What is RegTech?
RegTech refers to the application of technology to support regulatory compliance. Using cutting-edge technologies like artificial intelligence and machine learning, it helps businesses to:
In the wake of the GFC, financial institutions faced a tsunami of regulation which sent compliance costs soaring. Financial regulation become more complex and fragmented than ever and rapid regulatory change continues to create ongoing uncertainty. Despite armies of lawyers and compliance officers, large banks have struggled to understand and comply with a myriad of applicable regulations. Many are still dealing with the fallout from earlier compliance breaches. Smaller entities faced the prospect of being regulated out of existence. More efficient and effective compliance management became an economic imperative.
In this context, RegTech was developed to reduce compliance costs and improve risk analysis within the financial sector. It replaces manual processes with technological solutions, reducing the need for human intervention in compliance processes. Compliance management efficiency can be dramatically increased. For example, the Commonwealth Bank and ING recently applied RegTech to interpret the European Union’s Markets in Financial Instruments Directive. Completed manually, interpretation of the MiFID’s 1.5 million paragraphs would have taken about 1,800 hours. Using a combination of natural language processing and AI technology, the job was finished in 2.5 minutes.
While RegTech remains an emerging field, business leaders and regulators alike are slowly coming to grips with its true potential. In fact, it promises substantial benefits to any industry characterized by complex regulatory requirements, high volume transactions, and a significant risk of regulatory penalties and reputational damage. Current applications in Australia are small-scale but wide-ranging, including the:
Immigration is one area in which RegTech is beginning to prove its value. Under Australia’s increasingly punitive immigration law, employers are subject to a range of shifting obligations. Penalties for non-compliance are severe, and enforcement is increasingly stringent. Anything your business does today could have ramifications for 7 years into the future! The 7-Eleven scandal illustrated all too clearly the potential legal, financial, and reputational consequences of compliance breaches.
RegTech offers an ideal tool to simplify immigration compliance. With the right technology, businesses can manage and exploit their data more effectively to support better decision making and reduce the risk of non-compliance. One of the first movers in this space, Complize delivers an innovative RegTech toolkit that ensures immigration compliance. It combines online training, workforce management, and an extensive knowledge base in a suite of compliance tools that will help your business manage its immigration obligations in real time.
Contact us today to arrange a free demonstration.
Authors: Kylie Lacey, Jackson Taylor, Luke Scully & TJ
Kylie Lacey, Regulatory Compliance Consultant.
Kylie is completing her PhD in Political Science at the University of Western Australia, where her doctoral thesis focuses on regulatory compliance, CSR, and business ethics in the Australian banking sector.