Regtech Development: How Technology Is Changing Governance with Market Compliance in The Era of Digital Finance

Аннотация

In the era of digitalization of financial services, regulatory compliance has become one of the key drivers for sustainable development of organizations. RegTech (Regulatory Technology) represents a new generation of technology solutions focused on automating, optimizing and improving the efficiency of compliance processes. This article discusses the development of RegTech, its key tools and its impact on financial institutions in the context of digital transformation. Keywords: RegTech, digital finance, automation, optimization, sustainability, compliance, digitalization, financial technology, risk management. preventing abuse. Regulation and supervision of Introduction: In the 21st century, the digital economy financial institutions remain critical components of has become an integral part of the global landscape, maintaining the stability of the financial system in the which requires continuous development and context of digital transformation. improvement. The integration of financial technologies into everyday life transforms habitual behavioral As a response to the challenges of digitalization, patterns and has a significant impact on economic regulators are actively implementing SupTech and processes. The need for the digitalization of the RegTech technologies aimed at automating and financial market is driven by the desire to increase the optimizing supervisory and compliance processes. The efficiency and transparency of operations, as well as to use of these technologies can improve the efficiency of expand access to financial services. However, the supervision of financial institutions, promptly identify introduction of new technologies is associated with the potential risks and ensure regulatory compliance in a emergence of specific risks, which actualizes the rapidly changing technological landscape. question of the role and place of the regulator in the Today's financial markets are undergoing rapid change process of digital transformation. Transformation due to digitalization, decentralization and data growth. should involve not only financial market participants, In this environment, traditional methods of risk and but also regulators themselves, who should adapt their compliance management are becoming ineffective. methods and tools to the new realities. Harnessing the Against this backdrop, RegTech - technologies for power of digital technologies for supervisory purposes automating and optimizing regulatory processes - is is a key aspect of ensuring the stability and efficiency of developing. According to Professor Douglas Arner: the financial system. "RegTech promises not only to increase efficiency, but Regulation of digital technologies in the financial sector also to radically transform the approach to financial requires a balanced and comprehensive approach, regulation" [1] [1]. taking into account both potential benefits and According to a number of researchers, the activation of possible risks. The legal framework should be designed the introduction of RegTech technologies was observed to foster innovation and development of the digital after the global financial crisis of 2008. This crisis served economy, while protecting consumer rights and as a catalyst for the tightening of regulatory International Journal of Management and Economics Fundamental 14 https://theusajournals.com/index.php/ijmef International Journal of Management and Economics Fundamental (ISSN: 2771-2257) requirements and increased control over financial Currently, there is a process of forming a generally market participants by regulators in various countries. accepted definition of the term RegTech, considered as The post-crisis period was characterized by a significant a new class of digital technologies (see Table 1). Most increase in the volume of regulations and academic papers associate RegTech with the requirements, which led to the need for many application of innovative technologies to achieve companies to expand their staff to monitor changes in certain goals, but the specific formulation of these legislation. goals varies from author to author. RegTech is used by both regulators and companies, with unified The regulators themselves also faced challenges as they technologies based on common sources of digitized were faced with an increased volume of information to information and data flows. RegTech is thus a process and monitor, which resulted in increased time comprehensive approach to automating and expenditures. At the same time, the increasing optimizing financial compliance processes for both complexity of technological innovations and the regulators and regulated entities. transformation of financial instruments have demanded more efficient and advanced monitoring and control tools from market participants. International Journal of Management and Economics Fundamental 15 https://theusajournals.com/index.php/ijmef International Journal of Management and Economics Fundamental (ISSN: 2771-2257) Source