According to a survey conducted by Deloitte in 2019, Indian companies were found to

be spending an average of 0.5% to 1% of their annual revenue on regulatory and

compliance-related activities.
Due to the time-consuming and costly nature of compliance and regulatory activities,
there has been a global emergence of new industry.
Today I would like to discuss about the topic Regulatory Technology also known as
RegTech
RegTech, is the use of information technology to enhance regulatory and compliance
processes
Regulatory compliance means compliance with specific provisions issued by legislators,
industry authorities, as well as internal regulations within the companies themselves
Before understanding what RegTech is lets see the importance of Regulatory
Compliance and challenges faced when using traditional manual compliance methods.
Firstly, organizations must adhere to specific legal requirements imposed by regulatory
bodies. These regulations vary across industries and sectors. For instance, financial
institutions must comply with financial regulations by RBI, while healthcare providers
must follow healthcare-related laws issued by Ministry of Health and Family Welfare.
Secondly, there are reputational risks associated with non-compliance. Customers,
partners, and stakeholders expect organizations to operate ethically and responsibly.
Any compliance breach can damage a company's reputation, erode customer trust, and
result in a loss of business opportunities.
Lastly, non-compliance can have significant financial implications. Regulatory violations
can lead to hefty fines, penalties, and legal expenses. These financial burdens can impact
profitability, shareholder value, and overall financial stability.
When the Regulatory compliances was done in the traditional way ie manually it had
many drawbacks. It was time consuming, costly and resource intensive as well.
Regtech came in as a solution to all these isssues.
RegTech leverages technology to automate and streamline regulatory compliance
processes, reducing manual effort and improving efficiency. It helps organizations stay
compliant, mitigate risks, and adapt to rapidly evolving regulatory landscapes.
RegTech companies are unique as they engage in machine learning, natural language
processing, block chain AI and other technology.
Regulatory technology relies on artificial intelligence and machine learning to automate
routine tasks with the compliance department that helps those functions to stay abreast
of regulator’s ever changing rules and to reduce the time associated with operational
risk and compliance processes as well as compliance costs.
1. Efficiency
increases accuracy, and minimizes human error, less cost, less time consuming
2. Cost Saving
By automating compliance processes and reducing the need for manual labor, Regtech
can significantly lower compliance-related costs for organizations. Companies can save
expenses on staffing, manual data entry, and paperwork. Additionally, efficient risk
management and early detection of issues can prevent costly fines, penalties, and
reputational damage.
3.Enhanced Risk
If we were to take example of banking industry
Banks are required to monitor customer transactions, identify suspicious activities, and
report them to the relevant authorities.
Regtech makes it easier because it uses AI to detect any suspicious activites proactively
and it also gives real time reports as well
And because regtech uses technology like Blockchain it makes it nearly impossible to
hack or alter the system thereby making it Secure.