• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Business News Politics

Understanding regulatory technology and the role of regulators in Nigeria

Op-Ed Contributor by Op-Ed Contributor
April 17, 2019
in Politics, Tech News
Understanding regulatory technology and the role of regulators in Nigeria

Abstract digital composite of gavel and binary codes.

Share on FacebookShare on TwitterShare on Linkedin

Regulatory technology (“RegTech”) is an emerging field within the financial services industry that uses information technology to enhance regulatory processes. It places a premium on regulatory monitoring, reporting and compliance; thereby benefiting the finance industry as a whole.

The term RegTech refers to a set of companies and solutions that merge innovative technology and regulation to address regulatory requirements across industries, including financial services.

The Reg tech market map. Source: Comply Advantage

An overview of Regulatory Technology 

The regulatory changes and technological developments that followed the 2008 Global Financial Crisis are fundamentally changing the nature of financial markets, services, and institutions. These checkmate incidences of institutional failure to comply with demanding regulatory requirements. Regtech, thereafter, evolved to deal with changing dynamics of regulatory systems.

RelatedStories

Top 3 trending Web 3 games for action gamers in 2024 

Top 3 trending Web 3 games for action gamers in 2024 

November 9, 2024
PoS business

Nigerian inter-bank system, Zone to strengthen Nigeria’s POS transactions with blockchain 

August 20, 2024

The recent focus on RegTech has been on the horizon since the dramatic increase in financial services regulations and financial crisis, coupled with increased regulatory scrutiny in sectors such as financial services (regulatory breaches & misconduct), and even advertising (Facebook and Yahoo data breaches etc.).

Examples of regulatory technology applications are:

  1. Blockchain for seamlessly processing security transfers & transaction settlements
  2. Monitoring & Surveillance systems using Big Data for fraud & misconduct
  3. Natural language processing for interpreting legislation & automatically extracting requirements

RegTech is where

FinTech is explicitly purposed to address the requirement for financial services firms (banks, hedge funds, other asset management firms, stockbrokers, etc.) to be in compliance with all relevant, government-imposed anti-money laundering (AML) and know your customer (KYC) regulations and directives.

We have various aspects of RegTech which different classes of companies deal with. I have classified them by their area of focus for ease of understanding;

  1. Regulatory Reporting: A good example is Bearing Point, a leading international provider of innovative regulatory and risk technology solutions (RegTech and RiskTech) and services along the Regulatory Value Chain for the financial services industry.
  2. Risk Management: A typical example is Cloud Margin which uses Cloud-based Software as a service (SaaS) workflow tool for margin and collateral management.
  3. Identity Management & Control: An example is Accuity which provides services for payment efficiency, compliant transactions, bank counterparty insight, and AML screening.
  4. Compliance: eg Imadra.ai
  5. Transaction Monitoring: Example Identity mind which uses risk management solutions to track entities involved in every transaction

More Insight 

There are various AML/KYC directives in place across all global markets. In keeping up with this trends,therefore, human intervention alone is not sufficient to discover and report to the relevant authorities suspicious activity reports (SARs) or identify politically exposed persons (PEPs) and /or uncover whether the potential customer /corporation that a firm is considering ‘on-boarding’ is, for example, subject to political pressure (a PEP) or has previously committed fraud/bribery or any other form of criminal activity.

More on the uses of RegTech

RegTech helps Financial services screen potential customers against official Sanctions and Enforcement Watchlists (of which there are 100s), PEPs databases and millions of media sources for adverse and negative media concerning the individual in question.

Financial institutions employ Heads of Compliance and Money-Laundering Reporting Officers (MLROs) whose main tasks are to ensure that their firms do not breach the relevant regulations. When breaches do occur, financial firms can incur very large fines from the relevant authorities and also suffer from significant reputational damage. MLROs are legally responsible for ensuring that such events do not occur.

Good and effective RegTech helps MLROs sift through large amounts of data quickly and efficiently, in order to ensure that they are in compliance with the relevant statutory regulations and are therefore not exposing their firms to the risk of prosecution when they ‘on-board’ new customers.

Bearing in mind that the task of running these checks against so many persons/corporations, every day, is simply too laborious, RegTech is of great assistance to them by dramatically reducing the need for human intervention by automating much of these screening processes.

Key Participants in the Reg Sector include

  1. Regulator(s)
  2. RegTech firms
  3. Professional services firms
  4. Financial institutions

No segment in financial services is entirely independent. RegTech has significant overlap with the Identity, Data, KYC, Biometric, Compliance Training, Tax and Legal departments of the financial institutions.

Short Term benefits of Reg Tech

  1. RegTech can help to drive down the cost of compliance by simplifying and standardising compliance processes through automated mapping of regulatory risks to critical business processes, thereby reducing the need for manual and duplicate checks.
  2. RegTech utilises sustainable and scalable solutions, allowing for flexibility and growth as business needs change. Firms can move away from rigid enterprise risk management systems once the adopted RegTech solutions are stable.
  3. Advanced data analytics allows regulatory information to be analysed in various ways, including scenario analytics and horizon scanning for new regulations, thereby helping firms to proactively identify risks and issues.
  4. RegTech solutions, coupled with enterprise-wide governance, risk and control platforms, allow controls and risk frameworks to be linked seamlessly

Long Term benefits of Reg Tech

  1. RegTech will help to drive positive customer experiences. For example, a robust fraud detection platform could shorten the transaction life-span and improve consumer experience by reducing the number of false negatives.
  2. The same technologies that foster growth and promote customer experience can also be used to protect the financial health of institutions and prevent disruption of market agility and integrity.
  3. RegTech can provide greater confidence in meeting the board agenda on wider organizational governance, transparency and proactive reporting of risks and compliance.
  4. An expected application of RegTech will be to meet regulatory-driven data activities and support submissions to authorities. Early adopters will gain a competitive advantage by setting trends and gaining insights.

How Should Regulators Act?

RegTech solutions are being adopted by supervisors to cope more effectively with their new responsibilities and to inform policy development. RegTech enablement policies include digitizing regulatory handbooks, developing prudential reporting standards based around eXtensible Business Reporting Language (XBRL), and listing RegTechs complying with these reporting standards.

These approaches enable institutions to mitigate risk in selecting and working with new firms. Though regulators may not certify RegTech solutions, development of testing mechanisms such as sandboxes provide regulators with the opportunity to act as observers as part of a systematic validation of the effectiveness of new solutions.

Regulators should do the following to achieve success with RegTech:

  1. Initiate Open Engagement: The relationship between the regulator and the regulated must undergo a transition to become more cooperative, rather than adversarial. There is potential to work together with governments, technology startups, academia, technology service providers and industry associations to understand how technology is evolving, what it means for regulators, and how its adoption can be accelerated.
  2. Begin Innovative Ecosystems: Creating the enabling environment requires regulators to work with ecosystem stakeholders and invest in digital technologies. Helping regulators in this journey are RegTech initiatives that work with financial authorities in select markets to strengthen and accelerate innovative capabilities.
  3. Test run Potential Solutions: Regulators should play a catalytic role in the development and adoption of RegTech solutions. There is merit in starting small by testing potential technologies, tools and answers in a controlled regulatory sandbox environment, which allows regulators to engage entrepreneurs more quickly and at a lower cost.
  4. Transform Operations: The regulator of the future will be an analytics-driven organisation with data scientists, behavioural scientists and technology specialists playing a vital role. Legacy systems will have to be replaced by more agile and cloud-first platforms. This will also mean embedding the voice of the customer as well as the regulated entities into the regulatory process and driving technological deployment to break organisational boundaries restricting the free flow of talent and ideas.

Regulators should look at ‘Regulation as a Platform’, which is defined as a holistic approach in which regulators collaborate with businesses, government entities and citizens to drive innovation and improve compliance outcomes. Made possible through capabilities such as machine learning and analytics, the platform makes it easier for business and government to understand and work with regulation.

Regulation-as-a-Platform can be a catalyst for the development of innovative advisory applications. The Smart Advisor solution for regulators and business organizations, developed by Accenture Labs is an excellent example of reg-tech apps. This app leverages technology tools — such as conversational agents, predictive monitoring, sentiment analysis, and social risk analysis — to help officials at a regulator or a business organization make better decisions leading to improved outcomes for all stakeholders.

Conclusion

Nigeria needs innovative solutions to solve recurring problems. However, the regulators of the Nigerian business environment may not be ready for such solutions. A failure of the government to properly harness the advantages of regulatory technology would lead to an unstable regulatory response to Regtech. Therefore, the time to act is now.

About the Author: Adavize Alao a Nigerian Digital economy lawyer and a Corporate Governance professional with a master’s degree in Data protection.


Follow us for Breaking News and Market Intelligence.
Tags: BlockchainMonitoring & Surveillance SystemsOn the MoneyRegulatory Technology
Op-Ed Contributor

Op-Ed Contributor

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to info@nairametrics.com and we will publish it within 24 hours of approval by our editorial team.

Related Posts

Top 3 trending Web 3 games for action gamers in 2024 
Cryptos

Top 3 trending Web 3 games for action gamers in 2024 

November 9, 2024
PoS business
Sectors

Nigerian inter-bank system, Zone to strengthen Nigeria’s POS transactions with blockchain 

August 20, 2024
Federal Government unveils initiative to train 1,000 Nigerians annually in AI, blockchain
Sectors

Federal Government unveils initiative to train 1,000 Nigerians annually in AI, blockchain

July 24, 2024
Memecoins led the industry in Q2 2024 and total crypto market cap fell by 14% — Report
Cryptos

Memecoins led the industry in Q2 2024 and total crypto market cap fell by 14% — Report

July 17, 2024
NITDA, Digital skills
Sectors

FG to establish AI, blockchain research centres in Nigeria’s six geo-political zones

July 3, 2024
Tapswap
Cryptos

3 things we know so far about Tapswap launch date on Ton Blockchain 

July 1, 2024
Next Post
Nigerian Stock Exchange, sound, C & I Leasing Plc, NSE launches factbook, Top 10 stockbroking firms, Steroids from GTBANK, ZENITH Lift Nigerian bourse, as investors gain N94.2 billion , Steroids from GTBANK, ZENITH Lift Nigerian bourse, as investors gain N94.2 billion

Bond Yields Maintain Downtrend with Demand on Short Tenors

Comments 2

  1. Timothy Akintoye says:
    July 10, 2021 at 7:07 pm

    Your thesis is quite insightful and very expository. I am both impressed and enthusiastic about your logical expositions on the subject Regtech.
    However I want to ask know how to contact you sir. I would like to discuss privately with you on this same subject.
    If you don’t mind I can be reached on WhatsApp via 0703056777 or timothyakintoye@gmail.com
    Thank you
    Timothy Akintoye
    Ota, ogun state

    Reply
  2. Timothy Akintoye says:
    July 10, 2021 at 7:10 pm

    Your thesis is quite insightful and very expository. I am both impressed and enthusiastic about your logical expositions on the subject Regtech.
    However I want to ask know how to contact you sir. I would like to discuss privately with you on this same subject.
    If you don’t mind I can be reached on WhatsApp via 07030567177 or timothyakintoye@gmail.com
    Thank you
    Timothy Akintoye
    Ota, ogun state

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Zenth Bank
Emple
first bank
Zenth Bank









DUNS

Recent News

  • CBN launches new platform to boost $1 billion monthly remittances 
  • Report: Regulatory uncertainty deterring private capital investment in Nigeria’s Agriculture and Infrastructure sectors 
  • Hollywood’s “Sinners’’ crosses N500 million ticket sales in Nigerian cinemas 

Follow us on social media:

Recent News

CBN, forex

CBN launches new platform to boost $1 billion monthly remittances 

May 13, 2025
Report: Regulatory uncertainty deterring private capital investment in Nigeria’s Agriculture and Infrastructure sectors 

Report: Regulatory uncertainty deterring private capital investment in Nigeria’s Agriculture and Infrastructure sectors 

May 13, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics