As per industry reports for FY2021, 67% of globally significant financial institutions have a mix of in-house and externally developed Regtech solutions.

Dec 07, 2021

Kyzer Software is one of the leading banking software product companies, building Niche products in Trade Finance, Regulatory Reporting, and Compliance that works and assists in creating unique value and opportunity for the clients, workers, investors, and ecosystem partners. Below is a transcript from a recent interaction between team IT-Voice and Manish Bharucha, CEO of Kyzer Software:

Prateek: What is the vision behind Kyzer Software?

Manish Bharucha: Kyzer Software is an established company in Banking Automations and our vision is to be one of the global leaders with Trade Finance Process Automation and Regulatory Management. Envisioning new technologies as part of the global solution offerings.

Prateek: How has FinTech Regtech evolved in recent years?

Manish Bharucha: Regtech is the management of Regulatory processes within the financial industry. The main functions include Regulatory Monitoring, Reporting, and Compliance Management.

Even though Regtech as terminology is comparatively new, Regulatory Technology has been associated with global regulatory agencies, jurisdictions, and finance for a long time.

Each Country and region comply with different regulatory regimes. In a highly interconnected world, local events send ripples across the borders resulting in revisions of compliance frameworks or the introduction of new sets of regulations.

Going ahead the biggest challenges for Compliance practitioners would be to identify, manage and cope with continuing regulatory changes. The volume of data produced by the financial industry today is massive. Leveraging this data to extract customer insights and ensure fraud prevention requires analysis beyond the ability of any single team and usage of new technologies such as AI, ML, OCR, and Blockchain among others.

As per industry reports for FY 2021, 67% of globally significant financial institutions (G-SIFIs) have a mix of in-house and externally developed Regtech solutions.

Prateek: What are some of the challenges Indian Regtech companies face? How is the market changing?

Manish Bharucha: With reports of bank failures, money laundering, data privacy breaches, regulators have taken a much more active role than ever before. Financial institutions are now required to follow regulations in multiple areas including market risk, credit risk, liquidity, and operational risk, financial crime, payments and trade, regulatory reporting among others.

Following these regulations mean expenditure on compliance which global financial institutions may go up to billions per year. Banks and FIs, which were traditionally conservative and innovation followers, are now on the lookout for out-of-the-box, transformative, efficient, and cost-effective solutions.

Regtech companies are coming up with cognitive solutions which are more data-driven and would be able to predict, alert and suggest corrective actions.

Prateek: What is the scope of technologies like ML & AI in the Regtech industry?

Manish Bharucha: Regtech players using conventional and upcoming AI and ML technologies are acting as major compliance solution providers for the financial institutions ensuring savings towards penalties along with compliance costs.

Areas most impacted by Regtech in the coming years are Compliance monitoring, Financial crime, AML/CTF and sanctions, Onboarding and KYC, Cyber Security, and General Data Protection Regulations. Global firms are reporting that their risk and compliance functions are being fully engaged and consulted in their firm’s approach to Regtech.

Prateek: What do you think the Indian government can do to support Regtech startups?

Manish Bharucha: The role of governing regulatory bodies has evolved from the mere introduction of directives to ensuring implementation and adherence to the regulations. While some regulators use the baton of fines and penalties for enforcement, others have taken a step ahead of proactive engagement with Regtech players. The government efforts have also increased the confidence in the investor communities.

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