Do you know your govtech from your suptech? Your fintech from your regtech? The digital transformation has led to a surge in technological innovation in most sectors of the global economy. And with these new technologies have come new “tech labels” that have turned into buzzwords. This blog takes you on a trip down memory lane, reviewing these labels and their meaning as it goes, starting from the precursor, fintech.
Fintech: the financier
Fintech stands for financial technology. Financial technology has existed since the 1950s, in the form of credit cards and ATM machines. The term “fintech”, however, was coined later, in 1993. It only became widespread when Internet banking became mainstream, we learn from Moneylens. Fintech refers to new technology that “seeks to improve and automate the delivery and use of financial services”, according to Investopedia. Originally, the term described the back-end systems of financial institutions but has since taken on a more consumer-oriented definition, and is not limited to the financial services sector.
Regtech: the regulator
The number of fintech companies proceeded to increase due to technology breakthroughs. This, together with the increase in financial sector regulation that followed the 2008 crisis, created the need for technology enabling the automated management of regulatory processes in the financial sector. The UK’s Financial Conduct Authority then coined the term “regtech”, which is short for regulatory technology, in 2015. According to Investopedia, regtech’s main functions include regulatory monitoring, reporting, and compliance.
GVG was a regtech provider even before the term was coined. Indeed, since mid-2000, we have been developing and delivering technological solutions that enable governments and regulatory agencies to ensure compliance within the sector they are responsible for.
Suptech: the supervisor
Two years after regtech, “suptech, or supervisory technology, appeared on the digital scene. After the regulator, the supervisor. What is the difference, you may ask? Some overlap indeed exists, but regtech addresses the needs of financial institutions, fintech companies, and banks, while suptech supports supervisors and regulators, says Regtechtimes. Indeed, the latter need technology in order to ensure compliance in their respective sector. More specifically, suptech improves the quality of the data supervisory agencies need to fulfill their mandate. It also helps them optimize reporting and regulatory processes, according to Central Banking.
Govtech: the governor
The private sector readily embraced the digital transformation and the subsequent technological innovations. However, the same can’t always be said of government agencies. As a result, crucial aspects of the digital transformation, such as digital IDs, have not yet caught on, says Electronic IDentification. This negatively impacts the relationship between these agencies and the citizens. “Govtech”, which combines the words “government” and “technology”, came into play to support the digitization of public administrations, helping the latter better serve the population.
Whether we are talking about fintech, regtech, suptech, or govtech, the core idea remains the same. Indeed, the purpose of these “techs” is to meet the need for digitization, streamlining, automation, and overall improvement of the various operations and processes of a given sector, at the level of both private and public organizations.
Want to read more about how regtech can optimize governments’ regulatory capacities? Click here.