The financial services industry continues to move towards an era of optimized digitalization at breakneck speed.
With this happening, it is only natural to expect increased regulatory expectations as well as a heightened risk of non-compliance and not having access to vital data that could point to criminal activity and other security concerns.
In today’s rapidly-evolving environment, regulated financial service providers such as credit unions, banks, and wealth management firms are pressured to stay abreast of the latest technological developments. The technology can help them to streamline their processes, ensure compliance, and harness opportunities for growth.
The Benefits Of Regulatory Technology For The Finance Sector
Regulatory technology (RegTech) has the potential to be of great benefit to these financial operators. Here’s how:
Market Abuse can be Detected
More and more participants in the world’s markets are using automated tools in various areas, including regulatory reporting, risk management, and fraud detection.
It is not uncommon for an organization to be scared that its in-house compliance team is less informed about employee market abuse than regulators are.
This fear is warranted as regulators continue to process and evaluate market-generated data swifter and more effectively than ever before.
This situation puts operators within the financial sector under increased pressure to ensure operations are above board. RegTech tools make detecting any hint of market abuse increasingly easy before it becomes a huge problem.
Compliance Costs are Reduced
Making a decent profit and cutting costs where possible to maximize these profits is at the core of every organization, regardless of its operating sector.
Even during the business planning stage, the business plan’s financial planning section requires a detailed analysis of projected cash flow, a balance sheet, and an income statement for the business.
Using RegTech, a company can considerably reduce its compliance as automated processes take care of it. The time spent on the compliance process will also be reduced as the entire process will be rendered a lot less complex.
By saving time and money, the organization will find it easier to obtain a competitive advantage in a cut-throat industry.
Risk Management is Reformed
Using the right technology makes it easier to detect and eliminate any threats that could cause harm to a financial organization. These risks include anything from cyber attacks and fraud to market manipulation and non-compliant trade agreements.
Thanks to RegTech, regulatory compliance becomes increasingly easier to achieve. It also effectively accelerates business growth and digital optimization. When applied, RegTech can render risk management efforts more robust.
RegTech can also prevent security breaches, swiftly adapt to new regulatory measures, protect valuable data and digital systems, and reduce the risk of being penalized or fined due to non-compliance.
The Future Looks Bright For The Financial Sector
The financial sector has undergone a rapid and extensive digital transformation over the past few years. Thanks to RegTech, avoiding potential pitfalls while remaining compliant is becoming easier.
