WHAT IS REGTECH ?
INSURTECH
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WHAT IS REGTECH ?
In much the same way that fintech refers to the application of cutting edge digital solutions to the finance sector , RegTech is the result of applying technologies like artificial intelligence ( AI ), machine learning ( ML ), natural language processing ( NLP ) and blockchain to the regulatory sector in order to keep up with the accelerating challenges of regulatory compliance .
RegTech ’ s origins lie in the fallout from the global financial crisis of 2008 . The Dodd Frank Wall Street Reform and Consumer Protection act ushered in an era of financial regulation that stood in stark contrast to the precrisis period of financial de-regulation . The act – while criticised by some as a half-measure that failed to hold accountable the executives responsible for the crash – nevertheless had the effect of catalysing a much stricter regulatory environment . Since 2008 , US banks have been fined more than $ 243bn for regulatory breaches , a figure that amounts to a de facto 8 % tax on every enterprise in the financial sector . In fact , at large financial institutions , the cost of managing these new regulatory and compliance-based risks can amount to an average of $ 10,000 per employee . In addition to Dodd Frank , regulatory structures like GDPR and FINRA have imposed further regulatory overlays on companies , resulting in more and more fines for breaches . In order to combat those losses , financial institutions began harnessing cutting edge technologies to navigate this new regulatory jungle .
In a report released earlier this year , global consultancy and accounting firm Deloitte asserted that , “ RegTech promises to disrupt the regulatory landscape by providing technologically advanced solutions to the ever increasing demands of compliance within the financial industry .” RegTech
AUGUST 2020