Use RegTech to Reduce Compliance Burdens

Technology is disrupting the way businesses operate and interact with their customers. This is especially true for the financial services industry. Automation is redefining operational processes of the financial institutions. Digital transactions have made it easier for financial institutions to capture information about the customers and leverage this data to offer personalized services. They can approve or reject transactions in real-time and reduce friction for users.

Burdens of Compliance and Costs

To ensure financial institutions do not misuse customer data, regulators have issued directives and regulations in the past. Now, in the digital world, with so much data in hand, financial institutions are an attractive target for cyber criminals, who use data breaches to steal confidential customer data. Due to a spectacular increase in the number of data breaches potentially exposing millions of customers to financial crimes, regulators have issued new directives, making it mandatory for financial institutions to comply.

Numerous regulations—old and new—have increased the compliance burden on financial institutions. RegTech can help businesses cut down the compliance burdens at affordable costs. Financial institutions are leveraging RegTech to automate reporting and data analysis to gain a holistic view of compliance.

Invest in RegTech

RegTech is increasingly becoming central to overall digital transformation and compliance strategies. Businesses, undergoing digital transformation, now understand that just having a digital front-end does not suffice. They must also focus on upgrading the middle and back offices as well to keep pace with this transformation. According to KPMG, RegTech will likely make up 34% of all regulatory spending by 2020. These investment levels are used to define the stage of RegTech adoption of the financial institutions—defensive, progressive, and reinvention.

Reap the Benefits

A greater number of financial institutions are increasingly relying on RegTech to efficiently condense meaningful data which in turn reduces data loads and associated risks. RegTech also eliminates the possible human errors by automating the compliance processes. Human expertise can thus be put to more productive use such as interpreting insights and more strategic activities. With better data mapping techniques, RegTech, promises numerous benefits not only to the financial institutions but also to the regulators who can better monitor the market and create a win-win ecosystem for all players in the market.

The article has been written by Neetu Katyal, Content and Marketing Consultant

She can be reached here.