As the new
year approaches, it is possible to make educated predictions about what the
financial landscape will look like in the coming year and possibly beyond. Although everyone has their own opinion, most banking and financial experts would agree on one: compliance will be of great importance to financial institutions as they
face a more complex regulatory landscape.
We will
see a rise in the adoption of Regulatory Technology (RegTech) in the financial
industry during 2024. According to Juniper Research, the RegTech sector is
projected to reach 127 billion in the next 12 months.
The use of
technology to improve regulatory processes in industries with strict
regulations is nothing new and Regulatory Technologies initially appeared
as a response to the increase in financial sector regulations following the
2008 housing crisis.
RegTech
companies achieve their goals and develop their systems using several types of technologies in the form of
Cloud-Based Software, predictive analytics and machine learning. These technologies have been used to aid in areas such as
risk management and regulatory reporting among others.
Enter AI
In 2024 and beyond, Artificial
Intelligence (AI) may be destined to lead the charge in terms of impactful change.
AI is
expected to stand in the frontlines of RegTech in financial institutions in 2024 for
several reasons, including:
Transformative potential:
We have seen AI’s ability to analyze vast amounts of data quickly and accurately.
By converting raw data into actionable insights, AI can help financial
institutions detect and prevent fraud.
The AI tools created by RegTech
companies can also allow financial brands to conduct real-time monitoring. This
helps to reduce the risk of regulatory breaches and penalties.
Automation: Compliance is associated with countless resource consuming, repetitive actions. AI
can efficiently manage repetitive tasks such as risk identification and
mitigation, fraud detection, and anti-money laundering protocols, which will
reduce the resources needed to effectively manage the goal.
AI can also automate the process
of reporting compliance issues quickly and without human error. The technology offers
the potential to transform compliance from a necessity to a strategic
advantage. Financial companies can free up time and resources for other
activities by using AI to handle certain tasks.
Prediction: Through the use of AI
models, companies can quickly read and interpret data from any type of source
and provide predictive analysis.
By using machine learning
algorithms, AI-powered RegTech solutions can analyze substantial amounts of
data to find patterns that might pose a compliance risk. This approach empowers
institutions to address issues before they escalate, avoiding
potential penalties as a result.
Proven Ability
AI has
changed the financial services sector by allowing for regulatory and operational
improvements. The technology has proven its ability to support risk management
and compliance endeavors and these factors will contribute to AI’s growing
role in regulatory technologies during 2024.
Applicable to a wide variety of use cases, AI is an incredibly useful tool. As an example, we at Fintel Connect have
created a marketing tool designed to automate and monitor content to allow
financial brands to catch any content discrepancies before regulators do,
saving time and manual effort in this process.
A Delicate Balance
The financial space needs to
ensure compliance while supporting a high-quality product for customers. On one
hand, they want to bring accessible, innovative solutions to the market while providing great service. On the other, they need to achieve it without
jeopardizing the integrity of their business by not adhering to regulations.
To achieve this delicate balance,
financial firms will invest in regulatory technology to help them with
compliance. According to a report from Juniper Research, the spending on RegTech by financial
institutions and other industries will increase by 124% in the next five years,
from $83 billion in 2023 to 207 billion in 2028.
AI, in its many forms, can be used
for a wide range of tasks, from auditing transactions for potentially fraudulent
activity to ensuring a financial institution’s marketing is compliant. The adoption
of regulatory technology with AI in the financial sector is only going to keep
growing.
As the new
year approaches, it is possible to make educated predictions about what the
financial landscape will look like in the coming year and possibly beyond. Although everyone has their own opinion, most banking and financial experts would agree on one: compliance will be of great importance to financial institutions as they
face a more complex regulatory landscape.
We will
see a rise in the adoption of Regulatory Technology (RegTech) in the financial
industry during 2024. According to Juniper Research, the RegTech sector is
projected to reach 127 billion in the next 12 months.
The use of
technology to improve regulatory processes in industries with strict
regulations is nothing new and Regulatory Technologies initially appeared
as a response to the increase in financial sector regulations following the
2008 housing crisis.
RegTech
companies achieve their goals and develop their systems using several types of technologies in the form of
Cloud-Based Software, predictive analytics and machine learning. These technologies have been used to aid in areas such as
risk management and regulatory reporting among others.
Enter AI
In 2024 and beyond, Artificial
Intelligence (AI) may be destined to lead the charge in terms of impactful change.
AI is
expected to stand in the frontlines of RegTech in financial institutions in 2024 for
several reasons, including:
Transformative potential:
We have seen AI’s ability to analyze vast amounts of data quickly and accurately.
By converting raw data into actionable insights, AI can help financial
institutions detect and prevent fraud.
The AI tools created by RegTech
companies can also allow financial brands to conduct real-time monitoring. This
helps to reduce the risk of regulatory breaches and penalties.
Automation: Compliance is associated with countless resource consuming, repetitive actions. AI
can efficiently manage repetitive tasks such as risk identification and
mitigation, fraud detection, and anti-money laundering protocols, which will
reduce the resources needed to effectively manage the goal.
AI can also automate the process
of reporting compliance issues quickly and without human error. The technology offers
the potential to transform compliance from a necessity to a strategic
advantage. Financial companies can free up time and resources for other
activities by using AI to handle certain tasks.
Prediction: Through the use of AI
models, companies can quickly read and interpret data from any type of source
and provide predictive analysis.
By using machine learning
algorithms, AI-powered RegTech solutions can analyze substantial amounts of
data to find patterns that might pose a compliance risk. This approach empowers
institutions to address issues before they escalate, avoiding
potential penalties as a result.
Proven Ability
AI has
changed the financial services sector by allowing for regulatory and operational
improvements. The technology has proven its ability to support risk management
and compliance endeavors and these factors will contribute to AI’s growing
role in regulatory technologies during 2024.
Applicable to a wide variety of use cases, AI is an incredibly useful tool. As an example, we at Fintel Connect have
created a marketing tool designed to automate and monitor content to allow
financial brands to catch any content discrepancies before regulators do,
saving time and manual effort in this process.
A Delicate Balance
The financial space needs to
ensure compliance while supporting a high-quality product for customers. On one
hand, they want to bring accessible, innovative solutions to the market while providing great service. On the other, they need to achieve it without
jeopardizing the integrity of their business by not adhering to regulations.
To achieve this delicate balance,
financial firms will invest in regulatory technology to help them with
compliance. According to a report from Juniper Research, the spending on RegTech by financial
institutions and other industries will increase by 124% in the next five years,
from $83 billion in 2023 to 207 billion in 2028.
AI, in its many forms, can be used
for a wide range of tasks, from auditing transactions for potentially fraudulent
activity to ensuring a financial institution’s marketing is compliant. The adoption
of regulatory technology with AI in the financial sector is only going to keep
growing.
