Behind the buzzword RegTech (regulatory technology) lies enormous potential for innovative digital solutions in the area of regulation. In the highly-regulated financial sector, banks and other service providers are continuously confronted with increasing regulatory requirements, which go hand in hand with risk management and compliance expenses. A large part of these costs arises in the areas of “The cash handling and anti-money laundering (AML) regulations” and “Foreign custom-ers and tax compliance”.Conclusion: If RegTech is implemented nationwide, supervision and compliance will improve, and will do so at significantly lower costs.

Greater efficiency and improved compliance quality through use of RegTech

RegTech refers to the use of technological tools to render internal compliance at financial institutions more efficient and effective. RegTech can be used to record and manage straightforward, recurring cases completely digitally. This significantly improves the work done by legal and compliance departments and allows internal compliance experts to concentrate on more complex issues. However, it is not only the potential to increase the internal efficiency that is essential. Equally important is the improvement of compliance quality through intelligent analyses in real time and the lower rate of errors. In addition to this comes a more efficient collaboration with the supervisory authorities.

Broad spectrum of application

Existing and new rules must be explicitly verified in terms of their suitability for implementation using the latest technologies. Among others, possibilities for implementation can be expected in the four areas risk management, regulatory reporting, customer identification and anti-money laundering, as well as the overarching corporate governance.

The Swiss Bankers Association's (SBA) position

RegTech solutions facilitate the efficient and effective implementation of regulatory requirements and therefore make a significant contribution to strengthening the competitiveness of the Swiss financial centre. The improvements achieved through the utilisation of technological tools must not be offset by the simultaneous tightening of regulation. On the contrary: regulation should be designed in a manner that makes compliance easy to digitalise both for banks and the supervisory authorities, for example through machine-readable legislation. This is the only way to achieve a digital regulation that is of benefit to all.