Today we talk about regtech or how to approach regulatory compliance with technology.
In what context did regtech emerge?
The Covid-19 pandemic has greatly accelerated the digitization of services. This digitization is accompanied by increased security risks (mainly because digitization translates into exposure to new distribution models and unknown digital infrastructures).
In the face of ignorance and uncertainty, it is necessary to protect the integrity and personal data of end consumers. For this reason, this transition to the digital world has been accompanied by a growth in regulation, which seeks to adapt to changes and prevent damage.
Regtech arises in a context in which technology is needed to face the challenges of regulation.
Thus, regtech was born in a context in which:
- Regulated industries, such as finance or insurance, face increasing regulation. In addition, each regulatory entity has a specific scope, so that different entities can work to achieve similar objectives (for which the entities have to adapt equally).
- Regulatory compliance costs are high. Regulated entities need to be up to date and constantly modernize operating processes and systems. They spend more and more time and resources keeping track of changes and updates.
- Penalties for non-compliance threaten the strength of companies.
- Regulated industries need more agility than ever to deal with digital changes.
What is regtech?
The regtech (regulation + technology) encompasses all the activities and applications of technology that facilitate compliance with the regulation in an agile and simple way.
Applies to regulation management and regulatory processes through technology. Therefore, it helps institutions to improve their processes, automating regulatory compliance to the maximum.
The goal of regtech is to help companies adapt to regulations and constant legal changes.
⚠️ The term regtech was coined by the Financial Conduct Authority (FCA), the financial authority of the United Kingdom, an entity independent of the government.
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