Understanding FinTech vs RegTech vs SupTech: Definitions and differences

The are a lot of new words created by adding the suffix ‘tech’ to them, including those of FinTech, RegTech and SupTech. However, these terms represent distinct areas of innovation that address different aspects of finance and regulation. So, what are they and what do they do? 

What is Fintech? 

Firstly, Fintech, short for financial technology, encompasses innovative technologies that improve and automate the delivery and use of financial services. For instance, as the World Bank have stated, Fintech “advances in technology that have the potential to transform the provision of financial services, spurring the development of new business models, applications, and process and product.” 

Fintech aims to enhance financial processes, making them more efficient and user-friendly. For instance, it covers a broad range of applications including mobile banking, peer-to-peer lending, crowdfunding platforms, and cryptocurrency exchanges. FinTech has grown steadily with but The Covid-19 pandemic accelerated the shift towards Fintech adoption. 

Key Features of Fintech 

• User experience Focuses on improving customer engagement through digital interfaces and personalised services. 
• Efficiency Enhances operational efficiencies by automating processes and reducing manual intervention. 
• Innovation Introduces new financial products and services, often disrupting traditional financial sectors. 
• Accessibility Democratises access to financial services, especially for underserved populations. 

What is Regtech? 

Next, we have Regtech, or regulatory technology, is a subsegment of fintech that specifically addresses regulatory challenges in the financial industry through technology. Regtech solutions are designed to help organisations comply with regulations efficiently and effectively. In other words, by leveraging modern technologies including machine learning and artificial intelligence, Regtech provides tools for regulatory monitoring, reporting, policy management, regulatory change management and regulatory compliance management. 

In a recent report from Deloitte it was noted that “These tools and RegTech in general is yet to see its real value (….). In the short term RegTech will help firms to automate the more mundane compliance tasks and reduce operational risks associated with meeting compliance and reporting obligations. In the longer term it will empower compliance functions to make informed risk choices based on data provided insight about the compliance risks it faces and how it mitigates and manages those risks.” 

However, there are differing views in reports on whether: 

• Regtech is a subset, evolving or even the ‘new fintech’ 
• Regtech is a separate phenomenon as it applies to more than just the world of finance 
• Often seen as one of the less glamorous fintech sectors, regtech’s star is now rising. 

This would seem to be dependent on the scope and authoring of specific reports. 

Key features of Regtech

• Compliance automation Automates compliance processes, reducing the burden of manual checks and audits. 
• Regulatory risk management Enhances the ability to identify, manage, and mitigate risks related to regulatory compliance. 
• Data analytics Utilises advanced analytics to monitor and report regulatory requirements in real-time. 
• Cost reduction Lowers the costs associated with compliance by streamlining processes and reducing the need for manual oversight. 

What is Suptech? 

And finally, SupTech, or supervisory technology, is the use of technology by supervisors to deliver innovative and efficient supervisory solutions that will support a more effective, flexible and responsive supervisory system. 

What’s more, it has enhanced the capabilities of regulators to oversee and monitor financial institutions. 

The tools within SupTech enable regulators to collect, analyse, and act on data more effectively which improves the overall regulatory framework. 

Key Features of Suptech 

• Data collection Automates the collection of vast amounts of data from financial institutions. 
• Analytics and monitoring Uses advanced analytics to monitor the financial system for signs of instability or non-compliance. 
• Real-time Supervision Provides real-time insights into financial activities, enabling prompt regulatory actions. 
• Efficiency Enhances the efficiency and accuracy of supervisory processes, reducing the likelihood of financial crises. 

So, what are the differences Between Fintech, Regtech, and Suptech 

Of course, while Fintech, Regtech, and Suptech are interrelated, they serve different purposes within the financial ecosystem. 

The purpose and technological focus of FinTech, RegTech and SupTech

Who uses FinTech, RegTech and SupTech? 

• Fintech: Banks, financial institutions, startups, and consumers. 
• Regtech: Compliance departments within financial institutions. 
• Suptech: Regulatory and supervisory agencies. 

Importance of Fintech, Regtech, and Suptech

The integration of these technologies is crucial for the modernisation and stability of the financial system. 

• Fintech: Drives innovation, enhances user experience, and increases financial inclusion. 
• Regtech: Ensures compliance, reduces operational risks, and lowers compliance costs. 
• Suptech: Strengthens regulatory oversight, enhances market integrity, and prevents financial crises. 

In summary, Fintech, Regtech, and Suptech represent the cutting-edge of technological advancements in the financial sector. Indeed, these technologies not only improve efficiency and compliance but also play a critical role in ensuring the stability and resilience of the financial system. 

Therefore, by embracing these innovations, financial institutions and regulators can better adapt to the rapidly changing business, financial and economic environment, ensuring robust, compliant, and efficient financial services.