What is Fintech and its evolution into Regtech: how technology is redesigning real estate investments

Nowadays, the term fintech has become increasingly common in the world of investments and finance: short for financial technology, it represents the use of technology to improve and automate financial services. This approach has radically transformed the way people, businesses, and investors manage money, invest, and access banking services, making these operations faster, more efficient, and more accessible.

As fintech continues to expand, it has also evolved into the so-called regtech, short for regulation technology, which refers to the use of technology to facilitate compliance with existing regulations. In other words, while fintech aims to revolutionize financial services, regtech has a broader scope, as it seeks to simplify compliance with regulations by organizations and businesses through advanced technological solutions.

The concept of regtech was first recognized by the United Kingdom's Financial Conduct Authority (FCA), which defined it as "a subset of fintech that focuses on technologies that can facilitate the delivery of regulatory requirements in a more efficient and effective way." This concept gained further attention with Deloitte's 2015 report titled "RegTech is the new FinTech."

Its growing importance is linked to several factors, including the increasing complexity of regulations and the need for companies to respond quickly and efficiently to new regulations. 

As the volume of data and reporting demands increases, the ability to automate and optimize these processes has become crucial: according to the Regtech Council, in 2018, financial institutions spent an average of 4% of their revenues on compliance-related activities, a figure that grew to 10% in 2022 and has been steadily increasing in the last two years.

FOCUS ON REGTECH: WHY IT'S USEFUL AND HOW TO TURN IT INTO AN OPPORTUNITY

Regtech offers a wide range of benefits for financial institutions, starting with the potential to save significant economic resources. Moving to a digital and advanced compliance management system drastically reduces operational costs, thanks to the automation of traditionally lengthy and costly processes. Adopting regtech not only allows for faster regulatory compliance but also sets a new benchmark for regulators and financial institutions, based on mutual collaboration and operational efficiency.

This approach, which reduces the time required to produce and verify data through joint analyses, leads to greater information sharing among stakeholders, contributing to an overall improvement in business performance. Therefore, regtech is not just a tool for ensuring regulatory compliance but also an opportunity for companies to turn an obligation into a competitive advantage. 

Advantages of a Regtech approach for organization

The key features of regtech are manifold and offer significant advantages over traditional compliance management methods, including:

1. Agility, as these technologies allow complex datasets to be decoupled and organized through Extract, Transform, Load (ETL) processes, greatly improving data management. This approach enables rapid configuration and generation of reports, reducing the time and costs associated with producing regulatory documentation;
2. Speed, as these solutions are designed to be implemented and operational in a short time, allowing companies to respond promptly to regulatory requirements;
3. Cloud-based structure, meaning that data can be managed and backed up remotely, with significant cost reduction and increased security thanks to data encryption during transmission;
4. Use of advanced analytical tools, enabling the extraction of valuable insights from corporate big data, transforming raw information into actionable insights for informed and strategic decision-making. The ability to efficiently organize and analyze data allows companies to better respond to regulatory needs while simultaneously improving their decision-making capacity.

Applying Regtech to finance and investments

The financial and investment sector is particularly sensitive to regulatory changes, and the adoption of regtech represents an effective response to these challenges. Banks and financial institutions are dedicating increasing resources to implementing technological solutions capable of improving the management of regulatory issues and reducing associated costs.

Implementing regtech solutions in the investment sector allows the automation of complex processes such as customer identification (Know Your Customer, or KYC) and Due Diligence, making operations more efficient while ensuring compliance with regulations. Additionally, the use of advanced data management technologies allows for quick responses to regulatory requests, reducing risks associated with non-compliance, such as delays and penalties.

This digital transformation not only increases operational efficiency but also contributes to democratizing access to financial services. Investors of various sizes can access advanced and compliant investment tools, even remotely, improving transparency and trust in the market.

How we apply Regtech at Yeldo

At Yeldo, the regtech approach is now a crucial part of our operational strategy: we have implemented technological solutions that transform European regulations into digital workflows, making real estate investment more accessible and transparent to a broader audience.

For example, we have adopted online identity verification through certified partners, simplifying the process of investor identification. Additionally, we have replaced handwritten signatures with digital signatures, thanks to collaborations with specialized technology partners. These solutions not only ensure regulatory compliance but also allow investors to access our services remotely, making the entire investment process more digital and immediate. 

For us, this is a strategic choice that allows us to stay at the forefront of the market, offering our clients a secure, efficient, and accessible service. Technology not only simplifies compliance processes but transforms them into an opportunity for growth and innovation, bringing benefits to all parties involved in the investment process.

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