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Financial institutions have just begun to explore RegTech’s potential, which enables them to keep up with the high-demanding financial regulations.
FREMONT, CA: Authorities are unleashing a relentless wave of regulations on banks and financial institutions. As the demand to keep up with evolving regulations rises, firms are looking for solutions that make it easier to keep up with the compliance to avoid paying legal penalties and hefty fees. Advancements in applications make RegTech a viable solution for banks to meet these demands. It has the potential to lower the cost of compliance, reduce errors, and analyze a vast amount of data. Here is a closer look at the critical RegTech trends and how they are expected to impact the industry in the years ahead.
• Identity Verification
Verifying identities, assessing risk factors, and confirming individuals help prevent money laundering, funding terrorism, and fraud. Know Your Customer (KYC) laws require banks to know the identity of the customers with whom they are doing business and their potential risks. Not falling to comply with these regulations puts banks at risk of bad business decisions and result in them paying expensive and hefty fees. Banks are expected to continue to rely on automated processes to analyze high-risk entities and verify identities.
• Artificial Intelligence for Fraud Detection
Artificial Intelligence (AI) has the potential to be a mainstream solution for detecting fraud. Regulators and boards are demanding more clarity from financial institutions, especially as AI becomes part of their decision-making process. AI can also automate the collection of the supporting evidence, making the audit process less time consuming
• RegTech Investment to Grow
There will be no surprise in seeing financial institutions continuing to invest in RegTech solutions. As governing bodies continue to bombard with regulations, banks will look for solutions to stay current and with compliant lows and keep their operating costs low. RegTech can alleviate much of the pressure on financial institutions. It also allows firms to be proactive in their compliance management and makes perfect sense for them to invest in the automation of compliance processes.
As the technology continues to evolve, RegTech solutions is expected to have several exciting transformations in the future.