What is RegTech or Regulatory Technology?
The world of tech is constantly growing and innovating. So how do you find your way around the terminology? Here is the essential information you need to know about RegTech or Regulatory Technology: definition, technologies, uses, differences with the LegalTech concept, etc.
Regulatory Technology or RegTech: definition
There are various definitions of RegTech. We detailed them in our article on the definition, benefits and practical applications of RegTech.
RegTech is used to refer to companies that specialise in providing services around compliance with legal texts and regulatory requirements. RegTechs are often start-ups. They offer technical solutions to make it easier for banking and financial institutions to comply with regulations and manage the risks involved.
What technologies does the RegTech sector use?
By definition, RegTech is fond of new technologies. In fact, that is its very essence. The banking sector is adopting RegTech processes to reduce its regulatory costs while making the most of innovations linked to digitisation and automation.
These include technologies such as :
- big data for processing very large volumes of data (e.g. fraud detection) ;
- artificial intelligence (AI) combined with machine learning to analyse data, financial transactions, images, etc. (semantic search technology);
- biometrics for actions relating to electronic signatures and customer identification;
- workflow automation, a solution for reducing the bank’s internal development costs.
Who uses Regulatory Technology solutions, and for what purpose?
RegTechs’ customers are financial institutions or banking consultancies. These companies are looking for innovative solutions for :
- data protection, both in terms of legal compliance (FADP in Switzerland, for example) and access management and storage security;
- regulatory monitoring;
- anti-money laundering with KYC (Know Your Customer) processes;
- regulatory reporting tasks, both in terms of processing automation and data analysis and management;
- risk management, to improve productivity and efficiency;
- asset management;
- compliance and respect for regulatory obligations.
You can also read our article about the customers of e-Reg, our Swiss RegTech solution for banking and financial regulation.
What is the difference between a RegTech and a LegalTech?
A LegalTech company uses legal technology or puts technology at the service of the law. It offers services in the legal field, often through dematerialisation and automation. In some cases, it even gives non-law professionals access to services or products. One example is the creation of legal documents such as contracts, which are drawn up online based on questions directly asked to users on internet.
Some RegTechs, such as easy Reg, are also LegalTechs, while others are not. RegTechs cover all aspects of regulatory activities. Their main aim is to ensure that banking and financial institutions comply with regulatory requirements.
e-Reg, a Swiss RegTech specialising in financial regulation management for banks
Our e-Reg platform is not a Fintech. It is a LegalTech, but above all a RegTech. It offers comprehensive functionalities and services in the field of financial regulation:
- online regulatory research with a standardised view, in several languages and using several techniques ;
- knowledge of the regulatory context based on a search ;
- collaborative tool with comment function, notification of colleagues and task management;
- regulatory knowledge management ;
- use of regulatory libraries;
- management of regulatory changes;
- association of procedures and directives specific to a bank, directly in the document base, in a protected and segregated environment.