9 Common RegTech Questions, Answered | Ascent

As a new technology, RegTech often gives rise to a host of questions — everything from “what is it?” to “how does it work?” to “how will it affect me?” We’ve collected a handful of the more common ones and answered them below.

Have a question that’s not on our list? Drop us a line at marketing@ascentregtech.com and we’d be happy to help answer it!

CASE STUDY: How a Global Top 50 Bank Secured Its GDPR Obligations Using Ascent

What does RegTech mean?

RegTech is short for regulatory technology and means exactly that — the application of emerging technology to improve the way businesses manage regulatory compliance. 

RegTech companies can be established GRC (Governance, Risk, and Compliance) platforms, start-up companies, and everything in between. They are united by their use of new, groundbreaking technology in the service of solving the problems of regulatory compliance.

As an industry, RegTech has emerged over the last few years to address the rising tide of regulation currently bogging down financial services. To learn more about the history and future of RegTech, check out our comprehensive guide, “What is RegTech and Why Does it Matter?


What’s the difference between RegTech, FinTech, and SupTech?

RegTech leverages emerging technology to create tools focused on solving the challenges of regulatory compliance. While the majority of existing RegTech solutions are currently focused on the world of financial regulation, RegTech could also be leveraged for other regulated industries — for example, healthcare.

FinTech, short for financial technology, is the application of technology to the challenges of financial services. Examples include blockchain, cryptocurrency, robo-advisors, and open banking.

SupTech, short for supervisory technology, is the application of emerging technology in service of improving how supervisory agencies conduct supervision. Just as RegTech leverages technology for regulated companies, SupTech leverages technology for the regulators.


Do RegTech solutions actually work?

This is a common question we hear from Compliance and Risk teams, and an understandable one. RegTech solutions can sometimes sound like something plucked right out of the future, and regulatory compliance is complex with — essentially — a non-existent margin of error. Teams can’t afford to take a gamble on a flashy trend. But with the right vetting process, teams can have confidence in the solutions they choose. 

The short answer to the above question is that yes, many RegTech solutions do work as promised and can provide real value, but we don’t expect (nor suggest) that Compliance and Risk teams simply take the promise of a RegTech provider at face value. Here are three ways for financial firms and RegTech providers to work together to bridge the trust gap.


Will RegTech eliminate my job?

At Ascent, we strongly believe that RegTech solutions work best not when they replace a human being but when they augment one. Our Knowledge Automation tools can comb through millions of lines of regulatory documents and, in a matter of minutes, tell you which obligations apply to your business — but they can’t tell you how to adjust your policies and procedures according to those obligations. That complex and vital work is where the human element comes in. The power of RegTech is that it liberates Compliance and Risk teams from mundane, time-intensive tasks like researching and aggregating regulatory updates so they can focus on those more critical and higher-level responsibilities.

In other words, then, no — we do not believe the adoption of RegTech solutions will eliminate your job. But as to the effects of the lack of adoption — especially in a marketplace where others are implementing solutions and gaining a competitive edge by doing so — that is a different matter.


What technologies do RegTech solutions use?

RegTech providers leverage a wide variety of emerging technologies in order to create their groundbreaking solutions. Here are a few of the most common ones:

  • Machine learning technology uses large data sets to “train” a system to complete a task. By treating the vast troves of regulatory documents that exist as raw data and then running that data through a trained algorithm, machine learning can automate one of the most burdensome of compliance processes — regulatory change management.
  • Natural language processing (NLP) allows a system to process and analyze text. NLP can translate regulatory documents into “raw data,” which can then be ingested by machine learning algorithms in order to turn that data into regulatory knowledge.
  • Blockchain technology can enable secure sharing of Know-your-customer data within or between organizations.
  • Voice-to-text translation technology can help FX firms decipher complex trader jargon and translate it to text, creating a searchable database. 
  • Robotic process automation tools can automate laborious manual processes, like the production of hundreds of disclosures asset management firms are required to generate throughout the year.


What kinds of RegTech solutions exist?

The RegTech universe is vast and ever-growing. To help make sense of all the solutions out there, we organize them into the following three categories:

Knowledge automation solutions are situated right at the very beginning of the compliance process. They use emerging technology to analyze regulatory documents and identify which obligations apply to a business, automating one of the most onerous of compliance processes — regulatory change management. In short, these solutions treat the vast troves of regulatory documents as big data and, by running that data through an AI, turn it into knowledge.

Some change management solutions act more as a news feed, aggregating information that may or may not be relevant. At Ascent, though, we believe technology can take us beyond that, and we’ve leveraged AI to create a visionary regulatory knowledge solution, which automatically delivers up the obligations and rule changes that apply specifically to your business.

Workflow management solutions, most often taking the form of GRC (Governance, Risk, and Compliance) platforms, can improve Compliance and Risk teams’ efficiencies by multiples. The right GRC platform can help Risk and Compliance teams manage their obligations by linking internal controls together in one place, provide visibility into processes and requirements, and offer instant auditing and reporting tools to track activities in the case of an audit.

Point solutions focus on one particular regulatory compliance problem — for example, automating anti-money laundering efforts. Point solutions are more limited in scope than knowledge automation or workflow management solutions, but when they meet the right need they can provide substantial value.


Can RegTech help me with GDPR?

The recent influx of data privacy legislation like GDPR and CCPA have added necessary protections for consumers but have increased financial institutions’ already crippling regulatory burden in the process. RegTech offers a solution, providing a way for financial firms to feel empowered rather than constricted by the rule of law. 

In a recent case study, a Global Top 50 bank reached out to Ascent for help in identifying its obligations under GDPR. Ascent was able to produce a complete list of of the bank’s GDPR obligations in mere minutes — and at a 99% cost savings. Here’s how.


Is RegTech just a fad?

This is an understandable concern to have, especially considering RegTech’s exponential growth rate. One could reasonably think that this sort of industry growth isn’t sustainable and is merely the build up before the burn out.

Chart of global RegTech investment

But while we at Ascent believe that RegTech is now entering its next phase — moving out of the innovations stage and into a production environment — and that this new phase will likely result in some marketplace casualties, RegTech is no more a fad than AI is.

The solutions RegTech provides are real and powerful. The question is not if it will reshape regulatory compliance, but how quickly. Here are some of our predictions for what’s ahead.


What is End-to-End Compliance?

End-to-End (E2E) Compliance is a fully traceable process that connects external regulatory events to a business’ specific obligations, then all the way through to that business’ internal controls, policies, and procedures. In essence, E2E Compliance leverages automation and technology to create a complete functional system of compliance. 

In an ideal E2E system, businesses could 1) be alerted to relevant new rules or changes to existing rules, 2) be directed to the exact parts of their internal controls or P&Ps that are impacted so team members can make the appropriate changes, 3) manage their obligations digitally, 4) easily produce records of their compliance activities, and 5) generate useful reporting dashboards. 

Learn how to get a head start in achieving E2E Compliance

READ ARTICLE: How Ascent Simplifies Regulatory Change Management with Automation


Enjoy this article? Subscribe to receive helpful content designed to help you win at compliance.


Leave a Reply

Subscribe to Cliff Notes

Our monthly newsletter keeps you at the forefront of compliance and technology.