Regtech: technology at the service of banking regulation Regtechs, these specialized fintechs serving banking and finance Appeared over the past three years, Regtechs support banks in managing their data. In the age of Big Data, Cloud and artificial intelligence, but also of the growing body of regulation at European level (or will of course think of the Mifid II directive, the GDPR, etc.), banking institutions must meet the challenge of exploiting the data and its use within very strict regulatory frameworks.
Regtechs, fintechs specializing in the use of data in accordance with regulations, are helping them meet this challenge. They use a battery of advanced technologies for this.
Among the most widely used of them, we can cite: Artificial Intelligence and Machine Learning (23% of Regtechs in the Regtech Sia Partners-AEC Fintech study), Cloud (19% of companies in the sample of this same study) and Big Data (also 19%).
The different Regtechs and the services they offer regtech-startup-bank Asset Management is the banking sector most targeted by Regtech companies, followed by bank support functions and the Corporate & Investment Banking sector.
They offer all these actors different types of services. The Regtech Sia Partners-AEC Fintech study made it possible to identify the main categories of services offered by Regtechs. Identity control management The obligation for financial institutions to know their customers (“Know Your Customer”) and the fight against money laundering are the main pillars of this service offering which uses in particular Blockchain technology to set up the sharing of money. information between the different subsidiaries of the same bank for example. These Regtechs are also often specialized in application programming interfaces to link the databases of control bodies to customer databases.
Regulatory reporting to supervise financial companies By offering technologies based on application programming interfaces and on the Cloud, Regtechs in this category allow banks to automate the production of regulatory reports, to support and standardize the cross-border distribution of investment funds, to facilitate supervision financial companies by regulatory authorities. Identity control management The obligation for financial institutions to know their customers (“Know Your Customer”) and the fight against money laundering are the main pillars of this service offering which uses in particular Blockchain technology to set up the sharing of money. information between the different subsidiaries of the same bank for example.
These Regtechs are also often specialized in application programming interfaces to link the databases of control bodies to customer databases. Regulatory reporting to supervise financial companies By offering technologies based on application programming interfaces and on the Cloud, Regtechs in this category allow banks to automate the production of regulatory reports, to support and standardize the cross-border distribution of investment funds, to facilitate supervision financial companies by regulatory authorities. Data risk management and data protection The Cambridge Analytica case that rocked Facebook is an example of the problems that poor governance and / or data protection can cause.
To avoid this type of difficulty, banks can count on specialized Regtechs relying in particular on Big Data technologies. Monitoring of banking transactions Blockchain technology and Machine Learning are used by Regtechs who monitor transactions and in particular identify illegal activities.
Compliance management "Compliance management" is now a key issue for banks, required to ensure that all rules are respected. Regtechs have taken up this issue massively and this should intensify further: “around 30% of banks expect greater involvement of Regtech solutions in Compliance Management in the years to come” underlines the Regtech Sia Partners study -AEC Fintech. Other services offered by Regtechs