RegTech: Another buzzword or a long-delayed and fruitful cooperation of regulation and technology?
RegTech is short for regulatory technology. It indicates using the technology for regulatory compliance. There is a certain buzz around the term and it is especially used with FinTech. First thing to mention is that RegTech is not limited to the financial industry. However, the rise of RegTech is inextricably intertwined with the 2008 Financial Crisis and the financial sector is currently the pioneer of the RegTech.
Regulatory compliance is the notion of being compliant to the rules put in place by governments or regulatory authorities. The methods of compliance and the problems associated with the process vary from one sector to other. However, in essence, compliance means filling and checking forms on continuous basis. In order to monitor the compliance and enforce rules, regulatory authorities need information from the actors. Under a strict regulation, a huge amount of transaction must be reported by the participants, e.g. banks and other financial institutions, then this information must be examined by the regulatory authorities.
There are two main risks associated with such a scenario. Market actors may not be able to provide all necessary information in timely manner due to overflow of information and, additionally, regulators might not be able to…
