Bachelor Thesis 2023

A Thesis on

“A STUDY ON REGULATORY TECHNOLOGY

(REGTECH) ADOPTION AMID FINTECH
INDUSTRIES”

By
Zaminhussain Munjee
URN: 2020-B-23092002

UNDER THE GUIDANCE

OF

DR. SHIKHA SINGH

ADYPU, Pune

A report submitted in partial fulfilment of the requirement of

Bachelor of Business Administration - International Business

Batch 2020-2023
1
 Bachelor Thesis 2023

ACKNOWLEDGEMENT

Dr. Shikha Singh handled and managed the subject Bachelor Thesis. I am grateful and indebted to
her for sharing her knowledge and offering me genuine and valuable advice and support. The
dynamism, vision, authenticity, and motivation have all left an indelible mark on me. Nevertheless,
she taught me how to conduct research and present my findings in the most concise and clear way
possible.

I would like to express my sincere thanks to the Dean of School of Management of Ajeenkya DY
Patil University for giving me the opportunity to be part of such an esteemed institution and acquire
new learning experience by working on this project. .

On this platform, I now want to take this opportunity to thank everyone who helped me finish this
thesis, for implementing the research methods with me, and for their unconditional support,
enthusiasm, and consideration; this accomplishment would not have been possible without them.

Zaminhussain Munjee

2
 Bachelor Thesis 2023

CERTIFICATE

This is to certify that the Bachelor Thesis titled “A STUDY ON REGULATORY

TECHNOLOGY (REGTECH) ADOPTION AMID FINTECH INDUSTRIES” is the original
research work of Zaminhussain Munjee, URN No. 2020-B-23092002. Batch 2020-2023.

A student of Bachelor of Business Administration- International Business. He/ She has completed
this Bachelor Thesis under my guidance and supervision for the partial fulfilment of the award of
degree of BBA-IB, at School of Management, Ajeenkya D Y Patil University, Pune. This research
work has not been submitted earlier to this University or any other Institution for the fulfilment
of the requirement of any course of study.

.
Signature of Faculty Guide: Signature of External Examiner

Dr. Shikha Singh Name: Dr. Esha Bansal

Date: Date:

Signature of Dean, School of Management

Name: Dr. Latha Krishnan

Date:
3
 Bachelor Thesis 2023

DECLARATION BY THE CANDIDATE

I declare that the Bachelor Thesis Report entitled “A STUDY ON REGULATORY

TECHNOLOGY (REGTECH) ADOPTION AMID FINTECH INDUSTRIES” is submitted by
Zaminhussain Munjee and it is based on original research conducted by me during the period
from January 2023- March 2023 and I further declare that there is no falsification to the best of
my knowledge.

I further declare that the material obtained from other sources has been duly acknowledged in the
report.

Signature of the Student:

Name: Zaminhussain Munjee

URN NO.: 2020-B-23092002

Date:

4
 Bachelor Thesis 2023

TABLE OF CONTENTS

Contents Page No.

Acknowledgement 6

List of Table and Illustrations 7

Abbreviations 8

Abstract 9

Introduction 10

Review of literature 12

Research Methodology/design 14

Result and analysis 15

Discussion of implications 24

Conclusion 29

Recommendation 30

References 31

Appendices 32

Glossary 33

Plagiarism report 34

5
 Bachelor Thesis 2023

LIST OF TABLE AND ILLUSTRATIONS

Sr no. Items Page no.

1. Table No. 1 15

2. Table No. 2 16

3. Figure No. 1 17

4. Figure No. 2 to Figure No. 11 18 - 22

5. Figure No. 12 24

6. Figure No. 13 25

6
 Bachelor Thesis 2023

ABSTRACT

The aspiration of the thesis assesses the potential consequences to ensure that the organization's
consumers and customers receive rewarding benefits. In addition, as money laundering and terror
funding tactics evolve, financial institutions must work harder to ensure they are in compliance
with their regulatory settings and capable of preventing criminals from abusing their services.

Businesses must look for appropriate financial crime technology and software solutions in order
to identify the risks they face and respond to changing rules. This branch of financial technology
is known as regulatory technology (RegTech).

The RegTech is based mainly in Fintech, as it is a broad category that includes many different
technologies. RegTech gives banks and financial institutions significant advantages, allowing
them to stay competitive while also reducing human error by automating critical compliance
operations that would otherwise be handled manually.

To comprehend, the main objectives of the study is to perceive the use of Regulatory Technology
(RegTech) in FinTech industries and products. To understand the relationship between the
consumption of RegTech in various FinTech markets and the expected outcomes. Examining the
evolution of RegTech. Investigating and analyzing the benefits and drawbacks of incorporating
and utilizing such technology in a business. To comprehend how regulatory technology can be
made available to other growing or established businesses. Post-use of RegTech in an
organization to track outcomes.

The data was collected with a grouping of primary and secondary research papers utilizing
figures, facts, statistics, and information from research of other countries, markets, and industries
utilizing RegTech to then examine the potential implications of propositions.

7
 Bachelor Thesis 2023

ABBREVIATIONS

1. FinTech- Financial Technology

2. RegTech- Regulatory Technology

3. ATM- Automated Teller Machine

4. SWIFT- Society for Worldwide Interbank Financial Telecommunications RBI- Reserve

Bank of India

5. KYC- Know Your Customer IT- Information Technology

6. BBPS- Bharat Bill Payment Scheme

7. SEC- Securities and Exchange Commission

8. TRAI- Telecommunications Regulatory Authority of India IRDA- Insurance

Development and Regulatory Authority

9. CEO- Chief Executive officer

10. GST- Goods and service tax

11. NBFC- Non banking Financial Company

12. NCMC- National Common Mobility Card

13. RTGS- Real Time Gross Settlement

14. PIN- Personal Identification Number

8
 Bachelor Thesis 2023

INTRODUCTION

RegTech, or regulatory technology, is a new sector that's employing modern technological

innovations to enhance regulatory processes. RegTech is the application of modern technologies
such as artificial intelligence and machine learning to overcome regulatory challenges, primarily in
the financial services industry. RegTech is defined as "a subset of FinTech that focuses on
technologies that may facilitate the delivery of regulatory requirements more efficiently and
effectively than existing capabilities" by the UK Financial Conduit Authority.

The concept is also used to describe businesses that have focused in this field. RegTech firms assist
larger corporations with their regulatory compliance obligations, increasing efficiency, lowering
risks, and improving customer experience. RegTech is currently expanding into other regulated
businesses, with its primary application in the financial sector.

Nevertheless, the back story of RegTech emerges from in order to restore public trust in the
financial system after the 2008 global financial crisis, regulators around the world overhauled their
oversight of large corporations and financial institutions. Many of the new compliance regulations'
provisions proved burdensome for financial institutions' existing compliance workflows. There has
been a strong demand for the use of modern technology such as artificial intelligence, which has
already brought about radical changes in many industries, and businesses have begun to recognize
the potential of such technology in the area of regulatory compliance.

RegTech emerged as a distinct industry in response to the unprecedented regulatory burden

imposed by the global financial crisis. Financial institutions were initially skeptical of RegTech's
potential, especially given the relatively new technologies involved. RegTech companies, which
have received enormous support from global investors, have gradually but steadily developed
efficient solutions that can solve real-life regulatory compliance issues and have now begun to enter
the mainstream.

In particular, RegTech firms focus on accelerating data analytics, improving data quality, and
producing critical reports for sharing with regulators and assisting the company's decision-making
process. RegTechs use cutting-edge technology to completely or partially automate regulatory
compliance-related processes. Many of these processes are currently carried out using traditional
methods, which incur high costs and necessitate a large number of employees. RegTechs make
regulatory compliance processes more efficient and effective by utilizing cutting-edge technologies
such as Artificial Intelligence, Machine Learning, Big Data, Business Intelligence, and Block chain

9
 Bachelor Thesis 2023

RegTech services benefit businesses by increasing efficiency, improving process accuracy,

increasing internal alignment, and improving risk management. Businesses are recognizing the
value of these solutions, and their adoption is steadily increasing. Meanwhile, RegTech firms are
benefiting from increased investment in the sector. RegTech firms like Tookitaki are working to
create a world in which financial institutions can easily comply with regulations while unlocking
business value without sacrificing the consumer experience. Tookitaki provides anti-money
laundering software that can alleviate financial institutions' concerns about all aspects of AML
compliance.

RegTechs have a diverse and growing set of applications, such as Know Your Customer (KYC),
this case focuses on regulatory requirements in terms of ensuring adequate customer knowledge
when they are employed and throughout the customer lifecycle. Various KYC procedures are
enforced by regulators to assess customer risk and prevent money laundering. RegTech firms can
assist financial institutions in developing robust KYC compliance programs by utilizing modern
technologies such as machine learning, deep learning, and Big Data.

Secondly, Transaction Monitoring is the process by which financial firms analyses each money
transfer that passes through their systems for potential financial risk. While legacy rule-based fraud
detection and prevention solutions are becoming inefficient and ineffective due to a high volume
of false positives, new-age RegTech solutions can conduct proper risk factor assessments and
identify those truly risky transactions. Transaction monitoring solutions powered by AI and
machine learning can both reduce false alerts and identify 'unknown cases' or anomalies that legacy
systems cannot.

Thirdly, Anti-Money Laundering (AML) screening is a key component of AML compliance. It

refers to the process of evaluating the risk of existing or potential financial institution customers
and transactions for possible criminal links. Financial institutions constantly check the names of
their customers (both individuals and businesses) against watch lists (sanctions lists, PEP lists,
adverse media data). They also perform transaction screening to verify customer identities and
continuously monitor their transactions. This will assist financial institutions in identifying risk in
senders and recipients, as well as other aspects of a transaction.

In continuation, Global investors recently deposited a significant amount of investments into the
RegTech sector. According to Fintech Global, global RegTech investment increased to US$8.5
billion in 2019 from US$1.1 billion in 2018, representing a 66.7% CAGR. From 2015 to 2019, the
average deal size increased more than 3.5 times, from US$7.5m in 2015 to US$26.8m in 2019.

10
 Bachelor Thesis 2023

REVIEW OF LITERATURE

Numerous preceding publications and reports about RegTech and Fintech growth, customer
adoption towards online banking, customers' attitudes toward using fintech services with the safety
of RegTech, and their reviews have been published by various authors and publishers. The growth
of the finance sector is apparent to anyone looking; there are numerous FinTech start-ups in the
market that have adopted the use of RegTech technology, and the industry is highly likely to
accelerate its growth in the near future. The Indian economy, which was previously based on cash,
has now been boosted by FinTech. According to research, three key factors influence RegTech
usage in the FinTech industries: User friendly interface, Privacy and reduce premiums, the sway of
product quality and brand credence and Diversity and applications.

User friendly interface:

Previous research has shown that users of the system are significantly improved by its perceived
ease and simplicity of use. This hypothetical situation may show that when individuals find
RegTech products and services helpful and simple to use, their attitude towards technology will
also improve. According to a research by Chuang in Taiwan, consumer sentiments on the use of
RegTech products are closely correlated with ease of use and convenience. RegTech has some
benefits, including time savings, practicality, ease of use, and convenience. The convenience and
use of the banking system also had a favorable effect on the banking system, according to studies
on the Yemeni banking industry. There is a rise in user attitudes and intentions towards using
internet banking.

Privacy and reduce premiums:

Cost savings is the main advantage that companies and developers gain while creating Regtech
apps. Each time a piece of code is produced for an application, the likelihood of an error
increases. Due to the frequent upgrades, this can result in subpar performance, program failures,
and higher maintenance expenses. RegTech applications are made so that programmers can reuse
code for several applications. As a result, building different types of scripts takes less time and
money, and developers are free to concentrate on other crucial facets of application development,
such as design, security, and speed. RegTech, when utilized appropriately, has the potential to be
extremely beneficial. Online resources and mobile applications (apps) help speed up, simplify,
and improve the convenience of handling your funds.
RegTech may even assist you in reaching your financial objectives. The majority of businesses
that have embraced RegTech applications have prioritized user security and privacy. Nonetheless,
it's crucial that you choose and use RegTech while taking proactive steps to safeguard your
private information and financial accounts. Series of publications (Privacy and security when
using RegTech and FinTech apps). Because RegTech is a branch of FinTech, it lowers costs for
both businesses and developers as well as customers. Several processes have been automated,
which has been shown to be more effective in areas like credit risk management with more
accuracy and less human involvement, lowering service expenses and enhancing customer care.
11
 Bachelor Thesis 2023

The sway of product quality and brand credence:

Trust can also encompass perceptions, expectations, or feelings about specific things. A person's
experience can determine how much trust one person has in another, which can have an impact on
both the involved parties of a transaction. A person won't do anything unforeseen that might have
unfavorable effects or put their business partners at risk (Gulamhuseinwala, I., Bull, T. & Lewis, S.
2015). RegTech applications prevent them from being widely used yet; occasionally, customers of
Fintech services must visit websites to seek for services. Brands can assist consumers in fostering
diversity when the standards and related roles of products are unclear. Businesses can use their
brand's reputation for value, such as its stability, longevity, and dependability, to combat challenges
with consumer trust.

Trust among consumers is positively impacted by brand and reputation (Gomber, P., Kauffman, R.
J., Parker, C., and Weber, B. W. 2018). By the application of new technology, customer purchasing
attitudes will be directly influenced by consumer perceptions and information about the experience.

Consumers' purchasing attitudes will be more favorable when they have greater trust in products
and services. Customers will have a favorable opinion of the company if they think the information
it offers is accurate. Hence, the term "brand and service trustworthiness" The term "service" refers
to "the extent to which firm reputation, website quality, and system security have an impact on
customer behavioral intents to utilize RegTech Services" throughout the study. (He, M.D., M. R.B.
Leckow, Haksar)

Diversity and applications:

Regtech is active in a number of financial and regulatory fields. Employee monitoring, compliance
data management, fraud protection, and audit trail capabilities are a few of the projects that Regtech
automates.

A Regtech company cannot simply work with any financial institution or regulatory body because
it may have various objectives and approaches. The Securities and Exchange Commission (SEC),
whose current concern may be an increase in insider trading activities, or an investment firm
concerned with its employees' online behavior, for instance, may not establish a relationship with
a Regtech that seeks to identify credit card fraud in the digital payments ecosystem.

12
 Bachelor Thesis 2023

RESEARCH METHODOLOGY/DESIGN

In the research report, combined primary and secondary data are employed. Descriptive research is
a type of quantitative survey that gathers numerical data in order to analyze it objectively for a
selected respondents. With the help of this well-liked market research tool, we may gather and
explain the characteristics of demographic groupings. Thus, the word "descriptive research" refers
to the research questions, study design, and data analysis carried out on that subject. In addition to
a survey and questionnaire to ascertain consumer preferences, the descriptive research methodology
was used to ascertain customer opinions regarding RegTech services.

Convenience sampling is a random sampling technique in which analysts select their sample purely
for simplicity. Because the sample is not chosen at random but rather by the researchers, not every
member of the population has an equal chance of taking part in the study. The sample method used
was convenience sampling. Respondents provide their responses in survey research via
questionnaires, forms, or votes. They are a well-liked method for gathering respondent input in
market research. Quick and easy data collecting technique when time is at a premium, convenience
sampling is advantageous because it is a quick and easy procedure.

There are few standards to follow and convenience sampling enables investigators to swiftly obtain
large samples, it is preferred by many scholars. In accordance with the research plan, the data was
divided into two categories: primary data and secondary data. Using exploratory research, such as
a survey of RegTech customers and non-customers, the primary data was acquired. In addition to
academic papers, secondary data were acquired from internet sites, papers, blogs, and publications.
Spreadsheet is used in a variety of ways to analyze data in order to identify the main factors
influencing the RegTech spread. Surveys of a wide range of retail consumers of financial products
and services have been used to assist research, which is also based on an in-depth analysis of the
literature. This research additionally sought to figure out whether respondents were aware of, used,
and willing to use certain RegTech financial services.

The employed technique examined the Fintech industry's attitude and adoption of RegTech in Pune
from the standpoint of growth. Popular websites, Google articles, and a company survey were used
in the investigation. They were utilized to gather information from reviews conducted by various
customers using RegTech software. A custom questionnaire was also incorporated in the
methodology. The purpose of the poll was to gauge how deeply customers are influenced by
RegTech in Fintech businesses. Primary data: A survey conducted in Pune, India provided the
research's primary data. The research sample size is 150 respondents.

13
 Bachelor Thesis 2023

RESULT AND ANALYSIS

To gauge how satisfied people are with adopting fintech in their daily lives, a series of questions
was created. In addition to a survey and questionnaire to ascertain consumer preferences, the
descriptive research methodology was used to ascertain customer opinions regarding Payment
Systems and RegTech services.

Strongly Disagree Neutral Agree Strongly

Disagree Agree

My inability to use digital 19 44 51 30 6

payment services is due to
security risks
14 56 65 10 5
It is hazardous to use a digital
payment service
I utilize digital payment services, 12 30 48 52 8
my personal information can be
misused. Thoughts?
I gain connection to this service 5 10 19 78 38
whenever and wherever I am.

Online payments can be made 5 16 31 78 20

quickly using digital payment
services

I feel electronic providers of 7 14 63 53 13

payment services are reliable

The choice of digital payment 3 1 61 69 16

services is largely shaped by
the service provider's
reliability

14
 Bachelor Thesis 2023

2 4 41 81 22
Reputation of the service
provider has large effect in
choosing Online Payment
solutions

35 71 32 4 8
It will take me a lengthy period
to figure out how to operate the
digital payment service since
it's so technical
6 5 16 79 44
Digital payments are pragmatic
and simple to operate

Table No. 1: Retorts of Respondents

15
 Bachelor Thesis 2023

RESULTS AND ANALYSIS

The table above indicates that,

As per 35% of respondents, the digital payment service is hazardous. 65% of respondents said they
don't utilize digital payment systems because of security concerns. 58% of them worry about their
personal information being misused. According to 80% of respondents, digital payment systems
are widely available and the quickest option to make payments online. Just 55% of respondents
believe that a digital payment service provider is unreliable, and 75% of respondents say that
reputation and integrity are the most crucial considerations when selecting a digital payment
service. 85% of individuals believe that digital payment services are practical, user-friendly, and
simple to understand. While employing RegTech services, perceived risk, relative advantage, trust,
and convenience are all relevant considerations.

Total Variables = 150

Description: Samples:
Gender- Male 113
Female 37
Total 150
Age Groups- 11 – 20 34
21 – 30 69
31 – 40 22
41 – 50 16
51 – 60 5
61-70 4
150

Table No. 2: Provides respondent census data.

16
 Bachelor Thesis 2023

For the purpose of examining the use and adoption of RegTech across FinTech industries for
clients, as shown in the above table, the sample size of respondents is 150. A variety of
variables were considered, including age and gender, male, female, and age restrictions from
11 to 70 were the categories used. To better understand how Fintech and RegTech applications
are used and adapted, the majority of the data was gathered from adolescent and mid-
aged people.

AGE CHART

150 Respondents

Figure No. 1 Age Group of respondents

Proportions of survey respondents responding to questionnaires. The preference section of the

questionnaire asked respondents on their attitudes towards the Fintech industry's use of RegTech.
Participants could select whether they Neutral, Agree, Strongly Agree, Disagree, or Strongly
Disagree with the question. Consumers were required to provide feedback for each question.

17
 Bachelor Thesis 2023

Below shown in the Figures are the Pie Charts of all the questions and their percentage wise
responses of 166 customers.

My inability to use digital payment services is due to security risks

Figure No. 2

It is hazardous to use a digital payment service

Figure No. 3

18
 Bachelor Thesis 2023

I utilize digital payment services, my personal information can be misused. Thoughts?

Figure No. 4

I gain connection to this service whenever and wherever I am.

Figure No. 5

19
 Bachelor Thesis 2023

Online payments can be made quickly using digital payment services

Figure No. 6

I feel electronic providers of payment services are reliable

Figure No. 7

20
 Bachelor Thesis 2023

The choice of digital payment services is largely shaped by the service provider's reliability

Figure No. 8

Reputation of the service provider has large effect in choosing Online Payment solutions

Figure No. 9

21
 Bachelor Thesis 2023

It will take me a lengthy period to figure out how to operate the digital payment service since it's so technical

Figure No. 10

Digital payments are pragmatic and simple to operate

Figure No. 11

22
 Bachelor Thesis 2023

DISCUSSION

1. Customers will have a high level of service confidence in the Regtech services if they are
satisfied with the Regtech service offered by the company, such as the transaction process
and outcomes are accurate, or the transaction system is secure and reliable.

2. Customers' favorable attitudes towards using RegTech services would rise if they can
efficiently, promptly, and conveniently trade or access essential business information in
real time and without location or time constraints.

3. Customers' attitudes regarding utilizing Regtech applications will change if the services
are simple to use, have an intuitive operating method, and are free to download. The most
crucial factor in determining whether or not clients will use these services is the
availability of Regtech services.

4. The most significant factor influencing a customer's utilization of Regtech services is the
ratio of good to negative customer reviews. The study's key findings have important
managerial implications, according to the findings. This result highlights how crucial it is
to comprehend behavioral intentions with regard to the use of Regtech facilities.

In continuation, these implications can be vital to the managerial level for the RegTech companies
for the following reason. They will be able to better assist customers and grow their organization
once they comprehend the attitudes and variables that are crucial for customer utilization of
RegTech services. They will also be able to create marketing tactics that will entice in new clients.

23
 Bachelor Thesis 2023

Secondary Data Analysis:

Figure No.12 RegTech in 2021 and what 2022-2023 comprises

With a CAGR of 22.3%, the global RegTech market is anticipated to increase from $5.46 billion
in 2019 to 28.33 billion by 2027. According to Future Market Insights' recently published RegTech
Market analysis report, the market's global sales in 2021 were held at US$ 8.2 billion. With
predicted market growth of 16.2% between 2022 and 2032, the market is anticipated to reach a
valuation of US$ 45.3 billion by 2032. The highest revenue-generating segment is anticipated to
be cloud deployment-based RegTech, which is anticipated to have a CAGR of 15.8% between
2022 and 2032. In the upcoming months, there are some trends that are expected to be seen, and
block chain will be one of the key technologies driving the RegTech revolution.

24
 Bachelor Thesis 2023

Figure No.13 RegTech Growth Curve over the years and foreseeable future

The market is divided into four regions based on geography: North America, Europe, Asia
Pacific, and Latin America, the Middle East, and Africa. With the largest revenue share in the
RegTech market, the Asia Pacific region rose to the top position in 2020. Many nations in this
region, especially those with developing economies, are adopting new technologies to keep up
with procedures for enhancing the effectiveness of financial institutions. RegTech software is
anticipated to spread quickly over the area. Asia Pacific is anticipated to have the fastest-growing
RegTech market, owing to the increased usage of new technologies, significant expenditures in
digital transformation, quick growth of domestic businesses, extensive infrastructure
development, and rising GDP of various countries.

In order to provide efficient solutions, fintech technologies are being deployed across multiple
corporate processes in quickly developing economies like China, Japan, Singapore, and India.

25
 Bachelor Thesis 2023

Nevertheless, the driving factors for the RegTech market is said to be “Growing Demand for Faster
Transactions” and “Concerns Regarding GDPR are Boosting the Demand for RegTech”. Firstly,
Block chain technology can speed up interbank transactions. Block chain technology is being
considered by several financial organizations as a means of accelerating transactions, lowering
mistake rates, and doing away with reconciliation. Block chain is best suited for the payments
sector, where it can help turn multiday settlement cycles into real-time transactions, thereby
improving and enhancing transaction operations, enhancing companies' capabilities for AML,
KYC, and regulatory compliance data, and helping a financial institution and its customers transact
easily while doing away with the intermediary charging a fee to speed up the process. This can
assist banks in saving time and money on labor-intensive client and currency transaction processes.

Secondly, Due to the growth of RegTech, which is reshaping the regulatory environment by
offering technologically advanced solutions inside the financial industry, the GDPR regulations
have become mandatory for consumer personal data. As a result, the GDPR controls how personal
data is used and grants people the right to object to profiling, which is anticipated to create
profitable opportunities for the sector in terms of building trust and boosting customer loyalty. As
a result, GDPR is now required by law for some personal data-related activities, RegTech solution
providers are including GDPR in their services, and the industry is expected to grow in the coming
years.

On the other hand, the restraining factor for the RegTech market can be stated as “Threat to
Cybersecurity and Consumer Data Privacy”. The risk and compliance management processes of
financial service firms, with a focus on cybersecurity and data-related concerns. The adoption of
new laws, the increase in data networks, digital apps, and mobile users all increase the likelihood
of cyberattacks. As the process of integrating and extracting data from multiple internal and
external sources continues, the growing use and integration of RegTech into compliance and
regulatory systems could lead to new security vulnerabilities. Such dangers could be increased by
working with multiple new vendors and giving them access to a company's systems. RegTech
solutions can be useful in a number of areas, including technology governance, system change
management, risk assessments, technical controls, incident response, vendor management, data
loss prevention, and staff training.

26
 Bachelor Thesis 2023

The COVID-19 pandemic has significantly impacted the RegTech industry and increased global
adoption of online and digitalized financial services. Also, in order to stop the disease from
spreading further, the governments of various nations have enacted nationwide lockdowns. As a
result, during the pandemic, RegTech companies with software-as-a-service platforms became
more well-known. As a result, one of the most significant drivers of expansion for the RegTech
sector was the worldwide health crisis.

One of the greatest financial crises in recorded history is currently affecting the global economy.
In the struggle against internet fraud and money laundering, banks and other financial institutions
are leading the way. Unfortunately, the technical, social, and economic limitations of COVID-19
have severely impeded their ability to effectively monitor and stop fraud.

Moreover, the market is divided into five categories based on application: regulatory reporting,
regulatory intelligence, identity management, and AML & fraud management. In the RegTech
market in 2020, the category for regulatory intelligence attracted a promising revenue share.
Regulatory intelligence is the process of continuously keeping track on various regulations and
compliances. RegTech vendors offer a live database of various regulatory requirements that can
be utilized to track down and understand regulatory changes.
RegTech solutions analyses selected data and information from a variety of sources, process it,
and then generate a report that outlines the risks and options for creating the optimal regulatory
strategy. The adoption of RegTech solutions by financial institutions lowers the risk of non-
compliance and makes it simpler to manage changing regulatory environments. Producers of
RegTech solutions are automating the tracking of global regulatory data using AI and machine
learning.

The market is divided into three categories based on vertical: Banking & Capital Markets,
Insurance, and Non-Financial. In terms of revenue, the insurance sector accounted for a sizeable
portion of the RegTech market in 2020. With significant technological advancements, the
insurance industry is undergoing fast change. As these businesses utilize RegTech to monitor
regulatory compliance, automate reporting, enhance their data management capabilities, and
reduce risks, acceptance of RegTech solutions is gaining momentum.
The fair transfer of loss risk from one organization to another in exchange for payment is what
insurance, a type of risk management, comprises. The insurance sector is fast embracing
RegTech as a result of major digital transformation initiatives. Regulations governing
investments and solvency, claim resolutions, distribution channel issues, and data clarity
problems are all crucial problems with the insurance industry.

27
 Bachelor Thesis 2023

CONCLUSION

With the demise of the Internet came a new financial industry called "regtech," which uses
technology and innovation to supply financial services through new applications, processes,
products, or business models. India's favorable fintech environment is due in large part to its
population of slow-comparison individuals. Also, the prevalence of smartphones allowed for the
testing of a reoccurring scenario in 2018. As 0% of the population does not have a relationship
with a bank and more than 80% of transactions are made with cash, the financial services industry
in India is mostly undeveloped. To sum up, this study has given a general picture of the Indian
Fintech industry and developments brought about by the adoption of RegTech, the Government
Level Initiative on such applications, and it shows a chance for startup RegTech enterprises to
spread their wings in diverse categories. Their effectiveness in the current situation. RegTech
offers banking and financial services faster to customers. As a result, India and the global financial
sector both need the RegTech sector to grow. RegTech technology will advance in the financial
sector in the near future.

Indian RegTech enterprises may address some of the major structural issues affecting India's
financial services, expand their customer base, enhance customer satisfaction, lower operating
costs, and encourage the adoption and use of digital channels. When banks begin to catch up with
these more nimble and inventive startups, legacy procedures and higher operating cost models of
established banks and financial service providers will provide digital FinTech companies an
advantage. The opportunity for RegTech is in market expansion, influencing consumer behavior,
and bringing about long-lasting reform in the financial sector.

Risk assessments will serve as the foundation for novel and creative models created by the
RegTech sector. The penetration of financial services will increase in India by utilizing big data,
machine learning, and alternative data to secure credit and build credit scores for customers with
little credit history. A more varied, safe, and stable financial services environment will be produced
through RegTech. RegTech businesses are just like traditional banks, and they offer great learning
opportunities to enhance both culture and capabilities. The study showed how three financial
segments—financial planning, payments, lending and borrowing activities, and thus more
adopting and using regtech. The evidence that generational or adolescent consumers had the
highest engagement rate as opposed to other user groups' ages highlighted the reason for
distinguishing user groups for the most popular users. The simplicity of use and shorter processing
times were found to be most frequently attributed to the payment section. In India's RegTech
ecosystem, the concept of technical innovation has received universal support over the next few
years.

28
 Bachelor Thesis 2023

RECOMMENDATION

1. Raise public awareness of the use of RegTech.

2. Schedule training courses for online fund transfers and digital wallets.

3. People will be more likely to pay convenience fees for Fintech services in the future if it
is made safer and there is a guarantee of no fraud by the service provider.

4. Compared to the developed payment systems of the United States and Europe, Indian
markets are still in the development stage for digital payments.

5. With the high frequency of online fraud in our nation, secure and safe transactions are
one of the most desired characteristics of electronic transactions in India.

6. As a result, in a developed market for service providers, it is essential that they not only
make transactions safer but also communicate this fact through competent PR firms,
marketing, emphasizing security for a specific app, etc.

7. When the use of digital payments spreads more into rural and semi-urban regions, where
the customers are at the bottom of the economic income scale, the potential losses due to
fraud will have a significant impact on how the general public feels about these systems.

8. To maintain tight control over these service providers, our country's expanding regulatory
framework also demands for an independent regulatory institution under the RBI.

9. While money is a component of transactions, customer data, which is also highly

essential, has the potential to be a trade deal with numerous service providers, which is
riskier for the nation.

10. Detecting financial crimes within financial institutions in light of rising fraud, electronic
crimes, money laundering, financing of terrorism, bribery and corruption, and insider
trading.

29
 Bachelor Thesis 2023

REFERENCES

 https://www.technavio.com/report/regtech-market-size-industry-size-analysis

 https://www.alliedmarketresearch.com/regtech-market

 https://www.apiax.com/resources/guides/regtech-
guide/#:~:text=Regtech%2C%20or%20RegTech%2C%20consists%20of,also%20known
%20as%20regulatory%20technology.%E2%80%9D

 https://fineksus.com/difference-between-fintech-and-
regtech/#:~:text=The%20simplest%20definition%20of%20fintech,necessary%20for%20
any%20financial%20solutions.

 https://www.marketsandmarkets.com/Market-Reports/regtech-market-63447434.html

 (Gomber, P., Kauffman, R. J., Parker, C., and Weber, B. W. 2018).

 (Gulamhuseinwala, I., Bull, T. & Lewis, S. 2015)

30
 Bachelor Thesis 2023

APPENDICES

 Google Form Link: https://docs.google.com/forms/d/e/1FAIpQLSfjMvHBCSopakNwGz-

DZPHD6BdRj-iL51hIIJf6eKLaPLDitg/viewform?vc=0&c=0&w=1&flr=0

 Google Form Screenshots:

31
 Bachelor Thesis 2023

 Questions in google form:

I. My inability to use digital payment services is due to security risks

II. It is hazardous to use a digital payment service

III. I utilize digital payment services, my personal information can be misused. Thoughts?

IV. I gain connection to this service whenever and wherever I am.

V. Online payments can be made quickly using digital payment services

VI. I feel electronic providers of payment services are reliable

VII. The choice of digital payment services is largely shaped by the service provider's reliability

VIII. Reputation of the service provider has large effect in choosing Online Payment solutions

IX. It will take me a lengthy period to figure out how to operate the digital payment service
since it's so technical

X. Digital payments are pragmatic and simple to operate

32
 Bachelor Thesis 2023

GLOSSARY

1. Machine Learning: The usage of and research into computer systems that can adapt and
learn without being given explicit instructions.

2. Block-chain: A system in which a record of transactions is kept across computers

connected in a network of peers, particularly those done in a cryptocurrency.

3. Perceived: To get conscious of using one's senses. Especially to perceive and watch.

4. Compliance: The condition of adhering to established rules or requirements, or the process

of doing so.

5. Millennial: Denoting or relating to a period of a thousand years.

6. Remittance: A sum of money sent in payment or as a gift.

7. Scrutiny: Critical observation or examination.

8. Ubiquity: The fact of appearing everywhere or of being very common.

9. Protruding: Sticking out or projecting.

10. Ledger: A book or other collection of financial accounts.

33
 Bachelor Thesis 2023

PLAGIARISM REPORT

RegTech, or regulatory technology, is a new sector that's

employing modern technological innovations to enhance
regulatory processes. RegTech is the application of modern
technologies such as artificial intelligence and machine learning
to overcome regulatory challenges, primarily in the financial
services industry. RegTech is defined as "a subset of FinTech
that focuses on technologies that may facilitate the delivery of
regulatory requirements more efficiently and effectively than
existing capabilities" by the UK Financial Conduit Authority.
The aspiration of the thesis assesses the potential consequences
to ensure that the organization's consumers and customers
receive rewarding benefits. In addition, as money laundering and
terror funding tactics evolve, financial institutions must work

harder to ensure they are in compliance with

their regulatory settings and capable of
preventing criminals from abusing their
services.

The concept is also used to describe businesses that

have focused in this field. RegTech firms assist
larger corporations with their regulatory
compliance obligations, increasing efficiency,
lowering risks, and improving customer
experience. RegTech is currently expanding into
other regulated businesses, with its primary
application in the financial sector.

34