RegTech, or regulatory technology, is a field within the finance industry that focuses on enhancing regulatory processes. Essentially, the area puts stress on the importance of compliance and monitoring regulatory adherence. RegTech provides benefits to the finance industry by managing fraud, risk, and putting a halt to “bad behaviour” by employees.
According to a recent report by Research and Markets, the market for RegTech is estimated to reach revenue levels of up to $7.2 billion by the year 2023, as the field is growing at an annual growth rate of 25%. RegTech is gaining a lot of attention, as seen in Accenture Finance and Risk Blogs, as it supports cost reductions in addition to enhancing regulatory compliance; thus, reducing fines for compliance breaches.
The Global Fraud Report explains how money laundering and fraud is incredibly costly to firms, studies showing that the total costs of fraud in 2018 were over $7 billion dollars with 22% of the cases costing more than $1 million. RegTech has the ability to prevent these costs stemming from fraud and minimize anti-money laundering practices, providing better use of employees’ time.
Emotics, one of the startup teams in our current FinTech cohort, focuses on improving regulatory management with its innovative approach. They utilise new methods of analyzing compliance training and conduct surveillance by using browser analytics, facial recognition, and micro-expression analysis. Therefore, Emotics clients can ensure their employees are remaining engaged and focused during their necessary compliance training.
RegTech can also extend into non-compliance areas, addressing issues such as overdue invoices. Through time and innovation of financial services and technology, such as the growth of open banking, new rules to consumer/privacy rights are being brought to light. As a result, there is an opportunity for Emotics to address issues beyond RegTech into other areas of FinTech.
“All of that tedious online training that everyone hates and tries to avoid, we can optimise the training process and make the content better and more engaging,” states Ray Horan, CEO of Emotics, when discussing his startup company’s role within the rise of RegTech. Emotics introduces unique ways for companies to ensure the effectiveness of compliance training, meet their regulatory requirements, and diminish the real cost of bad behaviour from employees.