RegTech (Regulatory Technologies) uses developing technology to help firms handle regulatory compliance more effectively. RegTech, while still in its infancy, is evolving quickly. RegTech firms are increasingly leveraging machine learning, natural language processing, blockchain technology, and artificial intelligence (AI) to bring the power of digital transformation to the realm of regulatory compliance.

RegTech is frequently conflated with FinTech. While FinTech refers to the use of technology and software to deliver financial services, RegTech refers to the use of new technologies to the increasingly dense data environment necessary to satisfy regulatory compliance concerns.

RegTech businesses engage with financial institutions and regulatory agencies to share information using cloud computing and big data. Cloud computing is a low-cost technology that securely enables users to exchange data with other businesses.

A bank that gets a large volume of data may find it too complex, costly, and time-consuming to filter through. A RegTech business may integrate complicated data from a bank with historical data on regulatory failures to forecast future risk areas in which the bank should concentrate its efforts.

By developing the analytical tools necessary for major institutions to comply with regulatory bodies successfully, the RegTech business saves the bank both time and money. Additionally, the banks function as an excellent instrument for adhering to the financial authorities’ requirements.

This is especially essential for the Jurisdiction to have proper control over the manhandling of financial crimes. In short, it is the use of new technologies to solve regulatory and compliance requirements more effectively and efficiently.

Australia has developed itself as a significant regulatory technology centre, with 80 established RegTech, statistically only third in the world behind the United States and the United Kingdom.

REGTECH and its impact on Australia

RegTech will accelerate its growth in the coming years, enabled by the increasing ability to capture and analyse a wealth of internal and third-party data sources. With the capacity to make bulk storage and computational intelligence in the cloud, the vendors combining specialised technology within a niche domain and data analysis skills will gradually translate to ‘RegTech as a Service’.

Australia is much ahead of other markets such as Canada and Singapore, which each have 26 and 21 RegTech. ASIC believes that the regulation-oriented technology (RegTech) industry has immense potential to assist businesses in helping firms develop a compliance culture, discovering learning opportunities, and improving efficiency resulting in saving costs on regulatory compliance.

ASIC acknowledges that RegTech has been used in a variety of cases for some time (e.g., transaction monitoring and record-keeping) and is making a significant contribution to regulatory requirements, soundness of the financial system, and favourable customer outcomes.

The RegTech Association of Australia was created in 2017 as a non-profit organisation with a clear aim to be a worldwide centre of excellence by promoting the development of higher-performing, ethical, and compliant businesses through RegTech innovation and investment.

The association brings the Australian government, Australian regulators, and its regulated entities providing professional services, and founder-led RegTech start-ups to foster collaboration among all stakeholders, resulting in widespread adoption of RegTech proof of concepts and to implement RegTech solutions across the eco-system.

We feel that The change in the RegTech market’s growth trend is mainly due to the companies stabilizing their output after catering to the demand that grew exponentially during the COVID-19 pandemic in 2020.


Source: BCG Fintech Control Tower