Hello, glad to meet you here every month with my blog about Fintech for the Digital Ventures Blog. Today, I will be talking about RegTech, another interesting vocabulary in Fintech.
Getting to know RegTech
RegTech comes from the word Regulation or Regulatory Technology. It is using technology to enhance compliance such as security, stability in the financial system, data transfer, data processing, tracking, and creating reports for users to precisely and swiftly access information.
RegTech disrupting paper
RegTech has disrupted the errors caused by paper usages such as mistakes from filling names, time-consuming document sending, and document damages. Moreover, the change from paper to digital has helped with precision, security, and convenience.
A startup familiar with RegTech uses the KYC (Know Your Customer) system. It is used to quickly and precisely access consumer data so that financial institutes can use the information for their services. The Digital Verification system is also used to verify users and to easily evaluate credit scores (read more about credit scoring at http://dv.co.th/blog-th/get-to-know-creditscoring-fintech/)
The financial crises that happen over and over again showed the weakness of financial regulations and compliance. In the past, regulations and documentations are all paper regulations that accumulates over time. When incidents happen, going through the piles of papers and turning the pages limits real-time implementation, data search, and problem monitoring.
When we use technology to solve the paper regulation problem by moving towards the digital regulation, not only does it increase speed and preciseness but also unlocks new innovation for the financial industry. Once data is transferred from paper to digital, it means that big data can be used for deeper analysis. Moreover, RegTech will surely become the fundamentals of financial transactions in the future, both for commercial usage and regarding compliance.
Example of RegTech
To further explain about RegTech, let me share an example of RegTech. We begin with Onfido (https://onfido.com/) which is an identity verification and background checking system. This service is for entrepreneurs who have online applicants that will join their programs or use the services etc.
Onfido’s service covers the verification on whether the user is human, checking the right to work, criminal records, credit check, and negative media check. A one-stop service for background checking.
Another example is a RegTech that has disrupted the traditional banking system. Temenos (https://www.temenos.com/en) invented a software for banks and financial institutes meaning that if a bank uses the services, they will not need to develop any system by themselves.
The all-inclusive system has services ranging from internet banking (no need to make their own application), data storage for analysis (internal analytics), security system to detect the risk of fraud, and other all-in-one services for banks.
It is apparent that Fintech is trending and moving closer to our daily lives. In Thailand, there is still room for Fintech to grow. Those who have great ideas, the capabilities, and dream of changing the industry. I think the opportunity is wide open. Digital Ventures is opening applications for Accelerator Batch 1 and I can’t wait to see who will make it to this batch. Learn more about Fintech from the Digital Ventures blog or share your ideas on my social media channels. See you again soon.