Banks' regulatory obligations demand smart regtech solutions encompassing the right integration and application of data.
FREMONT, CA: Over the last few years, financial institutions have partnered with regtech companies in various aspects. The principal focus of banks was on customer-facing areas, and it is now shifted towards devoting more attention to compliance. With increased pressure from regulators on compliance and governance, regtech within the financial service ecosystem has gained importance. The next few years could witness regtech tapping into data for actionable insights and interesting use cases. The new data techniques are giving a boost to regulatory technologies by making the process faster and more effective.
In a regulatory environment with high levels of scrutiny and complexity, the need for regtech solutions prioritizing data insights to lower costs, increase efficiency, drive positive customer experience, and adhere to regulatory compliance is a top priority concern for the financial services industry. Enhanced data governance in financial institutions improves the quality of data and makes risk and critical business decisions more consistent. It also increases transparency and helps financial firms to proactively address any regulatory concerns. Furthermore, the application of machine learning and behavioural analysis on regtech solutions offer the potential of powerful data mining and simulation techniques for proactive decision-making.
One of the prime challenges that compliance managers encounter is the lack of easily accessible, high-quality data. This underlines the importance of a single holistic business model in financial services firms to capture a variety of data that will help regtech solutions effectively perform compliance activities, support submissions to authorities and make predictive decisions, shifting compliance’s efforts from just producing reports to the actual analysis of data, therefore generating better insights.
Considering the impact, early adopters of Regtech, combined with data mining technologies, can gain a competitive advantage. The significance of regtech solutions is that they leverage the existing data for reporting without creating the burden of replacing or updating legacy systems, which can be extremely laborious and expensive for financial institutions.