The European Banking Authority takes deep dive into banks' use of regtech

Regtech is used by banks to comply with anti-money laundering (AML) checks on customers, monitor transactions for fraud, send data to regulators about levels of capital, and assess if customers can afford a loan. It speeds up routine tasks and reduces human error, the European Banking Authority (EBA) said in a report on 29 June 2021.

But the lack of common regulatory standards across EU states for a growing subsector could pose barriers for wider market adoption of regtech, the European Union's banking watchdog said. However, the creation of a centralised EU database of regtech solutions or a potential certification of regtech ‘could be further explored and considered at the EU’, Reuters cited EBA.

Most challenges that hold back regtech from wider use are located within banks and regtech firms, and these include ensuring sufficient quality of data, internal governance processes, and adequate knowledge of regtech, the EBA said.