1. A Systematic Literature Review of RegTech:
Technologies, Characteristics, and
Architectures
Benny Firmansyah, Arry Akhmad Arman
School of Electrical Engineering and Informatics
Institut Teknologi Bandung
3. Introduction
• Since the financial crisis in 2008, the number and complicated financial regulations have
increased significantly.
• The rapid development of FinTech has also triggered an increase in regulations because
financial transaction data is also increasing.
• The increasing number of regulations and complexities is a challenge for the financial
services industry in realizing regulatory compliance.
• It will take a lot of time and effort to interpret these rules if it still uses manual processes,
specifically by instructing employees to do it. Additionally, it does not guarantee that the
rules will be correctly applied and maintained over time.
• Therefore, RegTech (Regulatory Technology) is the best solution for them to all these
challenges.
4. Introduction (Cont.)
• RegTech is the utilization of information technology by the financial services industry to
achieve regulatory compliance.
• RegTech offers several benefits, including improved operational process efficiency, reduced
risk, reduced costs, and increased revenue.
• RegTech was initially developed for the financial industry, but ideally, it can be taken and
applied in other sectors. In essence, the key elements that must be met in RegTech
include regulated entities, supervisors and/or regulators, regulatory data, and data
generated by regulated entities' activities. The technology at RegTech will bring all these
elements together to achieve regulatory compliance.
• Therefore, we used the systematic literature review approach to review several prior
studies that describe RegTech regarding technology utilization, characteristics, and
architecture in the financial industry.
• The results of this study can be adopted as a basis for answering the challenges of
implementing RegTech in various sectors of activity.
5. Research Methodology
The systematic literature review (SLR) method is applied in this study.
The following search term was submitted:
(("architecture" OR "system" OR "application" OR "software" OR "design")
AND ("regulatory technology" OR "regtech"))
ID Research Question Motivation
RQ1
What technologies that utilize in
RegTech?
To identify technologies that are utilized in
RegTech
RQ2 What are the characteristics of RegTech? To identify the characteristics of RegTech
RQ3
What are the components of RegTech
architecture?
To identify the components of RegTech
architecture
6. Research Methodology (Cont.)
No Database Journal
Number of
Articles
1 Scopus 121
2 ACM Digital Library 23
3 IEEE eXplore 11
4 Springer 555
Total 710
ID Publication Articles
1 Journal Q1 13
2 Journal Q2 10
3 Journal Q3 6
4 Journal Q4 1
5 Conference 7
Total 37
Inclusion
Criteria
(I1) The primary criteria for this review are RegTech or regulatory compliance
(I2) English is used to write articles
(I3) Articles are eligible for full-text access
(I4) Articles released between 2017 and 2022
Exclusion
Criteria
(E1) Extended abstract, poster, short paper, survey, magazine, book, chapter,
editorial, note, review, reference work, and reference work entry are excluded
(E2) Similar articles from several databases journals
(E3) RegTech is covered in the study, but not in terms of technology or architecture
7. Research Result
The technologies that utilize in RegTech
No Technology Number of Articles
1 Blockchain 18 (15%)
2 Artificial Intelligence (AI) 16 (14%)
3 Machine Learning (ML) 16 (14%)
4 Distributed Ledger Technology (DLT) 14 (12%)
5 Big Data Analytics (BD) 13 (11%)
6 Robotic Process Automation (RPA) 6 (5%)
7 Smart Contract 6 (5%)
8 Cloud Computing (CC) 6 (5%)
9 Natural Language Processing (NLP) 5 (4%)
10 Application Programming Interface (APIs) 4 (3%)
11 Deep Learning (DL) 3 (3%)
12 Data Mining 3 (3%)
13 Image Recognition 2 (2%)
14 Internet of Things (IoT) 2 (2%)
15 Text Mining 1 (1%)
16 Web Scraping 1 (1%)
17 Cryptography 1 (1%)
18 Near Field Communication (NFC) 1 (1%)
Top Five Technologies
Blockchain
Artificial
Intelligence
Machine Learning
Distributed Ledger
Technology
Big Data Analytics
1
2
3
4
5
8. Research Result (Cont.)
Characteristics of RegTech
1st Agility
2nd Speed
3rd Integration
4rd Analytics
Describe about unstructured and interrelated data sets can be
separated and organized using advanced technology.
Explain that creating and generating reports can be done more
quickly.
Describes that by utilizing its methods, operational solutions
can be produced in less time and launched into operation.
Its sophisticated analytical tools can handle and process large
data sets, such as big data.
9. Research Result (Cont.)
Component of RegTech Architecture
We adopted the Enterprise Architecture (EA) layers to describe the component of RegTech
Architecture.
Business Architecture
At this stage, we are more focused on RegTech’sbusiness
processes in general. Each activity is supported by various
technologies, such as APIs, AI, Big Data, ML, DL, NLP, RPA,
etc.
Data Architecture
No Data Type
Number
of
Articles
1 Customer 6 (26%)
2 Regulatory or Rule 6 (26%)
3 Financial Report 4 (17%)
4 Transaction 3 (13%)
5 Data from Public Information Sources 3 (13%)
6 Risk 1 (4%)
The business architecture description selected the core data
that are appropriate for the business core in RegTech activities.
The data formats involved can be structured and unstructured.
10. Research Result (Cont.)
Component of RegTech Architecture
We adopted the Enterprise Architecture (EA) layers to describe the component of RegTech
Architecture.
Application Architecture
The application architecture will focus intensely on software
applications to meet the requirements of RegTech, such as
regulatory reporting, compliance, transaction monitoring, identity
management and control, and risk management.
Related to Non-Functional Requirements
Hardware virtualization: software hosting, updated and running on
decentralized servers instead of on each workstation.
Technology Architecture
Technology architecture is required to enable the RegTech
solutions previously indicated in application architecture. It also
lists the leading platforms or technologies required to enable
the system in application and data architecture.
No Functional Requirement
1 Regulatory information retrieval
2 Translated reporting requirements or rules into machine readable
and executable form
3 Autonomously analyses and automated approach analyzing
4 Automated and real time monitoring
5 Simplify the process and or update new regulations
6 Automated compliance management and reporting
7 Online identification or digital entity authentication
8 Dynamic Transaction Document (DTD)
No Technology Infrastructure Environment
1 Cutting-edge distributed computing
2 Decentralized data management
3 Distributed storage
4 Cloud base and service
5 Data warehouse
6 Data lake
7 Service oriented architecture
8 Microservices
9 Service-based software
10 Distributed software architecture
11 Web based
11. Conclusion
ID Research Question Answer
RQ1
What technologies that utilize in
RegTech?
We have found 18 types of technology used in RegTech. The top five technology utilization in
RegTech are blockchain, artificial intelligence (AI), machine learning (ML), distributed ledger
technology (DLT), and big data analytics (BD).
RQ2
What are the characteristics of
RegTech?
RegTech solutions have four primary characteristics: agility, speed, integration, and analytics.
RQ3
What are the components of
RegTech architecture?
Based on the EA architecture layers, the core general business process in RegTech are data
collection, data processing, data analytics, and data visualization with numerous supporting
technology. Data customer and regulatory are the primary data that must be available.
Automated compliance management and reporting are primary functional requirements in
RegTech software. Cloud base and service, data warehouse, and decentralized data
management are kind of technology infrastructure environments in RegTech solutions.
Research related to RegTech is still little found in computer science journals. In addition, until now, no research has explained
the architectural patterns of RegTech. Therefore, based on the result of this study, we propose how to design the
generic architecture of RegTech based on the EA architecture layers, especially in the application and
technology layer, including the architecture pattern. The generic architecture describes the technology applied to any
RegTech solution that satisfies the previously described characteristics. As a result, the architecture can be adopted in
various sectors, not limited to the financial industry.
12. Thank You
Benny Firmansyah, Arry Akhmad Arman
School of Electrical Engineering and Informatics
Institut Teknologi Bandung
Editor's Notes
Thank you for the opportunity. This time I will present our paper entitled A Systematic Literature Review of RegTech: Technologies, Characteristics, and Architectures.
Here is the outline of the presentation
Introduction
Research Methodology
Research Result
Conclusion
The systematic literature review (SLR) method is applied in this study.
In this study, Kitchenham outlined guidelines that will be used.
There are three main tasks specified in the guideline: planning, conducting, and reporting.
At the planning stage, we determine RQ and Search Strategy
Planning
1. Research Questions
There are three research questions that must be answered by the results of the SLR.
The research questions (RQ) were clearly stated to keep the review on track.
Check the slide for research question and motivation.
2. Search Strategy
The process of searching includes deciding on digital libraries and specifying a search term.
The popular database journal's published research paper was searched for in this study using a specific search string.
Check the slide for the search term.
Four popular database journals are used as sources of article searches using predefined search keywords.
Database Journal :
Scopus : on scopus we found 121 papers
ACM : 23 Papers
IEEE eXplore : 11 papers
Springer : 555 papers
The total of all papers found in the initial search is 710 papers
Conducting
3. Study Selection
Multiple inclusion and exclusion criteria are set to filter the search results.
Check the slide for inclusion and exclusion criteria.
The graphic below explains the entire search process using inclusion and exclusion criteria.
The final result of the paper that was reviewed was 37, the classification based on the scimago index can be seen in the picture
Here is the answer to the first question based on SLR results.
RegTech contains 18 different types of technology, according to our research.
The top 5 technologies used now are blockchain, AI, machine learning, big data nalytics, and robotic process automation.
On the blockchain, data transactions are immutable. It means that they cannot be erased. Blockchain is incredibly adaptable.
Roles and permissions for transactions can mainly be created to serve a specified function
AI and RPA make automatic data visualization or reporting
DLT can store and maintain the information, i.e., a repeating digital duplicate of data stored in several locations, as in blockchain.
Data governance and security may be enhanced using DLT
BD and ML is a popular technology in data analytic
There are four charasteristics of RegTech solutions
Based on the results of the review, we generally conclude that there are four main general activities of the RegTech business process:
data collection, data processing, data analytic, and data visualization.
Each activity is supported by various technologies, such as APIs, AI, Big Data, ML, DL, NLP, RPA, etc.
The business architecture description selected the core data appropriate for the business core in RegTech activities.
The data formats involved can be structured and unstructured. Based on the review results, there are six data types in RegTech.
The top 3 are the customer, regulatory or rule data, and financial report.
The application architecture will focus intensely on software applications to meet the requirements of RegTech, such as regulatory reporting, compliance, transaction monitoring, identity management and control, and risk management.
Based on the review results, there are eight functional requirements in RegTech software.Three are regulatory information retrieval, translated reporting requirements or rules into machine readable, and autonomously analyses.
Related to non-functional requirements, a research proposed hardware virtualization: software hosting, updated and running on decentralized servers instead of on each workstation.
Technology architecture is required to enable the RegTech solutions previously indicated in application architecture.Based on the review results, there are 11 technology infrastructure environments to enable RegTech solutions.
Four are cloud base and service, data lake, data warehouse, and service-oriented architecture.
The following are conclusions based on research questions that were successfully answered by this study.
For future work, …………………..
