Is AI changing the RegTech landscape?

With the recent launch of GPT-4 on March 14, the whole Generative AI buzz is skyrocketing. What took years for any technology to achieve, Gen AI has achieved in a matter of two months – reaching 100 million users.

While Generative AI can potentially be used to generate anything, let’s discuss what it has in store for RegTech.

As per the MarketsandMarkets report, the AI-driven RegTech industry is expected to be worth $19.5 billion by 2026, with a growth rate of 20.8%.

The increasing complexity of regulatory policies and the difficulties faced by Financial Institutions (FIs) in compliance is a major driver for the industry’s reliance on AI models and tools. The sophistication and simplicity offered by robust Machine Learning (ML) algorithms in Gen AI helps the RegTech industry navigate the above challenges.

Though the RegTech industry is already using AI tools, the recent inception and ubiquitous scope of Gen AI is redefining the AI use cases.

Gen AI can bolster the RegTech industry by:

• Analyzing huge volumes of data and identifying patterns, trends, and potential compliance risks
• Providing easy regulatory advice through chatbots
• Improving overall compliance quality through flexible learning models
• Understanding new regulations for gaps and contradictions with the existing ones through Natural Language Processing (NLP)
• Predicting the nature of fraudulent transactions
• Storing and managing data using cloud-based platforms

The list can go on endlessly.

Gen AI is just at the entry level of a new technological era and there are a lot of challenges associated with it. But to even consider the potential for Gen AI in RegTech seems enigmatic.

The Founder Institute (FI) Chennai 2022 organized an event to recognize the hard work of graduating startups and its founders. The event was held at our Chennai office. The graduating startups include ashaa.ai, Boombirds, Infenex Softech Private Limited, and Pyrum Clinic. The event also featured a keynote session by Rohini Manian, CEO, Global Adjustments, Founder, Propcierge.

That's it for now. See you again soon with all the need-to-know fintech updates!

Stay tuned. Stay curious.