Blockchain technology and regulatory technology solutions to enhance regulatory compliance.
Regulatory technology solutions require the study of various techniques, especially those that can be employed in collecting, analyzing and tracking data, extracting information, and then using them in preparing regulatory reports in real time, which play a major role in building more efficient and effective regulatory solutions, and facilitating supervisory operations for regulators, which face Today, there is a great challenge facing the rapid developments in the financial technology sector, and the transfer of many financial services from banks to separate entities, which increased the need to speed up the response and create new methodologies that are more advanced and in line with the continuous developments.
Blockchain technology is one of the technologies that can be employed to store, manage, track and secure data using encryption techniques, which is an essential part in the formation of blockchain technology, to ensure the validity of data and speed up the process of verifying and obtaining it, with the possibility of linking it to data analysis techniques, big data and other technologies to achieve integration in solutions innovative.
How Blockchain Technology Contributes to the Development of Regulatory Technologies:
Although the employment of modern technologies in the financial technology sector has brought about tremendous development and remarkable improvements in several functional and security aspects, the new fraud methods devised by fraudsters require the development of more accurate solutions to detect and prevent them, and this is what financial technology companies seek by creating solutions New to carry out the operations of collecting customer information, verifying his identity, storing it securely, speeding up the audit process, and easily retrieving it when needed.
When studying the structure of blockchain technology and the way it works in storing information in a clear sequence and an easily accessible template, this indicates the possibility of using it to reduce and address fraud, which often involves two main factors:
Customer identity: Blockchain technology gives the possibility of verifying the customer’s identity by retrieving and browsing the record of his activities on the entire blockchain network and not on a specific platform only, while ensuring that no change or deletion of any of that information takes place, which contributes to facilitating obtaining the information required by Financial technology companies, which make great efforts to verify the identity of their customers and verify the validity of the information provided before granting them permission to access and benefit from their services.
Transparency of transactions: Transparency is one of the most important features of blockchain technology, as a record of all transactions is stored and secured using encryption algorithms, which can be used to view and track transaction details, which meets the need of financial technology companies to track every transaction and review all information related to it, including the identity of the sender And the future, the date of the transaction, the time of its occurrence, and other information in order to reduce fraud, guarantee the rights of customers, and build a reliable environment.
Regulatory technology solutions based on blockchain technology offer many advantages, which contribute to simplifying the processes of compliance with laws and regulations that financial technology companies are subject to in light of the continuous changes and rapid growth in the sector, as these changes bring many requirements and obligations that financial companies must comply with with it.
One of the characteristics of blockchain technology that contributes to simplifying regulatory compliance processes is smart contracts, which can be programmed according to pre-defined conditions and rules and then published on the network, and used to automate processes:
Monitoring: Smart contracts monitor the current situation, compare it to pre-listed conditions, and verify compliance with regulatory rules, which contributes to enhancing risk management and reducing the risk of non-compliance.
Preparing reports: Smart contracts can be programmed to take certain actions whether the listed conditions are met or not met. For example, smart contracts can prepare detailed reports that are automatically submitted, for review when needed.
Interoperability between financial technology companies and regulators’ systems
Blockchain technology provides its users with a public network and an open record of all previous transactions, which can be linked to external systems and used in various operations, such as collecting and analyzing data, creating studies on it, and preparing reports. This feature gives regulatory authorities easy access to information, evaluate companies, and verify their compliance with regulatory rules, and also facilitates Fintech companies should share reports with regulators.
The contributions of blockchain technology are not limited to what was discussed, as it can also be used in other aspects that support the development of regulatory technology solutions and make them more compatible with the rapid developments in financial technology solutions, especially in managing information and data and providing one common source through which details can be reviewed. Transactions and verification of compliance with statutory rules and regulations.
Written by: Aisha Al-Jabri