RegTech – what you need to know
RegTech may be a fairly new phenomenon, but its function is far from new. RegTech, regulatory technology, helps companies comply with regulations through innovative use of technology and has become an essential compliance element due to a rise in regulations and evolving complexity.
Compliance, including regulatory compliance, means following the rules in force. This includes identifying regulations and ensuring that sufficient processes are in place as well as providing documentation for compliance efforts.
Historical context of RegTech
In the aftermath of the financial crisis that began in 2008, a wave of regulations in the financial sector emerged to prevent a similar crisis taking place again. Many organizations implemented a quick fix: increasing the number of employees within critical control functions in the organization such as risk, compliance and audit. However, the long-term solution is to digitize and automate the approach to regulatory compliance, aiding the emergence of RegTech.
What is Regtech?
Like FinTech, MedTech and InsurTech, RegTech seeks to use technology to simplify and streamline an industry, in this case the industry of complying with regulations. Regulatory technology is created to help organizations address regulatory challenges and make compliance as efficient (and inexpensive) as possible.
The combination of regulation and technology is still fairly new, but it plays an important role in dealing with crucial levels of regulation and the increasing focus on data, reporting and transparency. Regulatory technology functions can, amongst others, include: Meeting compliance standards, ensuring that sufficient risk management protocols are in place, and implementing risk mitigating internal controls.
Why do you need RegTech?
RegTech will in the coming years become an even more central part of companies’ compliance work. Regulatory technology can help companies stay on top by keeping a proactive approach towards compliance with regulatory requirements, bringing in transparency and efficiency, and supporting a healthy organization in control.
For many companies, RegTech is a cost-efficient investment in relation to having a higher compliance level (avoiding non-compliance penalties) and spending less time and money on compliance efforts due to the automated workflows (compared to manual labour).
Impero is a cloud-based GRC solution that facilitates compliance and enables alignment and efficiency in administrative processes. View our introductory video here to learn more about Impero’s intuitive solution.