Difference between Fintech and Regtech
Fintech and Regtech are two new technologies that are revolutionizing the financial sector and triggering established banking structures.
While all two of these financial services solutions are closely tied to one another and work well together, they are not the same thing.
What Is FinTech?
Fintech, or financial technology, refers to cutting-edge technology that strives to enhance and automate the provision of financial services. At its core, fintech uses specialized software and algorithms that are employed on computers and, increasingly, smartphones to help businesses, business owners, and individuals better manage their financial operations, procedures, and everyday lives.
The phrase “financial technology” generally refers to any development in business practices, such as the introduction of digital currency or double-entry accounting.
Fintech, which initially belonged to computer technology used in the back office of banks or trading organizations, has, however, evolved fast since the internet and mobile internet/smartphone revolutions. It currently encompasses a wide range of technical methods in personal and business finance.
Fintech, as it is used now, refers to a wide range of financial activities that can be carried out without a person’s help, such as money transfers, check to deposit with a smartphone, avoiding a bank branch to apply for a loan, saving money for a company start-up, or managing your investments.
What Is RegTech?
A technological system called RegTech, or regulatory technology, helps a bank, credit union, or other financial institution manage regulatory compliance. The sheer number of laws, rules, and regulations that financial institutions must implement, enforce, and monitor—from business continuity and vendor management to fair financing and security—regularly overwhelms them. RegTech helps to simplify the compliance process.
The Differences in Fintech
The goal of fintech is to provide disruptive, new technology that transforms how customers interact with financial institutions by delivering easy-to-use online services. It is a direct rival to traditional banking and is changing the way that consumers view those industries. With the help of this banking paradigm, customers can access quicker, more effective financial services.
The Differences in Regtech
Regtech is a distinct subset of Fintech that focuses solely on automating, managing, and improving an organization’s regulatory compliance processes. For AML organizations to efficiently monitor and handle regulatory processes, Regtech solutions have been developed.
What is The Difference?
Regtech and fintech are frequently seen as interconnected. Regtech is regarded as a subcategory of fintech in some circles. But, while having developed (and still developing) concurrently, they are distinct phenomena.
The simplest definition of fintech is the application of technology to the provision of financial services. Regtech, on the other hand, deals with the compliance and regulatory procedures that are necessary for any financial solutions. Regtech permits the monitoring of transaction and onboarading activities financial crimes to prevent Financial crimes, whereas fintech enables transactions to take place between end users and various financial institutions.
Regtech can be used efficiently to screen and monitor any number of entities and clients at various stages of the transaction process, monitor client activities, examine data, and assess risk. When properly applied, it can lower costs and complexity while improving risk assessment accuracy and compliance practices.