In any financial industry around the globe, there are number of different processes. These processes need to be executed by abiding to rules and regulations in order get a desired output with minimum malfunctions. Such processes are known as regulatory processes. Regtech is simply the management of these regulatory processes using technology. Regtech makes use of modern technology like Artificial intelligence, Big data, Data mining to provide easy, cost effective and reliable regulatory solutions.
What are regulations? Regulations are set of rules or regulations for managing different types of systems effectively in a structured way. Different financial regulatory agencies like Australian Prudential Regulation Authority (APRA), Australian Securities and Investments Commissions (ASIC) have put forth various regulatory standards. These standards keep changing on timely basis. Therefore, not only do the companies in the financial sectors need to abide by these rules and regulations but also need to stay updated with these regulations.
There are basically two types of regulations –
- Economic regulations
- Social regulations
Economic regulations are regulations put forth by government. Organisations need to follow these regulations and conditions in order to enter any specific industrial sector. The consumer prices that the organisations charge depends on these regulations. These regulations need to be followed to protect these consumer prices, interests of consumers, avoid conflicts and maintain quality of outcomes. If they are not followed then the government can put sanctions or penalties on the organisation.
Social regulations are regulations put forth by government. Organisations need to follow these regulations in order to make sure that they do not hurt any society and coordination and harmony is maintained in the society without causing any chaos or causing any threat to safety, wellbeing or welfare of the society.
These regulations put forth by the regulatory agencies help in maintaining a balance in the society by protecting consumer interest and maintain the quality of outcomes. If an organisation fails to comply with these regulations then their product can be removed from the economy. The organisation can also face a huge penalty in terms of fines for invading taxes, incorrect filings or late filing. In some regions non-compliance may also lead to imprisonment or closure of a business. Complying with regulations makes it easy for the organisations to generate efficient, reliable and cost-effective reports and outputs.