There are many articles defining and dealing with “RegTech” framework and methodology. It is considered the latest tech that will disrupt the financial service industry. On the other hand, it will be the innovation tech that can really provide solutions to financial organizations that deal with risk. As for the digital customers/end users, it will be a system that works to protect us with our financial transactions.
So what does Regtech mean and why should we place any importance on this digital transformation?
Well first, you would need to identify yourself as a digital customer/end user. Second, you would need to know what RegTech is. And thirdly, you would need to know if the RegTech solutions and tools provide you with security for your everyday financial activities and transactions.
Are you a digital customer/user?
Any type of transactions that require you to transfer money, pay a bill, do trades, borrow and lend online or via mobile would qualify you as a digital customer/end user.
What is “RegTech”?
It is the process and system of regulating and keeping the financial industries in compliance through technological tools and solutions.
How does RegTech fit into your life?
After the effects of the 2008 financial crisis, RegTech is becoming the surety that digital customers are looking to in order to building confidence in the financial industries that deal with their money.
What are the components and why should we care?
There are several factors that point out the importance of having RegTech for digital customers and end users.
- Data protection
- Keeping up-to-date with technology (speed)
- Protection from misconduct externally and internally
- Providing easier ways of access and doing transactions without losing our privacy.
Every year, new regulations for financial institutions are imposed which are very costly and have lengthy processes. Coupled with digital transformations coming into the fold, these institutions still struggle to deal with the main problems of our digital users of today (i.e. data protection, hacking, and money laundering).
What RegTech does is allows businesses to innovate and create digital tools and solutions to automate, monitor and compel financial organizations to be in compliance with regulatory directives for the protection of our data.
Recently in the news, headlines over data breaches and hacking at financial institutions and firms have been the focus on making sure there are stricter and tighter rules in order to prevent identity theft and money laundering activities. In the EU and the US, payments, trading, and money transferring are expected to held to highest standards of compliance; meaning daily and live monitoring and reporting of activities are imposed on these financial organizations.
Currently there are major players that have innovated platforms to make it easier to digitally monitor and report these activities to the appropriate authorities. The Financial Conduct Authority (FCA) and Consumer Protection Acts include guidelines and rules dealing with the operations and health of the financial institutions. Such guidelines include the Basel Accords, the EU Solvency Directive, MiFids and Emir and the Dodd–Frank Act (US).
As well, under the PSD2 regulations in the EU, strong identity authentication is a requirement for for financial organizations that deal with digital customers/end users in payment and remittance services. There is new and upcoming identity management software that can identify and authenticate you as the real user in order to help minimize the risk of ID fraud and misconduct.
In addition, through advanced biometric authentication, you will no longer need a password to identify who you are as your mobile will identify the “live” you. For the EU, it provides a safer alternative as opposed to depending on passwords. Because of RegTech initiatives and solutions, transactions can be done faster and you will be better protected and far more secured.
Another example of why RegTech is important for digital customers is that it facilities transactions that can be far reaching, rapid, and inclusive for global digital communities. Whether you are business person, fund or asset manager that handles a lot of clients’ data and funds, you expect to trust that the organizations you are transferring money to are in compliance, are fast, and up to date with the latest technology that can make your transactions run smoothly, no matter which country you are in. You would like to ensure that your data can be saved in a “safe” such as the “blockchain” in order to protect your private information and keep from the risk of hackers.
Digital devices are becoming the norm for digital consumers and with Regtech solutions and tools, they can help solve the issues of risks that could affect us as end users.
In conclusion, RegTech tools and solutions play a vital role in helping financial organizations monitor and report their activities. It can also provide us with tools that help identify who we are and safeguard our data. As well, it can help make our transactions quicker while not compromising our privacy. As a digital user, it is important for me to trust the financial organization that I give my money to and that they are following the rules to protect and ensure my data privacy. RegTech is the ecosystem that is able to solve financial organization risk problems in this world of digital transformation; a solution that we can all agree is greatly needed.