According to Thompson Reuters Cost of Compliance report, a new regulatory update is implemented

every seven minutes and fines are issued for noncompliance and companies need to try and stay on
top of this.

This challenge has brought to bear a booming new industry called RegTech, encompassing a wide
range of tools that helps organizations stay above the rising tide of regulation and execute their
businesses activities in a more compliant way.

RegTech is just the other side of the coin of Fintech.

Just as Fintech facilitates the provision of financial services, so RegTech makes it easier and more
effective to manage and control regulatory requirements and is an incredible opportunity for many
companies to make their organization more agile, more efficient and more competitive in an
increasingly digitized market place. RegTech was born as a result of digital transformation.

It all starts with compliance. Compliance is a conformity to certain norms, rules or standards in
companies. Regulatory compliance means compliance with specific provisions issued by legislators,
industry authorities, as well as internal regulations within the companies themselves .Businesses
need to conduct themselves in an ethical and sustainable way, in a way that is transparent as
possible, so that their actions are always traceable and verifiable, and where it has a positive impact
on the community in which it operates. For this very reason, compliance is mandatory for certain
types of economic activity. The need for an internal regulatory system capable of ensuring
transparency and accountability has increased further with the advent of digital transformation,
which has greatly simplified processes and the ability to implement more accurate and reliable
controls.

It has also opened up critical issues and generated specific needs that can only be met through
digital solutions incomes regulatory Technology popularly known as RegTech,

itis a technology that allows firms to easily adapt to the pressure of increasing regulatory reporting
while being cost effective and secure. This technology allows companies to automate the process of
monitoring data and simplify the process of regulatory requirements to expand. Regtech is the
management of regulatory processes within the financial industry through technology. The main
functions of RegTech include regulatory monitoring, reporting and compliance. It is the application
of emerging technology to improve the way businesses manage regulatory compliance. RegTech
companies are unique as they engage in machine learning, natural language processing, block chain
AI and other technology. In order to bring the power of digital transformation to the world of
regulatory compliance, it uses innovation in technologies and techniques to meet regulatory
requirements and keep up with emerging statutory laws. 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. All the
reporting can be done in real time by using big data analytics. RegTech therefore fills the current
gaping the financial sector by bringing technology to address regulatory challenges. Since many firms
current regulatory practices constitute to legacy and manual processes that are no longer feasible to
address the growing list of regulatory obligations. Some of the industries that use RegTech are banks
and financial institutions, financial services, insurance high-risk sectors such as cross border trading,
real estate and luxury goods, ecommerce, travel and hospitality, healthcare, casino and gaming and
the service sector such as finance, law, accounting and consulting. While there is no definitive
agreement on RegTech categories, they can be looked at in the eight following categories firstly,
client Identification this setoff regulation solutions help financial companies gather and process
information on prospective and current customers. Secondly is monitoring. This subset of regulatory
technology focuses on monitoring ongoing transactions to identify whether they breach regulations
or display signs of suspicious activity.Thirdly, reporting this category helps companiesfulfill their
regulatory reporting obligations.This includes collecting, processing and submittinginternal data to
the relevant authorities.Next is data protection.These compliance tools protect personal data in
compliancewith regulations and offer a more general protectionfrom data breaches and
cybersecurity threats.Fifth, data warehousing and analytics.This regulatory technology helps
companies properlystore, sort and analyze vast quantitiesof data required for legal compliance.6th
Legal and Regulatory Analysis this refersto the technology that monitors and interpretsany existing
and emerging regulations to helpfinancial institutions identify gaps or areas ofnoncompliance in
their internal setup.Seven Training this set of tools isdesigned to help financial companies educate
andtrain their staff regarding laws and policiesthat relate to their work function.And lastly, general
compliance.This catchall category covers all regulation tech that doesn'tfall neatly into any of the
other types.It includes areas like forecasting and risk modeling.There is no single RegTech tool that
cancover the entire spectrum of compliance needs.Instead, the financial companies typically
pickseveral solutions to assemble a toolkitthat covers their specific organizational needs.For financial
services,

the benefitsof RegTech are substantial.

Firstly, they have efficiency gains

As regulation continues to grow, it becomes nearly impossible for compliance personnel to keepup
without the aid of technology. Technology capable of processing a high volume ofdata at incredible
speeds can quickly pass and analyze raw legal text and extract valuable insights.

Secondly, greater accuracy and comprehensiveness

manualised processes tend to create gaps in the compliance operation, leading to human error and
increased exposure.Implementing the right technology closes up gapsand creates a streamlined
compliance process.Thirdly, greater internal alignment technology toolsenable greater transparency
throughout the business,connecting one siloed people and processes.This results in better insights
between business unitsthat can be shared faster, which also leadsto a stronger culture of
compliance.And lastly, improved risk management.Many RegTech tools help protect against
varioustypes of risk, including market abuse, cyberattacksand fraud by monitoring systems and
alertingpersonnel to suspicious activities.So you may be wondering, howdoes fintech and RegTech
differ?The difference between fintech and RegTech isthat fintech is a financial technology,
andRegTech is a regulatory technology.Perhaps the most well known example offintech is the Bitcoin
blockchain technology.But really you use fintech every time you senda payment or make a purchase
via an app.Some view RegTech as a subset of fintechbecause the digital transformation fintech drove
in thefinancial services industry produced new and greater risk.RegTech, they say, arose in response
to thatchange, and it focuses on technologies that mayfacilitate the delivery of regulatory
requirements more effectivelyand efficiently than existing capabilities.RegTech is an effective tool
for transformingan organization and taking full advantage ofall the benefits of digital transformation,
reducingthe opportunity represented by outdated procedures andaudits of regulatory
requirements.It is a factor of competitive advantage,instead facilitates and simplifies organization's
management, thereforebecoming an additional weapon to be usedfor differentiation from players
within any market.What are your thoughts about REGSEC?Let us know in the comments below.If you
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