Regtech In Financial Services: Technology Solutions For Compliance And Reporting

“Regtech” is “the use of new technologies to solve regulatory and compliance requirements more effectively and efficiently. “ While regtech solutions are already being applied by financial institutions (FIs), the current innovations in technology and areas such as “fintech” indicate that we are only at the early stages of a regtech market, with more development of new solutions in the near future. The ambitious regulatory reform agenda implemented after the financial crisis has closed loopholes in the financial regulatory framework, but has also significantly increased compliance costs of FIs. In an uncertain macroeconomic and financial environment, applying regtech could make an important contribution to increasing the profitability and efficiency of FIs, while improving their effective compliance with financial regulations. By making compliance less complex and capacity-demanding, regtech solutions could free capital to put to more productive uses, increase competition by removing a barrier to entry, improve the quality and efficiency of supervision, and reduce risk in the system. With the aim of stimulating the development of the regtech market, this report, based on inputs from IIF member firms, identifies main bottlenecks in compliance and regulatory reporting, discusses how they could benefit from regtech and from which regtech solutions in particular, and discusses barriers to regtech implementation and to development of the regtech market.