Regulation Technology (regtech), the little brother of Financial Technology (Fintech), is nothing new. In fact, regtech has been around for decades addressing the necessary regulation challenges of organisations across numerous industries.
Previously regtech had mixed degrees of success due to limited investment and recognition of the technology. Now that regulatory levels have increased across organisations globally due to new legislation and international developments, like Brexit for example, it has become apparent that there is a gap in the technology necessary for businesses to maintain their compliance. This has meant that organisations, both big and small, have been pouring millions of dollars into compliance costs, hiring employees to maintain compliance internally.
Regtech has been recognised internationally and addressed in Australia by both ASIC and ScoMo as an industry that is set to revolutionise the business landscape.
In the UK, companies like Credit Benchmark have been founded by ex-bankers specifically to address credit risk data and provide financial institutions with improved risk management. In the US, services like AppZen have been developed to automate expense report auditing and even analyse the data with millions of other sources to detect compliance issues and fraud.
But is regtech simply a new tool, or is it a global shift that will revolutionise business automation? Some are suggesting the latter, as figureheads begin to recognise that regtech simply has no bounds or borders. Senior management personnel will soon begin to find more and more divisions within their organisations that can be automated, including government compliance, password management, identity recognition, risk management, reporting, security and many more. It’s simply a race for regtech start-ups to create the technologies that can then be adopted by institutes to save millions of dollars’ worth of business hours.
As you’ve probably guessed, regtech start-ups are currently following the money trail and focussing heavily on financial institutions and conglomerates working internationally. But finance and international business management certainly aren’t the only industries that can be aided.
Regtech can be applied to absolutely any industry, with the potential for employees to have their individual compliance maintained, organisations to have their global government compliance maintained, and never-ending data to be mined and utilised to deduce potential outcomes. The regtech industry is so diverse that you, as an individual or an organisation, are probably utilising the tech right now to manage passwords across various platforms or keep your security protection up-to-date.
As regtech becomes more diverse and robust, and businesses globally begin to take on these new technologies, it needs to be understood that an organisation’s cybersecurity must also evolve with the process. Systems will increase in speed, with the data utilised becoming more extensive, and this means that security measures must become just as extensive as the technology being used to protect sensitive information. How is the data protected? How sensitive is the data? Who has access? What is the data’s value? These are all question that business leaders must to ask themselves as they recognise the importance of cybersecurity and protection in a digital age.
A report by Let’s Talk Payments has stated that by 2020 the “global demand for regulatory, compliance and government software is expected to reach USD 118.7 billion. It is expected that close to 55% of the spending will occur in the consulting and business services.” After the recession, banks in the US alone were forced to pay more than USD 160 billion as penalties due to non-compliance of regulations. Best to keep an eye out.