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A year ago we reported the growing importance of Regtech, the application of technology to more efficiently and cost effectively prove and manage regulatory compliance. Deloitte describes the Regtech field as “nimble, configurable, easy to integrate, reliable, secure and cost-effective” regulatory solutions.
Companies have traditionally ignored the risks of regulation noncompliance. But as the penalties of noncompliance have increased, businesses have also increased their investments in Regtech as a sort of insurance policy and as a way to reduce their exposure to risk.
The types of Regtech solutions can be wide ranging. For example, one type of Regtech solution is software that enables better assessment of customers to help identify and minimize fraud. Another solution is one that assesses th erisk of digital transactions. A third example is reporting. Regulations are often coupled with the need to provide evidence of compliance by creating reports; some Regtech solutions are designed to help businesses compile data needed for reporting.
Anne Leslie-Bini is director of Regtech at BearingPoint, said that “In compliance, as in any domain, you can go only so far in reducing costs because you eventually hit a hard floor below which you just can’t trim away any more ‘fat.’ And looking at RegTech simply as a vector to reduce compliance overhead is a limiting and shortsighted view that belies a wealth of hidden value. In focusing exclusively on cost reduction, stakeholders are missing a truly golden opportunity to reengineer the regulatory compliance value chain, and that’s where the real promise lies. The emergence of RegTech is creating a global conversation where regulators the world over are taking a closer look at the “why” of regulation and beginning to challenge some of the legacy assumptions around “how” they regulate. This, in turn, is creating an opportunity to engage all the stakeholders present across the full gamut of the regulatory value chain and examine the role they play.”