Regulatory technology is a new technology that uses information technology to enhance regulatory and compliance processes. Regtech expands across all industries, including financial services, banking, technology, retail, gaming, and healthcare. RegTech puts a particular emphasis on regulatory monitoring, reporting, and compliance and is thus benefiting highly regulated industries. The objective of RegTech is to enhance transparency as well as consistency and standardize regulatory processes, to deliver sound interpretations of ambiguous regulations, and thus to provide higher levels of quality at a lower cost.
RegTech to date has been focused on the digitization of manual reporting and compliance processes, for example in the context of Know your customer requirements. This offers significant cost savings to the financial services industry and regulators. However, a 2016 academic paper suggested that the potential of RegTech is far greater stating that “it has the potential to enable a close to a real-time and proportionate regulatory regime that identifies and addresses risk while also facilitating far more efficient regulatory compliance”.
