RegTech – predictions for growth and use in 2023
Industry compliance has never been more complex. In the financial sector alone, there is a regulatory change every 7-12 minutes, and that can make it very challenging to remain compliant. However, the RegTech sector is growing rapidly and has become mission-critical for every sector that relies heavily on regulatory compliance. RegTech is being invested in, and heavily. This has led to the more rapid development of use cases and functionalities. As the costs of remaining compliant continue to grow, RegTech is helping to cut compliance expenditure and ensure that even the latest regulatory change is addressed. In 2023 and beyond, here are some of the most expected (and unexpected) changes coming to the RegTech sector.
Data Quality and Security
In 2023 the focus is going to remain firmly on the quality of accumulated data and how RegTech can ensure the protection of that data from end-to-end. Improving the quality of reporting is the key to this because it ensures that common mistakes are not replicated within any given enterprise. This will mean a more streamlined approach to regulatory communications, with rapid advancements in regulatory change technology improving speed and agility while ensuring accessibility of that data. RegTech in 2023 is set to prioritize operational resilience and accessibility.
Manual regulatory compliance monitoring and implementation are notoriously slow processes that have many potential areas of risk. RegTech companies are aware of the vulnerabilities exposed to human error, especially when it comes to data management and digital security. Automation is already key in RegTech, with automation tools as an inbuilt function of their tools and resources. So much of regulatory compliance (especially in the reporting stage) is reliant on data entry, and that means workflow slowdown and the potential for mistakes. Automation is becoming a key function of RegTech, and this is only set to become more prolific and valuable to enterprises.
There is more pressure than ever to comply with new regulations, and there are more regulations being enforced than at any time in recent history. That means more regulatory fines. For the risk and compliance teams within an organization, RegTech is proving to be the first line of defense against unexpected changes that leave their organizations vulnerable. The biggest trend for RegTech in 2023 is simply more widespread adoption as businesses in all sectors (particularly in more highly regulated industries) look for ways to streamline their compliance strategies.
Globalization and a New Ecosystem
Territorial compliance is incredibly complex, and Regtech is simply the only proactive way to remain up to date on the demands of a global compliance plan. This has led RegTech to distance itself from FinTech, and establish itself as its own sector. As this continues, we can expect to see more development of supportive ecosystems that are built into the foundation of the newest RegTech solutions. This, in turn, makes those solutions and technologies more valuable than ever, adding further benefits to Regtech investment.
As complementary technologies also continue to evolve, RegTech looks set to become its own intricate and evolving industry. Keeping up with the latest RegTech options and understanding their role in the modern maze of compliance and regulatory changes is now essential in 2023.
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