RegTech — an offshoot of FinTech that’s short for regulation technology — is quickly blossoming into an industry of significant size and importance. Thanks to new government regulations and an increased desire to use automation to help companies stay compliant, RegTech solutions make it easier for organizations to carry out regulator monitoring and reporting. Because of the sheer number of financial regulations in place around the globe, RegTech helps financial organizations and other industries under heavy regulation avoid making costly mistakes.
In the first half of 2018, $1.37 billion was invested in the RegTech industry — more than all of the investments in 2017 combined. As RegTech continues to break out from the shadow of FinTech and develop into its own mature industry, expect continued corporate interest and significant investments in the field.
Starting a new company or entering a new market can carry serious risks, especially in the financial services industry. RegTech makes it easy for risk management teams to greatly reduce the amount of time of a regulatory compliance check, lowering the barrier of entry for newcomers and streamlining a lengthy process for existing companies.
As the need for RegTech solutions has continued to grow, so has the awareness of the industry to continue developing solutions with like-minded thinkers. In 2019, more major RegTech-focused conferences have emerged as a way for regulators, thought leaders and industry experts to share best practices and develop tomorrow’s solutions through collaboration and transparency.
Implemented in 2018, the European Union’s General Data Protection Regulation (GDPR)is one of the world’s strongest large-scale government-mandated data protection and privacy regulations. Companies not compliant with the GDPR can face strict, heavy fines that can seriously jeopardize an organization’s long-term health. While it’s an EU regulation, the global nature of today’s economy dictates that any international company that operates within EU borders must remain compliant with GDPR policies.
GDPR isn’t the only world’s data protection regulation. As other countries continue to implement their own versions of data protection laws, expect RegTech solutions to continue developing around the notion of staying compliant with new federal and international regulations.