Regtech

@ profit_image/stock.adobe.com

A wide range of players are now focusing on regtech. Global standard-setting bodies such as the Basel Committee on Banking Supervision (BCBS) and the European Supervisory Authorities (ESAs) are analysing the types, trends and implications of regtech and the technologies it is based on. For example, they are conducting market analyses to examine potential application areas and the ways in which regtech can be used.

When supervisory authorities use innovative technologies to fulfil their mandates, this is known as “suptech”. Combining regtech and suptech as and where appropriate could promote efficiency and effectiveness on both sides in the areas where the two meet.

Potential and advantages

Thanks to regtech applications, companies can automate manual (sub-) processes. This allows regulatory requirements to be met with greater precision and less effort in some circumstances. In addition to the aspects relating to automation, regtech can play a role in the digital transformation of oversight, management and support functions.

According to the Bank for International Settlements (BIS), there are opportunities and potential collective benefits in making greater use of regtech and suptech in the financial sector.

Examples of regtech applications:

Technologies used:

Regtech applications in the stricter sense often involve different types of innovative technologies. These technologies may be used individually or in combination with other technologies. Big data and artificial intelligence (BDAI) and machine learning methods are key technologies for regtech. Biometrics is another key technology in the area of regtech, and distributed ledger technology (DLT) could play a more important role in future, too. Application programming interfaces (APIs) and cloud computing may be used as well, although mainly for the purpose of establishing infrastructures.

Frequently asked Questions

Regtech: make or buy?

Potential risks when using regtech