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Regulatory Technology – ‘RegTech’ – which was brought to life after the 2018 financial crisis, has evolved significantly over the past decade and moved steadily into its second phase of being. Going from a buzzword trapped inside the greater known ‘FinTech’, to being revolutionary in disrupting the way that people work, think and engage.

In the early years of RegTech emergence, hungry and promising startups placed greater emphasis on their technology in order to drive use cases, but in their haste, lacked the deep understanding of the regulations they sought to provide as a whole. Fast forward a few years and well into the second phase of RegTech, where the solution providers are equipped with support from regulators and governments and come armed with understanding – making compliance, cyber and regulatory expertise the primary driver, powered by smart technology.

Post liftoff: The shift into second gear.

With its primary aim to provide an answer to the manual and cumbersome processes that are traditionally used within organisations, RegTech 2.0 is firmly paving the way for a new generation of thinkers, who would look at governance, risk and compliance with new eyes. This digital transformation has shifted mindsets and is calling on a new workforce generation to rise up and meet it, by way of influencing the processes that were previously used, in order to be more agile, effective and resilient by nature–and not by effort.

With the rate of global technological advancements and smarter cyber threats, mindsets and regulatory approaches have changed from a Reactive to a Proactive approach. Organisations are now naturally planning ahead for the risks that might develop tomorrow, by ensuring that they are prepared for it today.

What is also evident in the market, is the different RegTech solutions that have cemented their positioning as market leaders within their niche, instilling a greater sense of confidence and focussed expertise in the organisation’s they work with.

However, in this phase, providers still need to focus on greater collaboration with experts, banks and regulators in order to gain a better understanding of their products’ success. This support is imperative as those established niche companies attempt to expand into providing broader and more encompassing solutions.

What’s next? RegTech 3.0

RegTech has made significant impact to date, but if possibilities are the greater universe, we are only just breaking through the atmosphere. The third phase of influence is coming, and it will mean that more and more companies will start to view RegTech as part of a wider digital transformation process. It will be another gear shift from ‘nice to have’ to ‚have-to-have‘. It will call for an evolution of those many institutions still operating on legacy systems, a rethink of the entire business model–from front to back office–and a new culture of risk and compliance across the organisation.

The problems we are solving with RegTech aren’t new, but the technology we are using is. With daily advancements in Natural Language Processing, Machine Learning and AI just shows that technology is not stopping for anyone, and that the potential for RegTech’s continued digital disruption of traditional processes is enormous.

So, ask yourself, what is your strategy for dealing with the rising demand, complexity and costs of compliance and regulations? And looking ahead, how do you plan to manage it in an environment that doesn’t show any signs of easing up? As partners, United Security Providers and Alyne, are equipping organisations with the tools, insight and expertise they need to confidently navigate the future of Governance, Risk and Compliance.