Regulation and compliance are necessary for the financial industry, but that doesn’t mean the current format isn’t inconvenient. Blockchain and its role in the regtech ecosystem could emerge as the solution to flaws.
Whether it is a big bank like HSBC or a small organization, the cost of compliance is high, and getting higher with time. Currently, all the global financial regulators are putting efforts to collaborate with organizations that employ software-as-a-service or cloud computing technologies to assist businesses in complying with laws more efficiently and cost-effectively.
Moreover, banks can use blockchain regulation technology to provide transparency of their operations to their users, offer cross-border transactions in real time and faster processing of payments. Blockchain also helps accelerate back-office settlements, inter-bank transactions and reduce the overall cost of doing business.
By successfully creating the analytics tools demanded by banks to comply with the laws and regulations, the regtech companies save the bank's time and capital. In this way, the banks implement an effective analytical tool to conform with rules set out by financial authorities. Customer onboarding screening, enhanced due diligence, transaction monitoring, blacklist screening, change in customer prospect status are the areas where blockchain technology plays a crucial role in handling AML and KYC-related issues.
This antiquated practice may be addressed with trustless blockchain technology, which allows users to authenticate their identity securely while still maintaining control over their data. Additionally, blockchain can help verify the identity of a politically exposed person through biometrics analytics and social media analytics.The second significant service offered by regtech providers is monitoring the clients’ transactions in real-time.
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