FinTech, RegTech, and SupTech

The financial sector is undergoing a technology-driven transformation that is reshaping how services are delivered, regulated, and supervised. Financial Technology (FinTech) refers to the innovative use of modern digital technology to enhance and automate financial services. Building on the FinTech revolution, Regulatory Technology (RegTech) and Supervisory Technology (SupTech) have emerged as specialized domains aimed at improving compliance and oversight through technology.

FinTech – Innovation in Financial Services

FinTech combines finance and technology to deliver faster, more accessible, and user-friendly financial services. Over the past decade, FinTech has transformed how people transact, borrow, invest, and manage money. It covers services such as digital payments, mobile banking, online lending, personal finance tools, InsurTech, and crypto- and blockchain-based solutions. Everyday activities like mobile wallet payments, online loans, digital insurance, and cryptocurrency trading fall under FinTech.

Key Areas of FinTech

FinTech spans almost all areas of finance:

• Digital payments: mobile wallets, UPI, contactless payments
• Banking: mobile/online banking and branchless neobanks
• Lending: peer-to-peer platforms and Buy Now, Pay Later (BNPL)
• Investments: robo-advisors, trading apps, wealth management tools
• Insurance (InsurTech): digital underwriting, claims, and distribution
• Crypto & blockchain: exchanges, digital assets, decentralized finance

These services rely on technologies such as smartphones, cloud computing, AI, big data analytics, and blockchain.

Impact on Customers and Industry

FinTech has improved convenience, speed, and access to financial services. Users can make payments, apply for loans, and invest anytime, anywhere. It has boosted financial inclusion by serving underserved groups like small businesses, low-income households, and rural customers.
Competition has intensified as fintech startups challenge traditional banks with low-cost, innovative services. Banks are responding by innovating internally or partnering with fintech firms to meet customer expectations.

Growth and Recent Developments

FinTech adoption surged in the 2010s and early 2020s, accelerated by smartphones, cashless trends, and the COVID-19 pandemic. Digital payments have seen massive growth; in India, UPI processed over 117 billion transactions in 2023. Globally, digital wallets, instant payments, and open banking frameworks are expanding rapidly.
AI and machine learning are increasingly used for fraud detection, credit assessment, automation, and personalized services. Cryptocurrencies and blockchain have introduced new digital assets and decentralized financial models, though they face volatility and regulatory scrutiny.

RegTech – Technology for Regulatory Compliance

As finance becomes digital and fintech products expand, regulatory compliance has grown more complex. Financial institutions must follow extensive regulations covering banking, securities, data privacy, and AML, with non-compliance leading to heavy penalties. Regulatory Technology (RegTech) refers to technology solutions that help firms meet regulatory and reporting requirements efficiently and accurately through automation and software-driven compliance.

What RegTech Does

RegTech digitizes and streamlines compliance tasks. Its key applications include regulatory monitoring and reporting, compliance workflow management, risk management, and KYC/AML checks. For example, RegTech tools can automatically flag suspicious transactions, verify customer identities using AI and biometrics, and update compliance processes when regulations change.
KYC and AML are major RegTech use cases. Automation replaces manual document checks and transaction reviews, enabling faster onboarding and real-time monitoring. Algorithms can screen large datasets against sanction lists and risk indicators quickly and consistently, reducing errors and delays.

Benefits and Importance

RegTech improves efficiency, reduces compliance costs, and enhances accuracy. Tasks that once took days can now be completed in real time. The global RegTech market is projected to exceed $22 billion by 2025, driven by rising regulatory demands and the need to cut compliance costs. Automation also enables timely alerts for breaches or fraud, helping institutions act proactively and avoid penalties.
RegTech further helps firms keep pace with frequent regulatory changes. Systems can continuously track new rules and integrate them into workflows, reducing the risk of inadvertent non-compliance and ensuring up-to-date adherence.

Real-World Examples

Companies like ComplyAdvantage offer AI-based platforms for AML screening and risk management, while Onfido uses biometrics and AI for digital identity verification. Such tools allow banks and fintechs to complete KYC digitally within minutes and automate regulatory reporting directly from internal systems.

SupTech – Tech-Enabled Supervisory Oversight

SupTech (Supervisory Technology) refers to the use of technology by regulators to supervise and monitor financial institutions more effectively. As defined by the Bank for International Settlements, SupTech is the use of technology for regulatory, supervisory, and oversight purposes. It helps regulators keep pace with digital finance and maintain financial stability and integrity.

Why SupTech is Needed

Traditional supervision relied on periodic reports and manual inspections, which are too slow for today’s real-time, data-driven financial system. New risks such as cyber fraud and algorithmic trading require faster detection. SupTech enables automated data collection, real-time dashboards, and AI-based analytics to identify risks early and improve oversight efficiency.

Key SupTech Applications

SupTech applications fall into two broad areas:

• Data Collection: Regulators use automated systems and APIs to collect standardized data directly from regulated entities, enabling near real-time monitoring. SupTech also improves data validation, consolidation, and visualization through dashboards and reports. Some regulators use AI chatbots to handle routine queries and consumer complaints, improving efficiency.
• Data Analytics: Advanced analytics and AI help regulators detect market abuse, fraud, money laundering, and compliance breaches by analyzing large datasets. SupTech tools are used for market surveillance, misconduct detection, and macro- and micro-prudential supervision, such as identifying systemic risks or vulnerabilities in individual institutions.

Benefits of SupTech

SupTech enables continuous, proactive supervision instead of periodic checks. Regulators can receive real-time alerts, detect risks early, and respond faster. Automation improves efficiency, expands supervisory coverage, reduces human error, and ensures consistent application of rules. It also lowers reporting burdens on regulated entities through standardized digital data submission.

Real-World Example – RBI’s DAKSH

A key SupTech initiative is Reserve Bank of India’s DAKSH, launched in 2022. DAKSH is a web-based supervisory system that supports digital data submission, inspection planning, incident reporting, and analytical dashboards. It enables real-time compliance monitoring and reflects RBI’s shift to technology-driven supervision.
Globally, regulators such as the Financial Conduct Authority, the U.S. Federal Reserve, and others are also adopting SupTech, supported by institutions like the BIS and World Bank.

SupTech and the Future of Supervision

SupTech is expected to become central to regulation, with greater use of AI, machine learning, and possibly blockchain for real-time oversight. The goal is data-driven, forward-looking supervision rather than reactive compliance checks.

International Benchmarks in RegTech and SupTech

As fintech and digital banking expand globally, regulators have adopted RegTech and SupTech to strengthen compliance and supervision. Key international benchmarks include Singapore, the UK, and guidance from global bodies.

Singapore (MAS – Monetary Authority of Singapore)

Monetary Authority of Singapore is a global leader in fintech regulation. It launched a regulatory sandbox in 2016 and активно promotes RegTech and SupTech. MAS aims to shift regulatory reporting to fully machine-readable formats, allowing data to flow directly from banks’ systems to supervisory dashboards via APIs. This reduces compliance costs and errors. MAS also uses analytics and NLP tools for risk detection and has issued AI governance frameworks such as FEAT principles and the Veritas framework to ensure responsible AI use in finance.

United Kingdom (UK – FCA & Bank of England)

The Financial Conduct Authority pioneered the regulatory sandbox in 2016 and conducts TechSprints to co-create RegTech solutions with industry. Along with the Bank of England, it has explored Digital Regulatory Reporting and machine-readable regulations. UK regulators also use SupTech tools like web-scraping to monitor product disclosures and AI-based analytics for market surveillance, including detection of insider trading and market manipulation.

BIS and FSB Guidance

International bodies such as the Bank for International Settlements and the Financial Stability Board promote RegTech and SupTech for financial stability. Their studies highlight benefits such as improved oversight, early risk detection, and better compliance. Examples include using machine learning on news and social media to detect banking stress, network analysis of payment systems, and AI-based review of regulatory filings. They also stress challenges like data privacy, integration costs, and skills development.