Name
Global FinTech Guide
Country _ Name
Austria
SectionTitle
RegTech and compliance management
Body
RegTech is composed of the words “regulatory” and “technology”. It is a collective term for the application of modern technologies, to get the increasing regulation in the banking- and financial sector under control both from an IT and a legal standpoint.

Introduction

Attitude of the country towards RegTech-services

Basically, the attitude towards RegTech is positive. However, general, and well-known concerns can be cited, such as those against digitisation and the use of artificial intelligence, both of which are key drivers in the RegTech market. 

Moreover, the success of RegTech solutions heavily depends on the structuring of banks operating models and their affinity to change current models.

Legal affairs

Obligations and requirements to provide RegTech-services

RegTechs are not subject to an authorisation requirement in and of themselves, because first and foremost, their business model consists of helping in handling the compliance with the growing regulation in the banking area. 

A key word in this context is the blockchain, whose application is conceivable in different areas. Supervisory assessments hinge on how the technology might be applied and which activities are to be conducted with it. Generally, when assessing a business model or business activities and the associated use of blockchain technology, the following questions can be expected to figure prominently in deciding whether authorisation is required: 

  • Which areas and/or which financial instruments will the business activity involve? 
  • Can the regulatory requirements for the planned business activity actually be fulfilled by using blockchain technology?
  • Is the business activity subject to legal provisions on the prevention of money laundering, terrorist financing and other criminal offences? 

Due to the wide range of potential applications of blockchain technology, it would be both difficult and inappropriate to make any general statements about notification requirements.

Additional comments regarding the legal situation for RegTech-services or what RegTech’s must be aware of in this business area

N/A.

Economic conditions

Market size for RegTech-services and biggest companies in this business area

Currently, no reliable statistics are available for the Austrian market. However, the global trend towards a RegTech boom is likely to be adopted in Austria. 

The demand for RegTech solutions has skyrocketed in recent years. This is reflected by the fact that the global RegTech market is expected to grow from USD 6.3bn in 2020 to USD 22.2bn in 2027. This corresponds to an annual growth rate of 20.1%. 

The most important RegTech products are in the areas of compliance and risk management, identity management, regulatory reporting, fraud management and regulatory intelligence.

Additional comments regarding the economic situation for RegTech-services or what RegTech’s must be aware of in this business area

RegTech is increasingly being used as a support tool in compliance – it remains to be seen whether clear requirements from the supervisory authorities will enable further use cases. However, this also shows that the potential associated with AI and similar technologies has not yet been fully exploited.

It is clear that many regulated industries are in the midst of a digital transformation and are implementing more and more technologies such as AI or data analytics in their processes.

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