After Fintech, there has been increasing talk in the past year about Regtech. But what does Regtech actually mean, and when is it used? Is Regtech really “the next big thing” in the finance industry?

Regtech is the fusion of the two words “regulatory” and “technology”. With Regtech, financial service providers are able to manage compliance tasks through an automated process. Since compliance is so expensive for the financial services industry, could Regtech be the answer to questions about regulatory efficiency?

We will answer six key questions about Regtech in two blogs. In this first blog you will learn about what Regtech is, what value it can deliver and whether or not it is a form of Fintech. The second blog will focus on the history of Regtech, why banks are focussed on Fintech and who develops Regtech.

1. What is Regtech?

Regtech is the use of technology (particularly information technology) to ensure compliance with monitoring of and reporting on regulatory requirements. Put into simple terms: through Regtech, regulatory processes are automated and the compliance with regulations is guaranteed. This will be achieved through entity wide standardisation of processes and the implementation of control frameworks provided by regulatory experts.

2. What value can Regtech deliver?

Regtech creates transparency and consistency, standardises regulatory processes, delivers interpretations of unclear regulations and provides better quality at lower cost. Through Regtech it is possible to demonstrate and check at any time that the relevant regulations have been applied.
In addition to increased comfort levels for financial institutions, regulators benefit from Regtech as well as there is a guarantee of ongoing automated supervision and transparency in the regulations that are being applied. 

Regtech enables real-time monitoring of activities and is a prerequisite for various other products which require such testing (e.g. self-service desk).
The potential of Regtech goes far beyond cost savings, a benefit that is often highlighted during market discussions.

3. Is Regtech a form of Fintech?

Since many Regtech products are oriented towards the financial services industry, it is possible to reach this conclusion. As the name suggests, however, the automation of regulation is the key element, and this is applicable to more industries than just financial services.

Besides its different applications, another difference is that Regtech is less of a technology in itself, but is about the subject matter expertise contained in the technology. It could therefore be difficult for Fintech organisations to develop Regtech products, as they may not have the necessary expertise.

Discover the next three things you need to know about RegTech in our second blog post or visit our website.

Micha Bitterli - Partner, Head of Managed Services, Zurich

Micha has over 16 years of experience, including two in New York, in auditing large financial institutions and trading financial instruments and commodities. In addition to working as an auditor, Micha has spent many years advising small and medium-sized financial institutions on the operational implementation of regulatory requirements. Micha joined Deloitte from another Big Four company in 2015 and is responsible for establishing the “Deloitte Managed Services” platform.

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