What is the most significant challenge the financial services industry faces today? It is complying with ever-changing regulations. Non-compliance leads to cancellation of license, significant penalties, legal issues, and sanctions. Utilizing technology to meet the regulatory requirements like automating tasks, reducing operational risks, and reporting obligations is the need of the hour.
The financial industry is increasingly looking at technology-driven transformation in regulatory affairs, popularly known as RegTech, to deal with the new directives and regulations. The global market size of Regulatory Technology (RegTech) was $1.37Bn in 2018 and is likely to reach $6.42Bn by the end of 2025, with a CAGR of 24.7% in 2019-2025*
In the banking sector, there are multiple domains like Loans & Mortgages (Agri Finance), Payments, Investment banking that need extensive compliance reporting like TILA, RESPA, HOEPA, SAFE, FHA, HMDA, CCPA, SEPA, GDPR.
Below are the significant regulatory challenges the financial industry face
Further, regulators come up with complex requirements that may not meet current legacy solutions used by banks.
RegTech solutions offer
Impact of technology
Rising technologies like AI/ML, Predictive Analytics, Chatbots are applied in the following regulatory compliance areas
Blockchain & the evolving RegTech landscape
Blockchain is reinventing the regulatory space with applications in the areas of customer onboarding, fraud, and risk management. With blockchain, they can store, track, and retrieve data any time, anywhere. With private blockchain, institutions can own the entirety of information as transaction data flow back and forth in real-time while ensuring data security.
The potential of RegTech is vast and mostly untapped. Indeed, with a greater focus on data and associated regulatory obligations, banks are increasingly looking at tech enablers to gain value out of RegTech investments and solutions.
Author: Santhosh Srinivasa, Banking and Financial Services , EVRY India
* : Source from PR Newswire