International banks pay $70 billion a year to make sure they follow every law and comply with every regulation in every country in which they do business. That’s according to Let’s Talk Payments, a financial technology website. And that expense is going to rise to $120 billion within three years. That’s an extraordinary and onerous burden on the world’s financial system. Fortunately, some companies are finding ways to reduce that problem by assuming responsibility for keeping up with all the legal changes themselves, then providing that as a service to banks at a cost far lower than the banks can afford to do it themselves.
The demand for this regulatory finance, or regtech, is so high, financial journalist Jeff Yastine writes about for the readers of his newsletter Total Wealth Insider.
Banks in the United States must pay $10 million or so to comply with requirements they know and track the activity of their customers, to thwart money laundering and fraudulent activity. In the European Union, that cost is $1 billion. Yet the regtech companies can accomplish it for $300,000. That’s because they specialize in their niches, and use the latest technologies, including Artificial Intelligence, blockchain and advanced software. Read more about Jeff Yastine at investmentu.com to know more.
Financial regulators have noticed the existence of these new regtech companies, and are welcoming them as partners to keep banks compliant with the regulations. The Office of the Controller of the Currency (OCC) suggested giving some appropriate regtech companies access to special national bank charter. This would make them authority like a bank. After all, although it’s the job of regulators to look for violations, they don’t want trouble. The regtech companies make their jobs easier as well.
— Jeff Yastine (@Jeff_Y_Guru) November 16, 2017
Jeff Yastine worked as a senior correspondent and anchor for PBS Nightly Business Report from 1994 through 2010. That gave him a ring side seat for all the important business events that happened during that period, including the Dot Com Boom, the Tech Wreck and the Financial Crisis. He interviewed many business leaders and expert investors, learning the secrets to their success. He was nominated for the 2007 Business Emmy for stories on how America’s infrastructure of highways and bridges is going downhill due to lack of funding. He reported on the Deepwater Horizon oil spill of 2010 and visited Cuba for a story on how foreign investment in that communist country has affected its economy. He reported on the handover of the Panama Canal in 1999. Check:https://www.stockgumshoe.com/tag/jeff-yastine/