RegTech (regulatory technology)
RegTech is a technology for automating compliance with regulatory requirements and reducing compliance risks in the financial and public sectors.
What is RegTech in simple words
RegTech (Regulatory Technology) is a technology for automating the processes of compliance with regulatory requirements, risk management, reporting preparation and interaction with regulatory bodies. In simple words, these are programs and services that help companies meet government requirements without wasting time and resources.
Imagine that you are a bank. Every month you need to send dozens of reports to the Bank of Russia, check clients against black lists, track suspicious transactions and monitor legislative changes. Manually, this takes hundreds of hours of work for a whole department. RegTech solutions automate these processes, reducing time and lowering the risk of errors.
The term RegTech emerged in 2015 in the UK after the 2008 global financial crisis, when regulators tightened requirements for financial institutions. Today RegTech is a rapidly growing market covering not only finance, but also public administration, healthcare and other industries. According to MarketsandMarkets, the global RegTech market will reach $28 billion by 2027, with an average annual growth rate of 23%.
RegTech is part of the broader FinTech (financial technology) direction and overlaps with SupTech (supervisory technologies for regulators). If RegTech helps companies report to the regulator, then SupTech helps the regulator verify these reports.
Key RegTech directions
RegTech solutions cover several key areas, each of which solves specific compliance tasks:
- Reporting automation: Generation of reports in the required formats (XBRL, XML, JSON) and automatic submission to regulatory bodies (Bank of Russia, Federal Tax Service, Rosfinmonitoring). This eliminates manual data entry, reduces the risk of errors and speeds up the process many times over.
- Transaction monitoring (AML/CFT): Automatic detection of suspicious operations to counter money laundering (AML) and terrorist financing (CFT). Systems analyze transactions in real time using ML algorithms to detect anomalies and signal suspicious activity.
- Compliance risk management: Assessment and monitoring of risks associated with violation of regulatory requirements. Systems help identify problem areas, assess their criticality and prevent violations before they occur.
- Data validation: Automatic verification of data for completeness, correctness and format compliance before submitting reports. This prevents report returns due to errors and saves time on revisions.
- Regulatory change management: Automatic tracking of legislative changes (regulations, regulator letters) and adaptation of the company's internal processes to new requirements. Systems can notify about new requirements and suggest process changes.
- Customer identification (KYC/AML): Automation of KYC (Know Your Customer) processes — customer verification when opening accounts, reconciliation with sanctions lists, risk assessment.
In the public sector, RegTech is used to automate control of procurement procedures, monitoring of budget funds spending and verification of counterparties. These tasks are effectively solved with BPMS and RPA.
RegTech on Fintech platforms
The SKIF-BP system includes modules that implement RegTech functionality in the field of budget accounting and government compliance:
- Automatic reconciliation with Federal Treasury data to control targeted use of funds;
- Control of budget commitment limits and monitoring of their execution;
- Generation of reporting according to Ministry of Finance forms in the required formats;
- Automatic verification of data correctness before submitting reporting;
- Monitoring of procurement procedures in accordance with 44-FZ and 223-FZ.
The SINTEZ-M platform can be used to create RegTech applications using built-in tools for working with forms, processes and reports. This allows quickly creating solutions for specific regulatory requirements without programming from scratch.
The research service helps identify processes with the greatest automation potential and develop a RegTech implementation strategy. Read more about RegTech solutions in the technologies section.
Frequently asked questions
What is RegTech in simple words?
RegTech is a technology that helps companies automatically comply with regulatory requirements (for example, the Bank of Russia, Federal Tax Service). These are programs that independently generate reports, check clients, track suspicious transactions and monitor legal changes. Instead of doing everything manually, companies automate these processes, saving time and reducing the risk of fines. In the public sector, RegTech functionality is implemented in the SKIF-BP system for budget accounting automation. The research service will help identify processes for automation.
What are RegTech and SupTech?
RegTech is a technology for automating compliance with regulatory requirements by companies (bottom-up). SupTech (Supervisory Technology) is the use of technology by regulators (for example, the Bank of Russia) to control the market (top-down). SupTech allows remotely monitoring compliance, detecting violations and analyzing risks across the entire financial system. The SKIF-BP system implements RegTech functionality for government institutions. Read more about the approaches in the technologies section.
What is regtech in Russia?
RegTech in Russia is digital technology that helps companies and government institutions automate compliance with regulatory requirements. In Russia, regtech is actively developing within the framework of digital transformation of public administration. Main directions: automation of budget reporting (through SKIF-BP), procurement monitoring under 44-FZ and 223-FZ, control of targeted use of budget funds, as well as KYC and AML for financial organizations. The design service will help implement RegTech solutions in your organization.
What problems does RegTech solve?
RegTech solves the problems of compliance with regulatory requirements: it automates the preparation of reports for regulators, monitors transactions for signs of financial crimes, manages compliance risks and tracks changes in legislation. This reduces the cost of compliance and the risk of fines. In the public sector, RegTech functionality is implemented in the SKIF-BP system for budget accounting automation. Read more about the approaches in the technologies section.
What types of RegTech solutions exist?
RegTech solutions are divided into four main categories: financial risk and capital management (ratio calculation, stress testing); corporate governance, risk and compliance (GRC — Governance, Risk, Compliance); cybersecurity and IT security (incident monitoring, data protection); countering financial crimes (AML, CFT, KYC). In the public sector, RegTech functionality is implemented in the SKIF-BP system for automating budget processes. The research service will help determine priority automation areas.
How does the Bank of Russia use SupTech?
The Bank of Russia uses SupTech to collect and analyze reporting data, monitor the compliance of financial organizations with regulations, detect violations and assess risks across the financial system. Automated data collection and machine-readable regulation allow the regulator to respond faster to emerging risks. The SKIF-BP system implements SupTech functionality for state financial control.
Who uses SupTech?
SupTech is used by regulatory and supervisory bodies: central banks, financial market regulators, tax services and state financial control bodies. For example, the Bank of Russia actively uses SupTech tools to monitor the market and collect reports. In the public sector, the SKIF-BP system implements SupTech functionality for state financial control. Read more about the approaches in the technologies section.
Other terms in «Fintech and Public Finance»
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RegTech (regulatory technology)
RegTech is a technology for automating compliance with regulatory requirements and reducing compliance risks in the financial and public sectors.
All categories
SKIF-BP (budget automation)
Public finance management automation — data collection, processing and analysis.
Thematic research
Testing for compliance with the requirements of FSTEC and FSB of Russia.
Design and development of information systems
Design and development of automated information systems.
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