You've probably heard of the number one buzzword flying around in compliance circles - RegTech which is short for regulation technology. RegTech was first coined in the UK and referred to any technologies that ensure companies comply with their regulatory requirements. Some examples of RegTech solutions include regulatory workflow tools, assessment and risk management solutions, audit tools, change management solutions, onboarding solutions, and comprehensive dashboards and reports.
With the seemingly endless rate of regulation expansion, RegTech is becoming increasingly popular. Companies, particularly those in the financial sector, need to have a firm grip on compliance or risk being slapped with costly fines or damage to their reputation. In other words, compliance was just an afterthought for many businesses, but that isn't true today. The regulatory landscape has changed, and companies' attitude (and budget) towards compliance has changed too.
It's not all bad news, though. By adopting RegTech solutions, organizations can transform compliance into a competitive advantage. How? Through the many additional benefits, RegTech solutions offer. Let's take a deeper look at some of the advantages provided by RegTech.
Streamlining and Auditing Marketing
Many companies operate in sectors with strict marketing regulations. Typically, this means that advertisements must be truthful and cannot be deceptive, misleading, or unfair. In addition, some specific industries have even tighter requirements. For example, any product's health benefits must be supported by solid evidence. Additionally, in the UK, financial advertisements must be balanced and not emphasize benefits without indicating relevant risks.
However, mistakes do creep in. Therefore, companies must establish robust, auditable processes for managing, approving, reviewing, and achieving advertisement materials. By using RegTech tools, this process can be largely automated and streamlined.
Improving Risk Management
By using appropriate RegTech tools, companies can detect, mitigate, and prevent harmful risks. These risks can include non-compliant trades, fraud, market abuse, legal threats, unforeseen events, and others. These solutions typically notify the appropriate employees when suspicious activities are detected so they can be handled promptly. This is critical because companies are often judged on how quickly they respond to events.
Enhanced Time and Cost Efficiency
RegTech solutions help cut costs and effort (time) associated with compliance. By making the compliance process simpler and cheaper, companies can spend more money and energy in other areas. How do RegTech solutions provide this efficiency boost? Through technologies like robotic process automation (RPA), intelligent automation, real-time data monitoring, and more. As a result of implementing RegTech, companies gain an advantage over their competitors.
Improved Accountability and Accuracy
Siloed manual processes are fraught with issues. Often, not everyone involved in the compliance process knows what stage a compliance activity is in or who is responsible for the deliverable. Additionally, some compliance tasks can slip through the cracks and be forgotten or take much longer than they should. With RegTech tools, individuals (and the company as a whole) can be held accountable for compliance tasks, and nothing gets missed.
Centralizing Regulatory Filings
Today, regulators in many countries use technology to process and search regulatory filings and determine which organizations they should examine in the near future. These advanced solutions use sophisticated technology to crunch numbers and generate reports that detect anomalies or suspicious activity. Once detected, the organization is on the radar of the Agencies and may even be subjected to a heightened regulatory scrutiny.
However, with RegTech tools, you can manage your regulatory filings and ensure everything is accounted for in a centralized location. This ensures you're never surprised by an incorrect or missing filing, and reduces your risk of increased scrutiny.
Boosting Trust in Your Brand
Consumers are more likely to trust brands that use cutting-edge technology and take a serious approach to manage compliance. Remember, regulations exist to protect consumers (and their data and assets) from harm. Most of the time, this harm isn't intentional but rather the result of a simple error. Regardless, regulatory compliance tools help reduce the chance of these mistakes. Regulations keep communities safe, so consumers trust brands that take compliance seriously.
A Paradigm Shift Towards Predictive Compliance
RegTech emerged due to the changing nature of the world. Today, we live in a data-driven world with powerful computers and rapidly expanding regulations. In the past, regulatory compliance was essentially a fire fighting exercise where companies would go about their business until a problem was highlighted and only then they would respond. Today's regulatory technologies empower companies to take a different approach. The paradigm has shifted from firefighting to predicting and mitigating potential compliance threats. As a result, organizations today have more control, and that's only possible because of RegTech solutions.