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Why RegTech is the Key to Seamless Digital Onboarding


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In 2020, “The Banking Scene’s” first conference was held by Docbyte‘s CEO Frederik Rosseel. This conference gave the idea of a Digital Onboarding solution. This solution did not include any compliance or regulation but rather supported the idea of digitalization and innovation by shaping the customer’s experience.

Digital onboarding refers to the digitalized feature of mobile banking; the better the UX (User Experience) design, the better the service. 

Frederik Rosseel undertook the path to expand the horizons of digital onboarding at the Banking Scene’s conference in 2020. This conference may have started as a presentation focusing on digitalization and mobile experience while neglecting the compliance and regulatory nuances.

Still, it evolved the digital landscape with terms like “Regtech,” “KYC,” and “AML” taking the spotlight. This blog highlights the critical role of “RegTech,” or we may call it “Regulatory Technology,” in shaping the ecosystem digitalization perspective of organizations. With the continuous growth of RegTech, a seamless and compliant customer experience is guaranteed.

What is RegTech (Regulatory Technology)?

Regulatory Technology is an innovative concept in the financial and regulatory sector. It includes using modern technologies and solutions to optimize and streamline compliance operations, particularly those dealing with regulated industries like banking and finance. These regtech solutions ensure relevant organizations can apply regulatory requirements efficiently while enhancing user experience.

Regtech KYC is an essential element of this innovative approach. KYC, or Know Your Customer, underlines the verification process organizations use to verify the identity and legitimacy of an individual. This process has been further automized with minimum human labor requirement only with the help of regtech solutions.

The evolution of this smart solution has set trends in an ever-changing landscape for digital onboarding. It began with the idea of digitalization and merged the concept of compliance and regulation with user experience to focus on excellent customer service.

The Evolution of Regtech

Digital onboarding put forth a brilliant idea of improving user experience a few years ago. It’s important to note that compliance and regulations were not the primary focus at that point. The main idea was to digitalize the banking experience; however, the information was gathered from trusted sources. 

If we look into this concept today, regtech compliance has become a major trend. It integrates terminologies like KYC and AML to broaden its aspects and merge the application of regulatory compliance. If we fast forward to today, this idea has evolved from mere user experience to an indispensable tool that ensures compliance and regulation in different sectors.

Let’s talk about another rising yet crucial aspect of regtech solutions: legal archiving and document verification. These technologies deal with storing and retrieving important documents while ensuring their integrity, originality, and authenticity.

The archiving requirements are now more crucial than ever, and regtech has addressed this concern by providing effective and secure solutions. So, if you plan to streamline and improve your regulatory compliance processes while prioritising customer satisfaction, Regtech Solutions is the right answer for you. 

The Regtech Scene

AI is transforming RegTech, making it more powerful and efficient. Thanks to recent advances, digital onboarding has matured into a comprehensive and seamless process trusted by regulators. New RegTech providers are entering the market, offering a broader range of solutions beyond UX as it shifts from a primarily UX-focused market.

Digital onboarding is no longer just a marketing and sales tool; it is now essential for compliance. The shift to “end-to-end onboarding trusted by a supervisor” demands a superior and fully compliant approach to customer onboarding.

The evolution of digital onboarding provides peace of mind to both the Sales Department and Compliance teams, ensuring that customers are properly identified and validated in accordance with the products they seek.

Regtech Initiating Open Banking

Open Banking has ushered in a new era for digital onboarding. Open Banking is more than just a buzzword; it’s a paradigm shift that will fundamentally change how we think about banking and digital onboarding.

Regulations like PSD2 and the emergence of Open Banking are forcing traditional banks to rethink their business models. Banks are no longer limited to their own sales channels. Banking-as-a-service is gaining prominence in digital onboarding, freeing banks from their proprietary sales channels.

Banking-as-a-service (BaaS) allows banks to partner with third-party providers to offer banking products and services. User experience and customer onboarding are essential in the new era of embedded banking. Embedded banking requires a fundamental rethink of the customer journey, with a focus on improving user experience and ensuring regulatory compliance throughout onboarding.

How Regtech Stores KYC documents

The era of regulatory technology has introduced transformative functionality related to the storage and management of KYC documents. Regtech KYC is an essential component that proves useful in financial and compliance-focused sectors to validate the identity of individuals.

This focuses on fulfilling the regulatory requirements. This digitized transformation has automated and optimized the systems that ensure regulations are followed while improving overall customer experience.

Let’s break into the process and see how it works:

  1. Streamlining Processes: By streamlining KYC processes, an organization can accurately ensure their customers’ identities. This is done by automating the identity verification procedure using different data sources that provide the information.
  2. Document Verification: With the revolutionized automated solution, regtech confirms the authenticity of crucial documents with the accuracy of recorded information.
  3. Secure Storage: Let’s admit we require secure document storage for all verified KYC documents, and this has just been made easy. This storage keeps documents stored safely and ensures their authenticity is maintained. For this purpose, it uses data encryption and secure databases.
  4. Retrieval and Accessibility: Stored documents can be accessed whenever needed. This frequent accessibility is essential for regulatory audits and customer service. Effective retrieval and accessibility is a hallmark of a productive regtech solution.
  5. Compliance Assurance: Compliance is another aspect that cannot be neglected. By automizing the processes and ensuring the accuracy and security of documents, organizations are guaranteed to meet and fulfil the regulatory requirements.

What are the Archive Requirements for financial documents?

With proper management and archiving of financial documents, regulatory compliance, and accountability can be monitored effectively. To ensure the security and authenticity of stored documents with frequent accessibility, it is important to understand the archive requirements of financial records.

Let’s look at the key factors you need to consider in this concern:

Retention Periods

Sometimes, financial documents have a specific retention period defined by regulatory authorities. This period differs according to the type of documents; for instance, tax records require varying times for retainment compared to investment statements. So, an organization must comply with this specific retention period to stay consistent with the law, and failure may result in legal consequences.

Data Integrity

Data integrity is vital for organizations to prevent unauthorized access or manipulation of financial records. This countercheck may include physical and digital security measures. Remember, whenever there are any discrepancies or unauthorized amendments to a financial document, severe legal implications can come forth as a consequence.

Security and Access Controls

Archives must be kept safe and only accessible to those authorized to view them. This helps keep financial documents safe from being looked at, changed, or deleted by people who should not have access to them.

Access controls are essential for keeping sensitive financial information confidential and secure. Secure archiving solutions use encryption, strong authentication, and user-specific access privileges to protect records.

Compliance with Regulations

Every financial document must comply with relevant protection authorities. These authorities have varying regulations depending on the industry they are associated with and their base location.For example, the United States has the Sarbanes-Oxley Act (SOX), which imposes strict restrictions on archiving and managing financial records.

In contrast, Europe has the General Data Protection Regulation (GDPR) that sets rules for protecting personal data. Every regulation is industry-specific, and their legal obligations must be met at any cost.

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