Q&A with Aruna Pannala (Deloitte) on regulatory technology

10 April 2023 Consultancy.in 2 min. read

Facing mounting regulatory pressures, organisations across the globe are increasingly turning to regulatory technology (RegTech) solutions to digitise, streamline and optimise their compliance. We asked Deloitte partner Aruna Pannala three questions on the emerging technology and its benefits.

Why is RegTech growing in relevance?

With an increase in the number of regulatory initiatives to promote RegTech and regulated entities expressing interest in deploying such technologies, the RegTech market has witnessed significant growth.

RegTech solutions augment stability and efficiency in compliance operations and provide flexibility to develop capabilities to drive this growth. This paradigm shift towards RegTech serves to benefit both regulated entities and regulators.

Q&A with Aruna Pannala (Deloitte) on regulatory technology

Globally, financial services regulators have adopted a variety of initiatives to raise awareness of RegTech developments, its benefits, and accelerate adoption within the industry. Regulators are taking a proactive stance to educate the financial services industry on the role of regulatory technology, to improve efficiency and ease of regulatory compliance and risk management.

How does RegTech ensure compliance within the regulatory landscape?

Regulatory compliance lies at the core of the issues that RegTech seeks to address. The three components of regulatory compliance in the Indian context are inventory of regulatory obligations, identity management, and regulatory reporting to ensure compliance within the regulatory landscape.

To keep track of regulations, RegTech solutions offer inventories and translate regulatory requirements into specific actionables and automate the compliance lifecycle into daily workflows. Regulatory horizon scanning tools are designed to track, identify, and monitor regulatory trends and changing regulations.

Identity management and KYC solutions help determine the “true” identity and background of customers to protect regulated entities against financial crimes. These solutions are industry agnostic and are at present in use in the financial, telecom, and consumer goods sectors.

Regulatory reporting solutions simplify the report generation process by standardising data requirements, streamlining data flow from various data sources, and enabling validation checks and controls. Reports may be automated through preconfigured data models, which may be accessed through user interfaces and with the limited involvement of IT specialists.

How is RegTech impacting the FinTech sector?

FinTech may be described as the solutions used by the business functions, whereas RegTech refers to the solutions used by the second line of defense.

FinTech is going through a period of swift growth and this new phase brings new difficulties for regulators, which requires the simultaneous adoption of RegTech solutions. Regulated entities must use innovation to develop and integrate RegTech solutions into their existing FinTech architecture.