Page 27 - Insurance Times November 2023

transformation to the world of regulatory compliance. regulatory and compliance needs. RegTech systems in risk
Regtech tools monitor online transactions that take place management support risk data aggregation for capital
in real-time to identify irregularities or issues in the digital planning and liquidity reporting, modelling, scenario analysis
payment sphere. Any outlier is sent to the fintech company and forecasting with stress testing.
to analyse if fraudulent activity is taking place. RegTech uses
new technologies such as Artificial Intelligence, Machine RegTech solutions in the areas of know your customer (KYC),
Learning and Robotic Process Automation (RPA) among real-time AML screening, AI/ML-based fraud prevention,
others, to simplify regulatory reporting, management, and and real-time compliance monitoring had the highest level
compliance. It offers numerous benefits both for regulators of adoption by banks. Other areas, which are generating
and regulated entities. While a single piece of technology interest are, cloud computing for data standardisation,
often overlaps into different areas, there are generally six cleansing and provenance audit and board level governance,
different categories of technology: communication, analytics dashboard and predictive analytics for advanced
electrical, energy, manufacturing, medical and risk management and end-to-end automation regulatory
transportation. reporting, AI/ML-based e-KYC, Real Time AML, sanctions
screening and compliance monitoring.
Regtech in Insurance Sector:
Regtech Vs Regulatory sandbox:
RegTech allows insurance compliance professionals to work
over and around legacy infrastructure impediments to Sandbox is a new innovation of customised reporting
connect and analyse information more smartly in order to platform for firms looking to be compliant with the RBI,
understand where the organization may have risks and SEBI, IRDAI, PF etc. It also provides access to instant insights
exposures based on a larger data population than was based on trading data so that decision-makers can make
previously accessible. RegTech is designed to help firms informed data-driven decisions and monitor best execution
automate the more routine compliance tasks and reduce practices. It also serves the purpose to fulfil the long
operational risks associated with meeting compliance and awaiting need of FIs for data governance-producing,
reporting obligations. A perfect example of regtech is the experimenting with, and sharing data within small, isolated
electronic Know Your Customer (eKYC) process by which groups before deciding if that external data is worth
banks verify the identities of the people who open new cleansing and ultimately adopting for use throughout the
accounts digitally. This KYC process is a major part of the organisation. A good data governance model enables
banking powerful sandbox analytics.
Sandbox will enable more FinTech and Insurtech
Reason for rise of Regtech in India: experimentation within a well-defined space within all the
A variety of factors has fueled this growth, but the main one regulatory and governance support. Sandbox can help
is "looming regulatory burden." The majority of regtech innovators to increase efficiency, manage risks and reduce
companies work with clients in the financial services industry; go to market time within the regulatory framework.
it's the most heavily regulated, after all. RegTech has the
potential to transform the Fintech industry in India by Conclusions on Regtech:
making it more efficient and effective. It can help financial By facilitating protection against regulatory risks, RegTech
institutions save time and money by automating compliance increases investor confidence. In case of most RegTech
processes. The implementation of RegTech in the Fintech offerings, the usage of automated intelligence to detect red
industry in India is still in its early stages. Regtech Market Is flags and control regulatory reporting has reduced the
Projected to Grow at A CAGR of 17.55% During The Forecast incidence of manual error, thereby increasing investor
Period, 2023-2029. The RegTech Market is segmented based
confidence. RegTech (regulatory technology) is a class of
on component, deployment type, technology, application, software applications for managing regulatory compliance.
end user and region.
Companies invest in RegTech as a way to save time and
money, allowing resources that were once devoted to
Regtech Vs Fraud & Risk Management: regulatory compliance to be diverted elsewhere, once
Risk management solutions enable automated credit RegTech takes over those functionalities. In the Insurance
assessments to understand optimal exposure and limits. arena Regtech is gearing up for providing services in the field
Whereas collaborating with RegTech solutions can deliver of Underwriting and Risk management along with
cost savings, and increased return of capital along with all appropriate claims management and reduction of Fraud. T

26 November 2023 The Insurance Times