Impact of RegTech on compliance risk due to financial misconduct in the United States banking industry

Abstract

Financial misconduct is a growing issue in the financial sector, leading to increased regulations. The increased need to comply with these regulations preceded the need for regulatory technology. Regulatory technology (RegTech) helps the financial industry comply with regulations. This study aims to identify regulatory technology’s impact on financial misconduct within the United States banking industry. This study uses an evidence-based approach to help make informed decisions on adopting regulatory technology to control financial misconduct. The researcher used the qualitative, Rapid Evidence Assessment methodology to find ten articles (quantitative and qualitative), critically appraise, code, and synthesize them to provide findings and recommendations to the United States banking industry, regulatory agencies, and regulatory technology solution providers. Data from the Financial Industry Regulatory Authority annual reports and Financial Crime Enforcement statistics helped triangulate the findings from the evidence synthesis to increase the study's validity. The results indicated that the adoption of RegTech provided advanced risk assessment and monitoring capabilities that increased compliance with regulations, minimized financial misconduct, and improved the stability and profitability of the United States banking system though it introduced information privacy risk.