With new federal regulatory and compliance challenges like the CFPB rule on the horizon, more and more community financial institutions are exploring regtech in banking and finance. Regulatory technology, or regtech, can improve the efficiency and effectiveness of functions in many workplaces, and banks and credit unions are no exception.
Regtech is simply the use of technology such as AI, machine learning, natural language processing, and blockchain to improve the way businesses manage regulatory compliance. For example, in the pharmaceutical industry, manufacturers can use regtech to ensure that marketing complies with FDA requirements. Of course, banks and credit unions are highly regulated industries, and this is increasing. They must not only comply with regulations aimed at protecting the safety of the FI but also those protecting the customers/members. Keeping up with OFAC Russian sanctions, customer due diligence regulations, and consumer lending compliance expectations can be challenging. That’s where regtech for banks can help.
Regtech in banking can be used in a variety of ways to enhance monitoring, reporting, and compliance. It helps BSA Officers and AML/CFT staff collect more data faster, giving them access to real-time analytics and helping them form data-driven strategies for combatting financial crime. From transaction monitoring to detecting unusual activities and facilitating report filing for reviews and audits, regtech solutions for banks can streamline and optimize compliance operations.
If your bank is considering using a form of regtech like AML software for the first time, knowing its strengths and how it can help you save money on adhering to regulatory requirements is critical to getting buy-in from your organization.