How RegTech innovations are taking the complexity out of compliance

25th October 2019

Regulatory compliance. It’s a thing – and a pretty big thing too in 2019. Banks and financial enterprises have long been operating across a highly regulated environment – but today’s tech-first business landscape means it’s changing fast. Really fast. Facing new regulatory demands on practically a daily basis, and addressing everything from money laundering to fraud to terrorist funding, there are big responsibilities on the shoulders of every business that has finance at its heart. Today we’re exploring how RegTech innovations are taking the complexity out of compliance.

The financial enterprise pays a heavy penalty for non-compliance with regulations – more than $100bn at last count. GDPR – the compliance regulations that have made the biggest noise (so far!) – is still fresh in most of our minds. Last year’s very visible countdown towards d-day, made sure we knew that if you were a business without your data ducks in a row, you could expect to be facing some very hefty fines. Now imagine you’re in finance, where every week comes a new set of compliance rules you need to meet or be damned. With a $270bn annual compliance spend across the industry, and an eye-watering $300bn+ in compliance fines paid by banks since 2008, it’s not going to come as a big surprise that there’s a healthy appetite for help – perhaps something to ease the compliance pain, to bring clarity to a very complex, murky, confusing landscape … help that’s going to make real inroads into untangling a very tangled area …

Finance and compliance – it’s complicated

The finance industry isn’t slow when it comes to innovation that disrupts – you’ve only got to look at the burgeoning crypto/blockchain space, the flourishing FinOps revolution or the remarkable wealthtech uprising to get a feel for where emerging technologies are driving real and lasting change across processes that have long passed their sell-by dates. But that sticky area of compliance, one in which every day brings a relentless onslaught of 200 regulatory changes, has its own unique set of challenges that have seen it playing catch-up with the rest of its financial compadres. No longer. Brace yourselves for RegTech – ready and willing to shine a light on the most complex of compliance demands, and heralding in an easier life for the compliance c-suite.

When it comes to compliance, many financial enterprises are still relying on cumbersome, time-consuming and paper-based ways of doing things. Activities such as updating and meeting a vast cornucopia of ever-changing regulations, and ensuring timely distribution and execution across an entire business, can very quickly get complicated, inefficient, error-prone, costly and unsustainable. No small wonder then that fintech innovators have risen to the compliance challenge with RegTech, built to do exactly what it says on the tin, and coming to a finance enterprise near you.

Projected to become a nearly $120 billion industry, and making up around 35% of global regulatory spending come 2020, RegTech is on the lips of every finance-focused business that’s looking to work smarter, more cost-effectively and more innovatively to compete in a cut-throat tech-driven business environment. Focused on addressing the ever-mounting risk and regulatory challenges they’re now facing, RegTech is ensuring that the progressive finance enterprise runs like clockwork around compliance, making it easier, more cost-effective, and less complex to meet compliance, identify potential compliance issues, and to customise compliance processes to meet the often very unique requirements for individual businesses. It promises a lot, and with new RegTech innovations entering the market on almost a daily basis, it’s delivering, driving the savvy finance enterprise towards a smarter, better way of navigating the often rocky compliance landscape:

The benefits of RegTech:

  • Bolsters compliance
  • Reduces risk
  • Lowers compliance costs
  • Enhances efficiencies
  • Strengthens customer protection
  • Delivers new and valuable business insights
  • Enriches customer service
  • Shines a light on new product and service opportunities

To say that RegTech is transforming the financial regulations and compliance space is a bit of an understatement. It’s on the cusp of creating a real revolution, a term we bandy around a lot, but one that often loses its meaning in doing so. Not so this time. Regtech is making massive inroads into addressing the pain points nearly every business has around compliance – from reports automation to misconduct identification, continuous risk monitoring to machine-readable regulations … and we’re only just getting started. Organisations that have been quick off the RegTech mark have found not only that they’ve been able to reduce their often vast spend on the physical infrastructure and huge management costs that compliance-meeting once demanded, but they’re also finding that their RegTech kit is providing highly-valuable customer insights and with them, a complete rewriting of business norms.

Regtech and the competitive advantage

Aside from simplifying compliance and supporting business to meet its ever-growing demands, the use of emerging technologies in the regulations space means that companies now have an unexpected goldmine in their laps – an exponential amount of highly valuable, super-insightful customer data. This means that the savvy financial enterprise is looking way beyond the traditional compliance goals of managing risk – we’re talking visibility of customer insights that have traditionally been hidden from view, now revealed and ready to inform strategic business decisions. In this way, RegTech is a real game-changer, ripe with potential to completely disrupt the industry’s traditional approach to compliance by creating real business value – providing customers with an enriched, highly personalised service and driving new, enhanced products and services.

Financial firebrands are already making the most of this unexpected RegTech by-product, using AI, blockchain and machine learning technologies that are shifting the focus from mountains of miscellaneous data to meaningful data. Working across diverse areas such as regulatory reporting, compliance management, and identity management and control, leading-edge RegTech solutions are offering highly beneficial insights across a company’s regulatory activities, performing fast, meaningful analysis of risk, automating compliance reporting and streamlining once cumbersome and time-consuming compliance activities. And everyone benefits – from stakeholders and employees to the suppliers and customers that enterprise is duty-bound by regulatory compliance to protect and serve. It’s a win-win:

  • San Francisco-based BehavioSec is a behavioural biometrics enterprise doing rather well by providing solutions that deliver digital identity authentication via both mobile and web apps – and at the same time remaining 100% transparent to end-users. The result is robust protection against transactions fraud by verification of users by the way they type, tap, swipe and hold their phones. Impressive, right? The software essentially calculates a risk score for each user based on their physical interactions with their device – and if the score is low, the user is invited to go through additional steps until their identity can be authenticated. Already used by several financial powerhouses, and winning awards on a regular basis, this one to watch.


  • With over $1.6-2 trillion in money laundered worldwide every year, less than 1% of it being caught, and resulting in a heart-stopping $321 billion in fines since 2008 for regulatory failings, the creation of anti-money-laundering software was only a matter of time. Hummingbird is one such creation to the rescue, focused entirely on ensuring crime doesn’t pay by tracking and identifying illegal financial activities across the financial ecosystem – and stopping it in its tracks when the proverbial alarm bells start ringing.


  • Risk management when it comes to compliance across cryptocurrencies is a big pain-point for the finance enterprise … the number of cryptocurrency firms investigated by the UK’s financial regulator has already seen an increase of 74% already this year. To the rescue, Chainalysis – crypto crimefighter extraordinaire – making big waves with financial institutions and governments around the globe by delivering the means to automatically comply with stringent regulatory requirements as they find themselves increasingly dealing with cryptocurrency firms. Supporting banks in understanding how they can build initiatives that allow cryptocurrency businesses to access their services and at the same time ensuring everything’s legal means greater business opportunities and that much sought-after competitive advantage mentioned above.


  • Privacy rules, such as GDPR, along with personal accountability protocols means that all digital recordings today need reviewed, supervised, audited and archived. But enterprises are struggling, predominantly because they don’t have the kit to both efficiently and affordably undertake these activities across what can often be vast volumes of voice and video recordings. Enter RegTech innovators Theta Lake, using AI and deep learning to help compliance teams spot risks in video, voice, and other rich media content, and supporting regulated firms to better streamline the supervision and retention of both.


According to Norton’s 2017 report, cybercrime was responsible for incurring $172bn worth of damage to 978 million consumers across 20 countries in the same year. That’s a lot of money, however you look at it, and it’s also a big problem. Global identity theft, often associated with endless data breaches and the resulting loss of PII (personally identifiable information), continues to spread, driving the growing demand for identity-based RegTech solutions. Step up to the plate, IdentityMind, a tool that continuously builds, validates, and risk scores digital identities via “DNA technology”, supporting enterprise to meet compliance requirements right across the entire customer lifecycle. Powered by old favourites AI and machine learning, IdentityMind is smashing the traditional ops issues that high volume manual processes have faced – with fantastic results.

RegTech beyond finance …

There can’t have been many of you reading this far that haven’t thought, “With so many advantages, doesn’t RegTech have something to offer beyond the finance space?”. Sure, there are myriad RegTech solutions addressing compliance and regulatory requirements that only exist across this one sector – but beyond finance, there are many other industries facing their own regulatory challenges. Challenges that RegTech can help address across compliance-heavy industries such as healthcare, manufacturing and pharmaceuticals, bringing real‐time insights, predictive analytics, and other unprecedented compliance capabilities.


When it comes to manufacturing and compliance, there’s much to consider when it comes to doing business in a digital marketplace. So when geo-expansion becomes the go-to strategy for long-term growth, the savvy manufacturing enterprise must ensure their products and services are meeting regulatory compliance across every region where they find themselves doing business. From FMCG to clothing to food and beverages to electronics, bringing products to new markets takes time, resources and money – and that’s just to get up to speed on the compliance side of things. Staying agile and on the right side of the law across ever-evolving, complex regulations that can differ greatly from country to country can be arduous labour-intensive work. So when RegTech holds the promise of making light work of very labyrinthine requirements, it becomes highly relevant, automating compliance endeavours and freeing up the time and resources to focus on production, growth, and new innovations.

Example of manufacturing RegTech solution


Last year, US hospitals and healthcare providers spent nearly $39bn – or $1,200 for every patient admission – on compliance-related activities. And no wonder – HIPAA, MACRA, GDPR, HITECH … much like finance, the healthcare sector is a highly-regulated industry in which failure to meet very stringent (and rapidly growing) compliance requirements can result not only in serious financial and reputational consequences, but which can damage lives too. The challenge? Data, and lots of it.

Advancing healthcare innovations, millions of connected medical devices across vast digital ecosystems, and exponentially increasing patient numbers mean only one thing – healthcare data is multiplying at rates which make successfully managing it a costly, time-consuming and increasingly complex activity. And it shows. Last year, the number of breached healthcare records tripled, but let’s face it, the opportunities for a breach keep on increasing as organisations struggle to manage these vast data volumes that, above all else, need to be robustly protected, both from a legal and moral point of view. It can’t come as a surprise then that healthcare is turning to the soothing hand of RegTech to help ease the pain of compliance, particularly when it comes to the privacy and protection of that highly personal, highly sensitive patient data. Enter RegTech, opening up transparent communications (remember blockchain!), automating vast swathes of compliance requirements, and freeing up healthcare compliance professionals to secure the data entrusted to their care. But that’s not all – the benefits RegTech has delivered across the world of financial compliance are just as applicable to healthcare- increased efficiencies, massive cost savings and total visibility of the myriad, and frequent regulatory changes across the sector. See an example of healthcare RegTech here.

Oil & Gas

Operating at national, international and global levels, and drilling, extracting, exploring and supplying, the oil industry has a lot of bases to cover – and with these bases comes the obligatory heavy tome of regulations which must meet to stay compliant, profitable, and on the right side of the law. What’s more, high industry standards, heated public debate around publicised oil-spills, and serious concerns around our environment have seen said regulations become some of the most rigorous regulations you’ll see in any industry. Yet much the same all sectors that struggle with compliance, the reasons remain (mostly) the same – the sheer volume and complexity of the regulations, the frequency with which they change, the lack of resources to fully dedicate to managing compliance, and the increase in likelihood of compliance-failure that all of the above results in. Bottom line? The oil and gas enterprise needs robust, flexible, cost-effective risk management solutions that not only support in meeting compliance but ensure that every facet with a part to play in the sector’s ecosystem, such as the entire supply chain, is supported in doing so as well. Why? When failure happens, the financial costs can be huge, the environmental impact cataclysmic, and reputations left floundering in the dust. The risks are real, and they’re big.

The good news? Risk mitigation courtesy of RegTech puts the smart oil and gas enterprise in a far safer, stronger position, ensuring compliance activities across operations, procedures, policies are effectively managed, controlled and met. You can almost hear the collective sigh of relief as oil and gas RegTech innovations make their way on to centre stage, automating tasks, providing clarity and visibility across myriad compliance obligations, – normally scattered across a vast digital ecosystem – together in one place, providing transparency across requirements. High-value employees can focus on what they’re good at, resources can be directed where they’re best served, risk can be managed, and everyone can get a good night’s sleep. You can see an example of Regtech in Oil & Gas here.


As we can see from these innovations, RegTech is really about reinventing a previously complex, defensive approach to regulatory compliance across a range of sectors, to an approach that’s broken free from these restrictions to shine a light on new business opportunities. The impact of the most innovative RegTech technologies will be measured in billions of dollars over the coming years, as early(ish!) adopters uncover the often highly valuable business benefits that it can bring. From saving millions in locking down money laundering, to streamlining service delivery that drives a very healthy ROI, to, of course, the millions saved by more easily being able to meet compliance requirements, this truly is a reinvention that’s putting the fun back into finance.

What to do next

If you’re planning on simplifying compliance as part of your digital transformation, Waracle have dedicated compliance expertise to support you in meeting your enterprise goals. Whatever your idea, and wherever you want it to take you, tell us about it and let’s get the conversation started!

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