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Last Updated : Feb 19, 2020 07:58 PM IST | Source: Moneycontrol.com

RegTech to redefine the way finservs do business

As the economy and the financial sector grows, it is foreseen that banks may put in place technology systems to effectively control risks.

Jaya Vaidhyanathan

In 2019, the FinTech sector witnessed numerous breakthroughs in terms of regulatory technology and digitization. Financial institutions were also seen investing in the enterprise solutions for internal controls as well as regulatory reporting. Looking back at regulatory technology, the role of regulators grew phenomenally focussing on financial institutions – from policing to guidance and beyond. Failures of large corporates and consequent NPA declarations at a massive scale have not just led to this regulatory thrust but have also catapulted RegTech from just reporting to a more proactive monitoring process on an ongoing basis, by:

1. Making compliance easier for banks through advanced technologies

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2. Enabling business and risk professionals take more effective decisions through availability of customer information with accuracy, currency and brevity.

In the recent past, banking reforms stirred the industry to relinquish age-old techniques of data analysis and modelling and adopt more rewarding technologies. One reason is that, with digitization, the volume of data has been increasing exponentially. The technology available with most banks is not adequate enough to process all of this data being generated at an unprecedented pace.

So, not only is an alarming amount of data going to waste, along with it, valuable insights are being lost to the industry. Luckily, technology advances have facilitated the creation of tools that can handle unimaginable amounts of data. The adoption of technologies like big data, AI/ML, fuzzy logic, natural language processing (NLP) and analytics, has changed the face of FinTech for the better.

In 2020, Safe and responsive banking will take centre stage in future. High-quality data, emerging technologies and a robust FinTech strategy will be central to assisting bankers resolve bad loan scenarios and frauds. The emphasis will be on accelerating problem detection and pre-emptive action.

As the economy and the financial sector grows, it is foreseen that banks may put in place technology systems to effectively control risks. Credit risk manifested as a system wide asset quality issues was an eye opener for all stakeholders – regulators, financial institutions, FinTechs, corporates and general public. Regulators now want to intervene before other risks can manifest and are now pushing for advances in regulatory guidance for model risk, liquidity risk, Asset Liability management and Operational Risk – across banks, NBFCs and HFCs. This is where risk-optimised banking experience comes in, drawing on the strengths of game-changing technologies to redefine the FinTech playground.

Our focus at BCT Digital, is to continue using disruptive technologies, like, AI/ML, Predictive analytics and Blockchain, to expedite India’s move to the next generation of banking. We have been effectively converging emerging technologies with banking and will endeavour to keep the momentum going.

The author is the CEO at BCT Digital.

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First Published on Feb 19, 2020 07:58 pm
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