Fintech has brought enormous changes to the financial services industry. Fintech is a product or service based on technological innovations specifically created for finance. The fintech industry is growing at an alarming rate and has raised questions to financial authorities about whether it requires regulatory or supervisory perimeter.
Moreover, whether new digital technology will fit the current regulations, how it will affect financial stability, and how to identify, monitor, and mitigate the risks of fintech innovations. Financial authorities created new approaches and policies to keep fintech in check. RegTech and SupTech are the approaches that have a deep impact on fintech. In this article, we will differentiate fintech, RegTech, and SupTech to understand how each technology works.
Financial technology also referred to as Fintech is a new technology created to improve and automate the delivery and usage of financial services. Fintech assists corporations, consumers, and company owners in managing their financial services better. Fintech also assists its users through specialised software and algorithms created specifically for managing finances.
Additionally, with the internet and smartphone revolutions, financial technology has grown rapidly. The technology that was only available on a computer and was accessible by banks or trading centres is now available on smartphones as well. Various financial activities such as checking bank balance, money transfers, applying for loans, and managing investments have become easy with fintech.
Regulatory technology or RegTech assists a bank, credit union, or financial institution to manage regulatory compliance. There are many laws, rules, and regulations that a financial institution must implement, enforce, and monitor to keep a smooth run. In simple words, Regtech helps a financial institute in streamlining the compliance process.
Regtech solutions come in all shapes and sizes. A developer develops a business solution to your needs whether it is complete compliance or single-rule solutions. With Regtech, institutions can create risk and compliance management strategies that fit their size, complexity, and requirements. You will never get a solution that fits all sizes as each institution is different in size and need.
Supervisory technology or Suptech are technological solutions that aid financial supervisory authorities in maintaining regulatory compliance. The supervisory agencies aim to manage risk in the financial sector and form regulations in response.
As financial companies have to follow thousands of rules and regulations, supervisory agencies make sure that they do comply. SupTech assists regulatory authorities with various technological tools to improve and manage efficiency through automation.
The fintech industry is increasing swiftly and has raised many questions in the minds of various financial advisors. Questions like whether the new technology will fit the current financial environment, how it can change the banking system, and how it disrupts financial stability have led to the birth of RegTech and SupTech.
RegTech is the technology used by various financial institutions to maintain their regulatory compliance. As you know, many rules and regulations must be followed by all financial institutions. A system that helps an institute to act per law is RegTech. While SubTech helps the financial authorities in managing regulatory compliance.
Thus, this article concludes on the difference between FinTech, RegTech, and SupTech. We hope to provide you with our assistance with other articles, so do check them out. Thank You!!!