In the aftermath of the financial meltdown of 2008, usher in a plethora of new rules and regulations.
Banks, private equity, hedge funds, and other financial institutions were now faced with increased regulatory compliance costs and expense.
Regulation Technology (RegTech) startups grasp this opportunity and provided solutions to Reduce Financial Institutions’ Burden of KYC (know your client), AML (anti-money laundering) and regulatory reporting.
RegTech use of cloud computing technology delivered via a Software as a Service (SaaS) model so that businesses can easily process KYC documentation quickly and efficiently, at a lower cost.
The arrival of Blockchain spelled a technology that is picture-perfect for regulatory compliance.
Having a single integrated platform or share ledger and i’s inherent immutability will allow;
- Application of proof-of-process for compliance is automated and quick, from 3-4 weeks to 1 week or less.
- Introducing one share ledger would remove the requirement for each to hold its own duplicate records reducing cost by at least 20%.
- Information available to all on the network would mean an assured audit trail all the KYC processes would be communicated and updated in real time, create an efficiently seamless stream of knowledge throughout.
- A smart contract on the blockchain share ledger will self-regulate and audit transaction to verify compliance and easily detect a potential scam or fraudulent transaction.
Sharing KYC information enhances the customer experience as there is one authentication process reduces burden, faster onboarding and less work for customers.
RegTech applications using Blockchain can significantly improve the ability to resolve compliance issues, address internal audit requirements while enhanced customer experience and cost savings.