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The Emergence of RegTech 2.0: From Know Your Customer to Know Your Data

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Abstract

The regulatory changes and technological developments following the 2008 Global Financial Crisis are fundamentally changing the nature of financial markets, services, and institutions. At the juncture of these two phenomena lies regulatory technology or “RegTech” – the use of technology, particularly information technology, in the context of regulatory monitoring, reporting, and compliance. RegTech to date has focused on the digitization of manual reporting and compliance processes, for example in the context of know-your-customer requirements. This offers tremendous cost savings to the financial services industry and regulators. However, the potential of RegTech is far greater – it could enable a close to real-time and proportionate regulatory regime that identifies and addresses risk while also facilitating more efficient regulatory compliance. We argue that the transformative nature of technology will only be captured by a new approach that sits at the nexus between data, digital identity, and regulation. The development of financial technology (“FinTech”), rapid developments in emerging markets, and recent pro-active stance of regulators in developing regulatory sandboxes, represent a unique combination of events, which could facilitate the transition from one regulatory model to another.

Suggested Citation

  • Arner, Douglas W & Barberis, Janos & Buckley, Ross P, 2016. "The Emergence of RegTech 2.0: From Know Your Customer to Know Your Data," Journal of Financial Transformation, Capco Institute, vol. 44, pages 79-86.
    • Handle: RePEc:ris:jofitr:1576
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    Citations

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    Cited by:

    1. Johan Solms, 2021. "Integrating Regulatory Technology (RegTech) into the digital transformation of a bank Treasury," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(3), pages 191-207, September.
    2. Johan Solms, 2021. "Integrating Regulatory Technology (RegTech) into the digital transformation of a bank Treasury," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(2), pages 152-168, June.
    3. José Parra Moyano & Omri Ross, 2017. "KYC Optimization Using Distributed Ledger Technology," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 59(6), pages 411-423, December.
    4. Stefan Zeranski & Ibrahim E. Sancak, 2021. "Prudential supervisory disclosure (PSD) with supervisory technology (SupTech): lessons from a FinTech crisis," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(4), pages 315-335, December.
    5. Xiaohui Chen, 2023. "Information moderation principle on the regulatory sandbox," Economic Change and Restructuring, Springer, vol. 56(1), pages 111-128, February.
    6. Vincent Schlatt & Johannes Sedlmeir & Simon Feulner & Nils Urbach, 2021. "Designing a Framework for Digital KYC Processes Built on Blockchain-Based Self-Sovereign Identity," Papers 2112.01237, arXiv.org.
    7. Jinying Li & Ananda Maiti & Jiangang Fei, 2023. "Features and Scope of Regulatory Technologies: Challenges and Opportunities with Industrial Internet of Things," Future Internet, MDPI, vol. 15(8), pages 1-27, July.
    8. Anil Savio Kavuri & Alistair Milne, 2019. "FinTech and the future of financial services: What are the research gaps?," CAMA Working Papers 2019-18, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    9. Michael Becker & Kevin Merz & Rüdiger Buchkremer, 2020. "RegTech—the application of modern information technology in regulatory affairs: areas of interest in research and practice," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 27(4), pages 161-167, October.
    10. Ross P. Buckley & Douglas W. Arner & Dirk A. Zetzsche & Rolf H. Weber, 2020. "The road to RegTech: the (astonishing) example of the European Union," Journal of Banking Regulation, Palgrave Macmillan, vol. 21(1), pages 26-36, March.

    More about this item

    Keywords

    financial regulation; regtech; regulatory technology; fintech; regulatory reform; compliance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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