Banks and financial institutions are facing substantial work to comply with regulations. The number of regulatory is increasing yearly. As regulatory requirements continue to expand in scope, the traditional model of regulatory compliance is less effective and is looking increasingly outdated.
Banks are conservative in their approach to regulatory compliance. Failures can result in fines, regulatory constraints, legal action, and damage to a bank’s reputation.
The average bank spends approximately 40% to 60% of its change budget on regulatory compliance. A new agile model offers banks a promising alternative approach, and yet some banks executives and among board members still perceive the agile approach is risky. Using the agile approach could cut banks’ IT spending by 20% to 30% and could significantly improve their ability to deliver regulatory projects on time.
The term ‘regtech’ was coined in 2015 by the Financial Conduct Authority, which described it as a sub-set of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities. The new wave of technology is emerging to help banks and financial institutions manage their risks.
Two factors have fired regtech growth: the rising number and complexity of regulatory conditions and the ability of regtech to use emerging new technologies that are more practical or effective in performing such regulatory requirements. Those technologies typically include AI, ML, and big data techniques; blockchain and biometrics are also common, although their use is still developing.
One of the Regtech borns is HawkAI is building the Anti-Money-Laundering (AML) solution of the future, that assist financial intuitions with their financial crime compliance process end-to-end. Combining simplicity in design with state of the art AI technology and cloud scalability.
The Regtech is about to get hot and get the attention of the related parties as it promises efficiency, cost-cutting, and reduce the gap between regulators and financial institutions.