## 4 RegTech in Financial Sector
### Benefits of the Current Compliance Application in Financial Sectors  
RegTech offers numerous benefits to the financial industry, assisting financial institutions in streamlining their regulatory compliance processes and improving overall regulatory effectiveness. Some key benefits of RegTech in the financial industry include:  
* _Compliance Efficiency_: With the help of RegTech applications, the compliance processes can be automated, greatly reducing manual effort and time to save costs and improve productivity in compliance operations [69]. In addition, useful tools enable financial entities to keep good auditable records of compliance activities by maintaining a robust audit trail [25] and capturing all relevant actions during the compliance process, which provides clear evidence for future investigations. Moreover, financial regulations keep changing [16], which not only costs entities time to keep pace with them but may also cause potential non-compliance risks without good regulatory change management. RegTech solutions can automatically monitor and interpret regulatory changes and provide timely updates and alerts so that organizations can stay informed and adapt their compliance processes and policies accordingly. For example, the NLP can help users interpret the regulatory rules and identify any changes or updates; Robotic Process Automation can produce the regulatory reports automatically; distributed ledger technology can verify and check the authentication of the report; and the programming interface will enable the report to be submitted directly to regulators or supervisors [70]. The combination of various digital technologies can have a greater effect on the compliance process. * _Transparency and Regulatory Collaboration:_ RegTech can handle real-time monitoring [70] and internal and external reporting. On the one hand, by analyzing real-time data such as transactions, market activities, and regulatory changes, financial institutions can identify potential compliance issues or suspicious transactions and take appropriate action immediately against any potential risks. In addition, entities can identify and assess risks via real-time monitoring, detect patterns, and generate insights that support risk mitigation strategies by analyzing large volumes of data. On the other hand, RegTech also facilitates automated, accurate, and timely reporting to regulators or supervisors, contributing to transparency and accountability [32] and building trust between entities and supervisors. As a result, better collaboration and communication between two parties can be facilitated by providing a standardized platform with automated reporting, which can streamline the exchange of information, reduce duplication of efforts, and foster a more efficient and transparent relationship. * _Customer Due Diligence:_ Client background checks are crucial in the financial industry to avoid causing financial crimes such as money laundering. As criminals become more technologically advanced, it presents unprecedented challenges for financial service providers. Hence, customer due diligence processes such as Know Your Customer (KYC) and Anti-Money Laundering (AML) checks are inevitable [71]. By automating data collection, verification, and risk assessment, the applied RegTech can make more accurate analyses and judgments in due diligence procedures as well as streamline customer onboarding with reduced manual errors [71], establishing a good reputation in customer service. * _Data Integrity and Security:_ RegTech solutions often incorporate robust data management and security features, including encryption, access controls, audit trails, and other security measures to protect sensitive information and prevent data breaches [72], which helps financial companies ensure the integrity, confidentiality, and accuracy of data used in regulatory compliance.