How Regtech Can Help Fintech Companies Meet Compliance Standards
The rising sector of RegTech is aiming to change the regulatory landscape within the financial sector, accommodating its ever-changing compliance obligations. In 2022, we really saw an uptick in regulation changes.
Currently, there’s $80 billion USD being used on regulatory compliance across the financial industry, and it is set to rise by 50% over the next five years. It’s no secret that RegTech has attracted considerable interest and investment from financial professionals, but what is this money being used towards?
What’s causing the RegTech uptick?
One point of tension between innovation and regulation is the transactions that many FinTech’s make possible. As more companies adopt artificial intelligence, machine learning, and blockchain into their business model, the easier transactions will be to conduct.
New generations of RegTech tools come with new technologies, meaning more opportunity to improve compliance. The use of AI has helped promptly identify differences between real customers and potential fraudsters, creating a safer and smoother experience whilst abiding by regulatory requirements. By using automated processes, compliance departments can cut down on instances of human error or oversight.
Where is the investment for RegTech going?
ESG rising in FinTech
One of the biggest trends we followed in 2022 was environmental FinTech companies, and we’re seeing even more of this in 2023. As more governments are taking action to shift financial flows to more sustainable economic activities, RegTech will play a crucial role in supporting the transition.
There has been an increased focus on cryptocurrency regulation as there have been threats from tokens with unregistered securities, leaving prices of crypto open to manipulation.
Regulators are now looking to technology to revolutionize their approaches in banking and investment. Increased regulation will naturally slow down systems and processes in the short term, particularly as RegTech professionals adapt to the changes, but in the long term we are likely to see more efficiencies and cost savings.
In the past five years, startups have been applying artificial intelligence into many aspects of the company, including RegTech. This will help not only cut the costs of compliance processes but improve effectiveness to be quicker and more reliable.
What’s to come from RegTech?
The implementation of RegTech in financial services is only expected to grow. Going forward, financial technology companies will have to comply with the new regulations taken place. Compliance departments will need to work with operations teams to ensure rules are being enforced.
We’re expecting to see FinTech companies that accept crypto as payments will need to know the impact of their business practices. This will be crucial for companies to follow all new laws and sustainably grow.
Deployments of RegTech will thrive if FinTechs are closely working with their compliance and operations departments. As operations teams are looking to maintain their corporate policies and procedures, this will be a must for them in the years to come.
Recruitment in RegTech
Regulations are constantly changing, which means we are seeing an increase in hiring. With increased regulations, there is a greater need for talent. Financial services professionals with the right experience and talent can command higher salaries and better packages.
If you are a RegTech business looking to expand your team, Storm2 can help. Our expert teams are best placed to find top tier, hard to reach talent, that will help to drive your mission and lead your teams. If you have a vacancy you’d like to discuss, please get in touch. We have several recent successful engagements in the RegTech space, and we would be happy to advise or assist with your hiring plans.
Identifying the right FinTech talent is the number one challenge for startups – the RegTech sector is no different. At Storm2 our team of specialist consultants are experts in matching high-quality talent to the best institutions worldwide. Do you have a vacancy you would like to discuss? Please get in touch.