According to a recent report by MarketsandMarkets, the Regtech market is expected to be worth $12.3 billion by 2023. This is driven by an increase in the cost of compliance, as even more regulations are adopted and the requirement for a more streamlined customer experience proves to be more important than ever. Know your customer, anti-money laundering, fraud screening; financial services’ companies need to find efficient and effective ways to manage these challenges.
This complex environment includes not only the changing landscape around fraud and cybersecurity but also the same traditional challenges of monitoring compliance and ensuring that the customer onboarding and general customer processes are as frictionless as possible.
The UK’s Financial Conduct Authority has been issuing calls for input on using technology to achieve smarter regulatory reporting as it is well aware that this can help to relieve the regulatory burden. Financial services’ organisations can be confident that they are saving costs and making complex tasks more automated, increasing accuracy in their results.
We are certainly finding that Regtech is proving to be popular in smaller and challenger banks as their legacy systems aren’t as complex. The system to onboard a customer is much quicker and easier. By using a smart device, the customer just needs to capture images of their identity document and face. The feedback on the authenticity of the document is provided in seconds and allows the user to be onboarded accurately and incredibly quickly.
We all know the consequences of non-compliance with regulations. Research undertaken last year found that since 2008, financial firms have been fined $26b for failings in KYC, AML and sanctions regulations. In Europe, 83 fines totalling $1.7 billion have been imposed, most of which by the FCA.
As we progress through what has been called a 4th industrial revolution, if businesses want to continue growing and developing their customer base, they need to ensure they offer a customer service that stands out from the crowd. These days fewer customers are keen on face-to-face verification and want the ease of quick and accurate verification. We know that the majority of people wishing to transact are genuine, however, it’s important to flag problems, preferably by exception only.
As regulations continue to develop, especially the 5MLD, Regtech will play an increasingly important role for those companies wishing to streamline their processes, bring on customers more efficiently and also avoid fines for non-compliance.
External | what does this mean?
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.