The government and the legal industry are one of many transformed by technological advancements. New and improved technology capabilities are driving greater resilience, better client relations, and higher performance for many organisations across the UK.
Regulatory management software lets you keep informed of relevant compliance standards, frameworks, and regulations. The software assists you in streamlining your processes, integrating the controls and requirements imposed by these regulations into the rest of your departments, and staying on top to ensure compliance.
Before your company spends money on new products, you should know why you should invest in technology and how to begin integrating it into your current processes.
What Is RegTech?
According to the UK Financial Conduct Authority, the term Regulation Technology (RegTech) “…is a sub-set of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.”
These tools help businesses keep up with regulatory changes, automate risk management procedures, improve reporting to regulators, and protect against fraud. Even though it has found its most widespread use in the financial sector, RegTech is now beginning to spread to other industries where regulation is present.
RegTech presents a wealth of opportunities for policymakers and law firms. A company could increase its efficiency and scalability by implementing RegTech for its own compliance and business operations. Firms that demonstrate that they are innovating to provide clients with cost and quality benefits will stand out from the competition.
History of RegTech
The history of RegTech can be attributed to two key factors: the aftermath of the 2008 financial crisis and the rapid advancement of innovative technologies.
- Stricter Regulations: The 2008 financial crisis and other finance industry scandals led to stricter regulations imposed by governments worldwide, creating a high compliance burden for financial institutions. This has created a demand for technology solutions to help financial institutions meet these regulations.
- Technological Advancement: The rise of innovative technologies such as cloud computing, mobile devices, blockchain, and AI has opened up new possibilities for businesses across industries to improve processes. This has fuelled the growth of RegTech as there is a need to make compliance and regulation more manageable and efficient.
What does RegTech do?
RegTech solutions, like Law Notion, use advanced technologies like the cloud, open data models, AI, and ML to improve the regulatory process to fulfil ongoing compliance needs. It either works with existing in-house compliance, audit, and risk workflows or replaces them with constantly updated technological solutions. Risk management protocols control to actively mitigate risk, global regulation updates, and daily alert checks are all part of the service solutions.
Are there several types of RegTech?
Maintaining regulatory compliance can be expensive, but RegTech solutions aim to reduce this cost by automating as many associated processes as possible. RegTech includes a diverse variety of products and services, some of which can be broken down into the following types:
Operational Risk Management
This type of RegTech, which focuses on risk, identifies gaps in a firm and potential regulatory drawbacks. It includes identifying, assessing, controlling, and monitoring potentially risky behaviour and developing contingency plans and processes to minimise their impact.
This type of RegTech helps firms in meeting their regulatory reporting responsibilities. It includes generating reports required by regulatory authorities, monitoring regulatory changes and submitting notices on time.
This type of RegTech helps firms store, organise, and analyse vast quantities of data necessary for legal compliance. It provides organisations with a comprehensive view of their risk profile, enabling them to make decisions based on data regarding risk mitigation and compliance.
This type of RegTech ensures that firms are aware of any new regulations that may affect them. Since rules and regulations are subject to frequent revision, your firm’s personnel and technology must be flexible enough to keep up.
What industries use RegTech?
RegTech is mainly used in the financial services industry for regulatory compliance and risk management. Other sectors that use RegTech include:
- Government, Legislation
- Law firms
- Supervisory agency
- Researcher in parliaments
What is the importance of RegTech?
Lawyers and policymakers indeed play crucial roles in regulatory systems. For instance, they might work with the regulator to shape regulations and advise clients on how to implement and shape those policies—complying with regulations and maintaining competitive markets require close collaboration between government agencies, businesses, employees, and legal counsel.
A knowledge of RegTech is essential for more than just advising clients on the latest innovations for meeting their compliance needs. RegTech’s impact on the entire legal and regulatory system has become increasingly clear over the past decade. Here are the ways in which RegTech influences the legal industry:
- Instead of manually reviewing and requesting large datasets regarding venture investments, mergers and acquisitions, and equity deals every few months, law firms could utilise RegTech to request information, study the initial reaction, and conduct the initial analysis.
- RegTech can monitor the uploading of documents and make decisions in real-time. The technology could generate weekly or daily status reports with preliminary assessments.
- Lawyers must communicate quickly and easily with colleagues and clients and collaborate effectively to complete complex legal work. Using software to manage your legal matters can help you create step-by-step processes, build a checklist for routine tasks, and adhere to critical deadlines.
The advantages of RegTech
RegTech offers several advantages for organisations in various industries. These benefits include:
Improved productivity: Manually monitoring the constantly shifting regulatory landscape is nearly impossible. With RegTech, it can automatically analyse and apply new legal requirements to a company’s unique setup in real-time.
Increase accuracy: Manual processes are prone to human error. By incorporating RegTech, a firm can achieve more streamlined and error-free reporting.
Reduced Risk: Regulation tools not only help in ensuring compliance, but they can also identify and mitigate risks such as cyberattacks, fraud, and other suspicious activities. It allows the organisation to respond immediately to security and legal threats.
Cost Savings: Starting with RegTech may appear to be costly, but it will result in long-term savings. Once operational, these implementations can liberate internal resources, enhance output quality, and reduce the risk of noncompliance fines.
The Future of RegTech
RegTech has completely revolutionised a wide range of industries. Since the introduction of the term “Fintech,” everyone has been discussing the use of technology and innovation to digitise and rethink specific industries from a professional standpoint. Legal teams and government can transform their roles and support RegTech, clients, and regulators by interpreting, evaluating, and navigating the landscape of RegTech.
Other publications have extensively discussed that new technology will have an increasingly disruptive impact on the legal profession, just as it has on many other economic sectors. But instead of viewing this as a threat, lawyers need to view it as an opportunity.
Technology can help perform time-consuming, tedious, structured, or repetitive tasks, such as research and simple drafting. Finding the right solution for your company and its clients to manage the demands, complexity, and cost of compliance in a dynamic regulatory setting is essential.
Law Notion solution is designed for lawyers and policymakers to work better. It helps manage new compliance programmes more effectively and gain insights from regulations efficiently. Therefore, you can devote more time to strategic and commercial problem-solving, where your greatest value resides and better serve your client.
To learn more about how our solutions can help you manage your clients’ compliance, contact Law Notion.