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Fremont, CA: Regtech has appeared as a low-cost way for businesses to conform with changing regulations. According to Markets and Markets, the Regtech market is growing at a CAGR of 23.5 percent and is expected to reach $12.3 billion by 2023. According to the report, the key drivers driving the Regtech market's growth are rising compliance costs, the adoption of regulatory sandboxes, and greater access to Software-as-a-Service (SaaS)-based offerings.
Human Resource Requirements
To improve data quality, intensive human effort is required, and large corporations have employed thousands of heads for this purpose. It is estimated that risk management and compliance activities currently occupy 10-15 percent of the total workforce. Human resource requirements will grow exponentially in the future as data volumes, and compliance requirements increase. However, skilled professionals with relevant experience will be challenging to find, and organizations will be required to train the workforce.
Another issue for Regtech is data standardization. Documents are rapidly being replaced by data. However, while regulators have audited documents, the same cannot be said for data. Regulators worldwide can learn from Australia's Standard Business Reporting (SBR) as the first step toward standardization. The Australian government has made significant efforts to provide a list of data fields and taxonomy for reporting to multiple agencies, as well as to collaborate with the software industry to get software built using these data fields. As a result, there is more automation, annual savings in the millions of dollars, and a data-centric compliance model.
While Regtech appears to be a promising solution to compliance issues, not everything is as simple as it appears on the surface. There are still issues that need to be addressed. The most difficult challenge appears to be data. Automation can only deliver the desired results if the input data is clean and unbiased; otherwise, the results will be off-track. The same data that makes Regtech efficient is also its adversary because not all data is usable and must be processed before it can be used.
See also: Top HR Technology Companies