RegTech: Because even compliance deserves a tech upgrade

The business environment is getting increasingly complex in India as the country embraces its digital future. From data privacy to digital lending norms and strict anti-money laundering measures, regulators in the country have increased their efforts to make sure there is transparency, accountability, and protection in this age of rapid technological innovation.

The changing regulations are important to protect both businesses and consumers, they have brought new challenges, especially for SMEs, who now have to navigate a maze of rules with limited resources.

As India positions itself as a burgeoning economic superpower, the regulatory environment is evolving rapidly to support this growth. In January 2025, the Indian Finance Ministry initiated the search for a new head of the Securities and Exchange Board of India (SEBI), signalling a commitment to strengthening market oversight and investor protection.

Regulatory bodies are prioritizing real-time monitoring, data security, and enhanced reporting, reflecting the growing complexity of compliance requirements in a digital world. - Jaya Vaidhyanathan, CEO of BCT Digital

Concurrently, the global RegTech market is experiencing significant expansion, with projections indicating a compound annual growth rate (CAGR) of 12% to 15.5% from 2025 to 2030.

This surge is driven by the increasing need for efficient compliance solutions amidst evolving regulatory frameworks.

Regulatory Technology, or RegTech, has emerged as a critical tool for businesses seeking to streamline compliance and reduce risk. As the regulatory framework becomes increasingly dynamic and complex, the adoption of RegTech solutions requires businesses to change their operations, which is often beset by technical, financial, and operational challenges.

To understand how industry leaders are approaching these challenges and leveraging RegTech to not only comply but gain a competitive advantage, I spoke with three leaders: Jaya Vaidhyanathan, CEO of BCT Digital; Paritosh Desai, Chief Product Officer of IDfy; and Dr. Yusuf Hashmi, Group Chief Information Security Officer at Jubilant Bhartia Group.

SMEs often operate without dedicated compliance teams. As they move to a digital model, understanding privacy policies and compliance frameworks becomes critical to avoid costly oversights. - Paritosh Desai, Chief Product Officer of IDfy

Their insights are driven into the evolution of the role of RegTech in ensuring compliance strategies, its transformative effects on businesses, and the critical importance of collaboration among regulators, technology providers, and enterprises in building a resilient, future-proof regulatory ecosystem.

A Multi-faceted Regulatory Evolution

•             Financial Sector: The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) are at the forefront of regulatory innovation. Initiatives like the introduction of video-KYC guidelines, digital lending guidelines, and KYC requirements for general insurers reflect a proactive approach to addressing the challenges of a rapidly digitizing financial sector.

•             Data Privacy: The Digital Personal Data Protection Act (DPDP Act) has significantly impacted the data landscape, emphasizing the need for robust data governance frameworks, secure data handling practices, and transparent data processing.

•             E-commerce and Online Gaming: Regulations governing e-commerce platforms, online gaming, and other digital businesses are constantly evolving, requiring businesses to adapt and ensure compliance with evolving guidelines.

However, India’s Digital Personal Data Protection Act (DPDPA) and the European Union’s General Data Protection Regulation (GDPR) both aim to protect personal data but differ in several key aspects:

Comparing Indian and Global Data

Protection Regulations

Both the GDPR and DPDPA share the common goal of protecting personal data but differ in several important areas:

1.            Consent Requirements:

•             GDPR: Requires consent to be “freely given, specific, informed, and unambiguous,” with a clear affirmative action.

•             DPDPA: Similar to GDPR but restricts processing based on lawful bases such as contractual necessity or legitimate interests.

2.            Scope and Applicability:

•             GDPR: Applies to entities processing personal data of individuals within the EU, irrespective of the entity’s location.

•             DPDPA: Applies to digital personal data within India and data processing by Indian entities outside the country.

3.            Cross-Border Data Transfers:

•             GDPR: Allows transfers to countries with an adequacy decision or through mechanisms like Standard Contractual Clauses (SCCs).

•             DPDPA: Imposes stricter restrictions on cross-border data transfers, requiring data to be stored and processed within India, with certain exceptions.

4.            Regulatory Authority:

•             GDPR: Enforced by independent Data Protection Authorities (DPAs) in each EU member state.

•             DPDPA: Enforced by the Data Protection Board of India, with significant powers retained by the government.

Compliance Challenges for Indian Companies in Cross-Border Data Transfers

For Indian companies managing global compliance challenges, especially regarding cross-border data transfers, the DPDPA’s restrictive measures pose considerable challenges. Unlike the GDPR, which provides clear mechanisms for international data transfers, the DPDPA lacks a structured framework for such transfers. This uncertainty can create compliance risks for businesses operating in multiple jurisdictions.

Each jurisdiction has its unique set of compliance requirements—GDPR in the EU, the DPDP Act in India, and others around the world. Keeping up with these regulations demands constant adaptation. - Dr. Yusuf Hashmi, Group Chief Information Security Officer at Jubilant Bhartia Group.

How Indian Companies Can Manage Cross-Border Compliance

To navigate these challenges, Indian companies should consider the following strategies:

•             Assess Data Flows: Thoroughly map data flows to understand where personal data is stored and processed.

Implement Data Localization: Ensure compliance by storing and processing data within India in line with the DPDPA’s requirements.

•             Engage with Regulators: Stay informed about evolving compliance requirements by maintaining communication with regulatory bodies.

•             Adopt Best Practices: Follow industry-leading privacy practices and data protection standards to reduce risks.

By proactively addressing these challenges, Indian companies can better align their operations with both domestic and international data protection standards, ensuring global compliance.

Jaya Vaidhyanathan highlights how India’s regulators, such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), have been proactive in creating frameworks that address the complexities of modern compliance. “Regulatory bodies are prioritizing real-time monitoring, data security, and enhanced reporting,” she explains. This proactive approach reflects the growing complexity of compliance requirements in a digital world.

Paritosh Desai agrees, emphasizing that rapid digitization has led to significant shifts in regulatory expectations. “We’ve seen new guidelines such as video-KYC, digital lending norms, and data privacy regulations. These frameworks are designed to ease onboarding processes while enforcing robust compliance measures.”

Desai highlights the increasing complexity of regulations across various sectors, including finance, e-commerce, and online gaming. He notes the emergence of standardized onboarding processes and the growing focus on data privacy, exemplified by the DPDP Act.

Such changes have prompted the adoption of advanced RegTech solutions, which leverage AI and ML to automate compliance processes and identify risks in real time. These technologies enable businesses to adapt quickly to evolving regulatory demands while maintaining operational efficiency.

One of the major hurdles organizations face today is ensuring compliance with the different regulations that govern data protection in various regions. As Dr. Yusuf Hashmi, highlights, “Each jurisdiction has its unique set of compliance requirements—GDPR in the EU, the DPDP Act in India, and others around the world.” These regulations vary significantly in their scope and requirements, making it a daunting task for multinational organizations to stay compliant.

Additionally, regulations are in a constant state of flux, requiring continuous monitoring and adaptation. The implementation of cross-border data transfers, often complicated by local data localization laws, further adds to the complexity. Dr. Hashmi acknowledges that ensuring compliance without duplication of efforts across regions demands significant resource allocation.

To address these challenges, Dr. Hashmi’s team has implemented several strategies:

•             RegTech Solutions: “Real-time monitoring and alert systems ensure we stay updated with regulatory changes,” he says. This proactive approach to compliance allows organizations to adjust quickly to new or updated regulations.

•             Centralized Compliance Platforms: By utilizing centralized platforms, organizations can standardize compliance processes globally, while still maintaining the flexibility to adapt to local laws.

•             Local Compliance Teams: Local teams reporting to a global compliance office help bridge the gap between global standards and jurisdiction-specific requirements, ensuring a balance between consistency and localization.

•             Collaboration with Advisors: Engaging with external legal and compliance experts offers insights into navigating complex regulatory landscapes across regions.

The Indispensability of RegTech

Both Vaidhyanathan and Desai underscore the critical role of RegTech in navigating this complex regulatory environment. RegTech solutions, powered by AI and ML, offer a range of benefits, including:

•             Automation: Automating compliance processes, such as KYC/AML checks, risk assessments, and regulatory reporting.

•             Efficiency: Streamlining operations and reducing manual effort, leading to significant cost savings.

•             Proactive Risk Management: Enabling real-time monitoring and identifying potential risks before they materialize.

•             Data-Driven Insights: Providing valuable insights into compliance trends and enabling data-driven decision-making.

Dr. Hashmi firmly believes that RegTech will become indispensable for organizations navigating the evolving data protection landscape.

•             Addressing Complexity: The increasing complexity of data protection laws makes manual compliance increasingly challenging and unsustainable.

•             Efficiency Gains: Automation reduces human error and significantly improves the speed and efficiency of compliance efforts.

•             Cost-Effectiveness: RegTech helps minimize the costs associated with non-compliance, such as fines and lawsuits.

•             Future Proofing: The adaptability of RegTech ensures organizations remain compliant with evolving regulations.

•             Building Trust: By ensuring transparency in data handling, RegTech helps build trust with customers and stakeholders.

Challenges in Implementing RegTech for SMEs

Implementing RegTech solutions offers significant benefits for businesses, particularly in navigating complex regulatory environments. However, several challenges can impede successful adoption:

1. Integration with Existing Systems

Integrating RegTech solutions into existing infrastructure can be complex, especially for organizations with legacy systems. The need for seamless compatibility and data migration can lead to operational disruptions and increased costs. A study by FasterCapital highlights that integrating new technologies with existing systems is a significant challenge for financial institutions.

2. Resistance to Change

Organizations may face internal resistance to adopting new technologies due to cultural inertia or fear of the unknown. This resistance can hinder the implementation process and delay the realization of RegTech benefits. Financial institutions often have entrenched procedures and legacy systems that resist change, both technologically and culturally.

Addressing these challenges requires a strategic approach, including comprehensive system audits, clear communication of benefits, and a phased implementation plan to ensure smooth integration and acceptance within the organization.

Achieving a balance between ensuring compliance and fostering operational efficiency is a challenge that many organizations face. According to Dr. Hashmi, the key lies in a risk-based approach. “We prioritize compliance efforts based on risk assessments, ensuring that resources are allocated effectively to mitigate the most significant risks,” he shares.

Automation also plays a crucial role in improving efficiency without compromising compliance. By leveraging RegTech to automate repetitive compliance tasks, organizations can free up resources for higher-priority tasks. Dr. Hashmi emphasizes the importance of building compliance into new technologies from the ground up. “By collaborating with R&D and product teams, we ensure compliance is part of the design process—‘compliance by design.’”

RegTech tools empower SMEs to make data-driven decisions by providing insights into compliance trends, potential risks, and areas of improvement, thereby improving overall business efficiency and decision-making.

“To address these challenges, we have implemented RegTech solutions for real-time monitoring and alerts on regulatory updates,” explains Dr. Hashmi. “This allows us to proactively identify and respond to changes in the regulatory landscape.”

Addressing the DPDP Act and Beyond

Dr. Hashmi envisions a future where RegTech plays an even more critical role:

•             DPDP Act Focus: RegTech will play a vital role in ensuring compliance with the DPDP Act’s specific requirements, including data mapping, classification, and cross-border data transfer restrictions.

•             AI-Driven Insights: Predictive analytics will empower organizations to anticipate regulatory changes and assess their potential impact.

•             Real-Time Audits: Automated compliance audits will enable continuous monitoring and real-time adjustments to address dynamic regulatory requirements.

•             Data Sovereignty Tools: RegTech will provide solutions to ensure strict adherence to local data storage and processing laws.

•             Interoperability: Platforms will facilitate seamless integration with multiple regulatory frameworks (e.g., GDPR, CCPA, DPDP Act).

For small and medium enterprises (SMEs), transitioning to digital platforms presents unique challenges. According to Vaidhyanathan, many SMEs lack awareness of the full scope of regulatory requirements and the potential benefits of RegTech solutions. This knowledge gap, coupled with budget constraints, often limits their ability to adopt advanced technologies.

However, Desai elaborates on this point, noting that SMEs typically operate without dedicated compliance teams. “An SME moving to a digital model might not understand the need for detailed policies, such as privacy terms or shipping policies. These gaps can lead to compliance oversights.”

To address these challenges, both IDfy and BCT Digital have developed scalable, cost-efficient solutions tailored to SMEs. Desai mentions IDfy’s low-code platform, IDfy360, which allows businesses to create onboarding journeys without extensive technical expertise. “We’ve designed modular solutions that can be easily deployed, ensuring SMEs can achieve compliance without significant resource investment,” he says.

Vaidhyanathan underscores the importance of flexibility, noting that modern RegTech solutions must cater to businesses of all sizes. “Scalability is crucial, especially as SMEs grow. Our solutions offer the flexibility to evolve alongside these businesses, ensuring they remain compliant at every stage of their journey.”

While challenges like cost, implementation complexity, and data sovereignty concerns remain, the potential benefits of RegTech are undeniable. As organizations strive to navigate the ever-changing regulatory landscape, embracing RegTech will be crucial for ensuring compliance, driving innovation, and fostering trust in the digital age.

The Evolution of the CISO Role

The role of the CISO has significantly evolved, especially with the increasing complexity of regulatory frameworks and data-sensitive industries. Dr. Hashmi explains, “Initially, CISOs were primarily focused on reactive compliance. Today, the role has shifted to proactive regulatory change management, integrating compliance into the very fabric of the organization’s strategy.”

In response to the growing need for sophisticated compliance mechanisms, CISOs are relying more heavily on technology. AI-driven compliance tools and data analytics now play an integral role in managing sensitive data, as they offer enhanced capabilities for monitoring and reporting. Moreover, collaboration between cross-functional teams—legal, IT, and operations—has become essential to embed compliance into every aspect of the business. Dr. Hashmi also notes the growing importance of continuous upskilling to stay ahead of new technologies and regulations, with an emphasis on understanding emerging tools like RegTech.

Dr. Hashmi sees the CISO role evolving into a strategic partner within the organization. “Beyond compliance enforcement, we act as strategic advisors, guiding the business on how compliance can drive innovation and build trust.”

Overcoming Legacy System Challenges

for Large Enterprises

For large enterprises, legacy systems often pose a barrier to adopting modern RegTech solutions. Vaidhyanathan describes how BCT Digital’s offerings are designed to integrate seamlessly with existing systems, allowing for phased implementation that minimizes disruption.

“Our approach focuses on complementing, not replacing, legacy systems,” she explains. “By automating compliance processes, we reduce reliance on manual efforts, enhance operational efficiency, and deliver measurable cost savings.”

Desai echoes this sentiment, highlighting the importance of balancing automation with human oversight. “AI-driven models bring efficiency, but fairness and ethical decision-making remain paramount. Our solutions blend AI with human review to ensure accuracy and fairness, particularly in critical decision-making scenarios.”

The Role of Regulators

Regulators play a crucial role in facilitating the adoption of RegTech solutions. Desai emphasizes the importance of clear guidance and support from regulators, particularly for SMEs. He highlights initiatives like the UDYAM scheme as positive examples of regulatory efforts to support business growth while ensuring compliance.

AI-driven models bring efficiency, but fairness & ethical decision-making remain paramount. Our solutions blend AI with human review to ensure accuracy & fairness, particularly in critical decision-making scenarios.

With businesses increasingly operating across borders, the challenge of managing global and local compliance has grown. Desai notes that IDfy has developed a common compliance framework that incorporates universal principles while accommodating jurisdiction-specific requirements. “We serve clients in over 10 countries, tailoring solutions to meet local regulations while maintaining global standards,” he says.

Vaidhyanathan adds that collaboration with regulators is key to achieving this balance. “Indian regulators are among the most forward-looking in the world. Initiatives like regulatory sandboxes enable us to demonstrate proof of concept and build trust.”

Desai acknowledges the importance of ethical decision-making in AI-powered compliance solutions. He emphasizes the need for a balanced approach that combines the efficiency of AI with human oversight to ensure fairness and accuracy. IDfy’s approach prioritizes human review processes to ensure that AI-driven decisions are accurate and unbiased.

As the regulatory environment continues to evolve, the role of RegTech solutions will only grow in importance. Both Vaidhyanathan and Desai stress the need for ongoing innovation and collaboration between technology providers, businesses, and regulators.

Conclusion

Dr. Yusuf Hashmi, reflecting on his experience at Jubilant Bhartia Group, emphasizes the importance of robust cybersecurity frameworks in compliance. “With the increasing digitization of regulatory processes, ensuring data security and privacy is critical. RegTech solutions must integrate advanced security measures to protect sensitive information and build trust,” he says.

Looking ahead, the focus will be on developing solutions that are not only compliant but also resilient, scalable, and sustainable. “By leveraging AI, ML, and advanced analytics, we can create a regulatory ecosystem that supports innovation while safeguarding stakeholders,” concludes Vaidhyanathan.

As businesses adapt to this new reality, the integration of RegTech solutions will be essential for driving efficiency, mitigating risks, and achieving long-term success. With continued collaboration and innovation, the future of compliance in India looks brighter than ever. 

aanchalg@cybermedia.co.in