RegTech (Regulatory Technology) combines "Regulatory" and "Technology" and its main functions include regulatory monitoring, reporting, and compliance.
However, the 2008 global financial crisis represented a crucial moment that separated prior phases of the development of FinTech and RegTech from the current paradigm, noticing that FinTech (Finance Technology) has now entered a period of fast innovation, characterized by a proliferation of startups and other new entrants, focusing on the financial services sector.
To add, FinTech is the technology used to make financial services easier online. People tend to confuse these technologies when they coexist in the same sentence. It’s hard to differentiate these technologies when they are used in the same product.
On the other hand, RegTech decreases risk of cyber hacks, data breaches, money laundering and other fraudulent activities, and should be perceived differently from FinTech and not always affiliated. The major difference between these two technologies is that FinTech mainly has a financial goal, whereas, RegTech is focused on technological solutions that streamline and improve regulatory processes.
Also, the factors associated with the growth of FinTech and RegTech are not the same; the reason behind FinTech’s growth goes to new emerging start-ups, whereas, the growth of RegTech depends on the demand and the need of regulations and compliance in the financial institutions.
Nevertheless, we should not forget that RegTech and FinTech are interdependent. RegTech is required in financial sectors to mitigate risks and produce efficient output. These technologies need both parties’ advancement to collaborate in a compatible way. Thus, instead of arguing on which is better, both the technologies should be incorporated and used wisely for the wellbeing of a financial organization.