The constant innovations in the financial world have helped the industry to have better control of processes thanks to the automation that allows the use of new technologies. These innovations have made possible the emergence of Regtech, which are startups that create solutions that help improve the parameters of compliance with regulatory requirements.
This term comes from the union of the words REG, which refers to regulation, and TECH, which refers to technology; and was coined by the FCA (Financial Conduct Authority), a regulatory body in England. These solutions mainly use technologies such as Cloud Computing, Big Data, Blockchain, Biometrics and elements of Artificial Intelligence.
Among the benefits that these solutions bring are:
- Greater efficiency and lower costs, thanks to process automation
Identification of possible risks more effectively (Deeper preventive culture)
- It allows an integration of areas of control, governance, risks and reporting. You can also improve the relationship between companies and official bodies by using comprehensive automated reporting and analysis services.
- Greater transparency and efficiency in regulatory compliance thanks to better transaction monitoring and identity verification.
- Scalable solutions are used ensuring stability with business growth.
- Help better decision making by using more advanced data analytics.
- Quick and agile report generation
As we can see, these new technologies and startups help financial companies in different ways, mainly in improving process automation and in obtaining quality and data processing. Now, from the consumer side, Regtech helps to give greater consumer protection in this world with increasingly advanced technologies.
José Manuel Gonzales-Páramo, BBVA executive, mentions the following about the need for Regtech to take care of consumers:
“This new digital paradigm presents risks in terms of cybersecurity, consumer protection, operational security and fraud, not covered by the traditional approach to supervision and regulation. Therefore, a renewed regulatory framework is necessary that fully captures the potential of digital innovation and makes the financial system more resilient to future crises "
Regtech are a great alternative to improve consumer protection, as well as to gain greater control and traceability of the relationship with the client. Likewise, they allow you to monitor and analyze transactions more quickly and effectively, which can help in the integrity of the financial system.
Regtech in Peru
The Regtech situation in Peru is still incipient, with only one Regtech in Peru to date. This is Rextie Scan, which focuses on the prevention of money laundering and terrorist financing through the use of artificial intelligence. This software is an internal bot (autonomous computer program), which does the human work of looking for information in various lists of prevention of money laundering, called "black lists" that are found worldwide and are required from certain items of companies, such as exchange houses, real estate, mining companies, customs agents, pawnshops, casinos, financial entities, among others. It also integrates information from more than 14 judicial sources and data centers that include the list of the Office of Foreign Assets Control, Terrorists of the National Council of the United Nations, terrorists of the European Union, and Financial Sanctions of the United Kingdom. , Interpol, the World Bank, the Ministry of Justice, among others.
In conclusion, Regtechs represent a great option for companies to not only automate their processes, but also help to ensure these processes and be in line with regulatory processes. In the same way, on the consumer side, it is a great alternative so that they are not harmed by the risks that the new digital paradigm can bring.
As we can see, regulation and innovation are not opposing terms, on the contrary they are complementary, so it is necessary to implement them and achieve a more inclusive, transparent, efficient and flexible financial system.
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