THANK YOU FOR SUBSCRIBING
Fremont, CA: Banks and authorities are fighting a losing war against financial crime, and the gradient has risen throughout COVID-19. As a result of the pandemic, there has been a significant increase in money laundering, fraud, and terrorist financing. At the same time, financial institutions face operational challenges due to social distancing measures, limited services, staff shortages, and the suspension of traditional servicing channels such as branches.
Financial firms must create and handle an expanding amount of data as regulators demand greater openness. Firms utilize various technological systems and applications to do this — that is, to collect, analyze, and calculate all relevant data. In reality, however, much of this data collection and analysis is still done manually, which is a significant expense driver for businesses.
Financial institutions are struggling hard to manage their compliance duties due to increased regulatory expectations and cost pressure. As a result, there is tremendous compliance risk and the impending prospect of regulatory fines, and a greater internal concentration on administrative activities rather than risk management.
Why is a Regtech solution becoming important for Financial Institutions?
Deep-cutting changes have changed the regulatory environment for financial institutions after more than a decade of global regulatory reforms marked by the 2008 financial crisis. They have witnessed a torrent of new rules and regulations. Though reasonable, the sheer amount of these new laws and standards has resulted in reams of red tape to cut through, making the job of risk and compliance functions more complicated and time-consuming, and leaving financial service providers focused on compliance rather than innovation.
The solution is digitization. Financial organizations want a long-term, scalable, and cost-effective solution to analyze massive volumes of data more effectively, readily spot suspicious behavior, and enhance and speed risk detection and remediation.
Regtech solutions employ cutting-edge technology such as machine learning to assist financial institutions in rapidly and efficiently resolving regulatory and compliance challenges. Machine learning Regtech solutions detect complicated situations of money laundering and terrorism financing fast and accurately by combining data with the knowledge and skills of compliance officers.
Regtech solutions have grown in popularity in recent years as businesses seek to meet rising regulatory demands. Digital compliance is in high demand. According to a report, the worldwide Regtech market will increase from USD 6.3 billion in 2020 to around USD 22.2 billion by 2027, at a Compound Annual Growth Rate (CAGR) of 20.1 percent throughout the forecast period.