The Age Of RegTech

Living in the present means we're perpetually at the peak of technology, sitting on a pyramid of past achievements. In the 1950s credit cards became plastic miracles of payment, an apex of FinTech resting upon the [modern] invention of credit some half-century prior, along with zip-zap machines which made a quick copy of the card to be sent off to banks for verification. The timing was right, with society becoming more convenience-driven and consumer-focused—credit card lore claims it was a man who forgot his wallet at a restaurant that came up with the idea.

Today is no different. Upon a slew of fantastic inventions like the internet comes one of the latest, hottest, and nerdiest realms of FinTech: regulatory technology. RegTech is no less a product of its epoch than the original credit card was: the 2008 crisis panicked regulators who started legislating enthusiastically, in turn giving rise to compliance challenges for companies in every sector. Alongside these developments came the further maturity of technologies like cloud computing, artificial intelligence, machine learning, big data analytics, and blockchain. Finally, all it took were disgruntled tech-savvy bankers and kids looking to whet their entrepreneurial appetites to start founding companies, and voilà: the age of RegTech.

What on earth?

Regulatory technology has been a couple of years in the making, but the term "RegTech" came to life only in late 2015, legitimising the phenomenon and its place in the psyche of today's finance professionals. As of yet, it's in the era of multiple definitions. Different sources variously determine seven or ten sub-categories, but most agree broadly that it's technology, heavily relying on biometrics and artificial intelligence, that helps companies comply with such areas of regulation as Know-Your-Customer, Anti-Money-Laundering, fraud protection and data breaches, password security, risk management, stress tests, and due diligence. The products are tailored for different sub-sectors like e-payment, fund management, banking, and others. Unsurprisingly, RegTechs tend to have a B2B business model.

Dropping the balm

The demand for RegTech doth arch no eyebrow. According to Thomson Reuters, around a third of compliance teams spend about one whole day of their week just tracking changes in the field of regulation, with a worldwide average of 200 international publications/changes/announcements occurring every day. The latter statistic, for...

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