Can you still remember how transactions are conducted in a bank 30 years ago? If you haven’t been born yet, then you would definitely have no idea but if you are already fifty years old and above, you may have experienced filling out countless of forms and hours or even days of waiting for a single transaction to be finished. Today, that era is long forgotten as technology made it possible to simplify and shorten the process of different banking transactions. The current process too, with all its technological hullaballoo, will soon be replaced by something better and new. There is a new bull in town and it’s named RegTech.
What is it really?
Short for Regulatory Technology, RegTech is designed to resolve compliance and regulatory burdens in a very effective and efficient manner. Far from being run by a single entity, the system uses cloud computing technology and Software-As-A-Service facility to assist businesses in their regulatory compliance. Compared to other methods and systems, RegTech is faster, more efficient, and less costly.
How did it come into being?
The financial crisis that initially struck the United States and eventually affected the whole world made everyone do a serious evaluation on how things are done. As a consequence, more regulations were enacted and implemented particularly in the financial sector. A number of technological breakthroughs gave rise to the number of Finance Technology (FinTech) companies that develop technology-driven applications which enhance customer engagement and experience with financial institutions. With more and more companies relying on consumer data, this led regulatory bodies to consider laws that deal with data distribution and privacy usage. The marriage of additional laws and regulatory measures with a more digital sector resulted in the need for regulatory technology.
How does RegTech work?
RegTech firms perform its tasks in cooperation with regulatory bodies and financial institutions by making use of cloud computing technology and big data for purposes of information sharing. Cloud computing has emerged as a low-cost technology that allow the sharing of data between entities in a secure and quick manner. RegTech firms use tools like predictive analysis to combine multifaceted information a bank has with data coming from past regulatory fiascos to generate figures that can help predict possible risk areas that banks must focus on. This process saves the bank money and time.
How many Asian banks and financial institutions use RegTech solutions?
As more efficient and smarter solutions are developed, Asian banks have started to move to adopt RegTech to protect them against future market crashes and financial failures. In the Cost of Compliance Report by Thomson Reuters, it revealed that more than half of all the financial companies surveyed in Asia say that RegTech solutions play a major role in how they handle compliance in their respective firms. Of that number, around 17% or nearly one-fifth have said that they already have employed one or more RegTech solutions. Among these solutions being implemented by Asian banks are cognitive computing, cloud computing, big data, the Internet of Things and blockchain.
What is the main focus of compliance among Asian banks and financial institutions?
Reports indicate that the main focus of compliance transpire mostly within the Know-Your-Customer (KYC) processes. The reason for this is that KYC is a major issue, not only in Asia, but in the whole world. Take for instance Hong Kong where around $80 million US dollars are being spent by firms based in Hong Kong on KYC processes.
Will RegTech soon become a common norm in Asian banks?
The swift changes and advancement of technologies have fueled the drive of Asian banks to utilize RegTech permanently. They use the system to help handle various aspects of compliance. With corporate customers breathing down the necks of Asian banks, it has been predicted that more banks will adopt RegTech solutions.