By: RegTech Africa.
The increasing digitization of financial transactions – which was accelerated by the COVID-19 pandemic – and the resulting rise in cybercrime and fraudulent activities have led to an ever-increasing demand for compliance in both the telecom and financial services sectors, especially in developing countries, for example in Africa. This demand for new regulations comes from the public as well as the governments and makes regulating these sectors all the more complex. It therefore necessitated the creation of a robust and appropriate regulatory framework. Such a task falls to the respective regulator of the sectors concerned. The purpose of this framework is to harness, control and protect the telecom and digital financial ecosystems. Once it has been created, the regulator is further tasked with ensuring its enforcement.
And what better way to regulate technology-driven sectors like the telecommunications or financial services than technology itself? In Africa, many telecom and financial services regulators do not have the necessary technological tools to independently assess the performance and compliance of their respective sector, and thus still have to rely on the operators’ declarations for information. As a result, their ability to meet their sector management and consumer protection mandate is limited. The African telecom sector has been growing steadily, due to an important smartphone penetration, the development of 4G and 5G technologies and the popularity of mobile money services. Without employing technological assistance, regulators and operators are likely to encounter situations where revenue leakage and network fraud become major concerns for them.
This is how Regulatory Technology (RegTech) came into being, with the purpose of facilitating compliance for businesses and governments alike. RegTech allows regulators to enforce compliance in a systematic, data-driven manner and is taking over the regulatory landscape by storm. According to a recent report published by Allied Market Research and covering the 2020-2027 period, the size of the global RegTech market was valued at $5.46 billion in 2019. This report also states that the market is expected to reach $28.33 billion by 2027, growing at a CAGR of 22.3% over the period under review. If we add to the findings of this report the World Bank’s statement about the capacity of a robust regulatory framework to boost GDP growth by more than 2% annually, we can glimpse a promising future for RegTech companies.
RegTech helps governments, regulatory authorities and companies in their efforts to ensure compliance and combat fraud in the telecom and financial services sectors. In Africa, the increasing demand for this type of technology has given rise to a number of startups that strive to meet this demand through continuous innovation. Several African countries have already implemented, or are in the process of implementing, digital systems that aim to monitor national and international telecommunications traffic, with a view to supporting revenue assurance, combating network fraud and cybercrime, as well as enforcing billing integrity.
Among these systems are Global Voice Group’s flagship product suites, Visio and FIN X. Global Voice Group (GVG) is a leading regulatory technology developer and Big Data analytics company. Its contribution to the RegTech landscape is twofold: not only does it design and develop digital RegTech solutions for governments and regulatory authorities, it also supports up-and-coming African startups through the investment fund it created in 2020.
The Visio Suite was primarily designed to effectively support all aspects of telecom regulation, while FIN X uses a cutting-edge digital approach to the growing issue of digital transactions compliance. Visio Suite enables telecom and financial authorities to obtain reliable and accurate data directly from the relevant sectors, thus providing them with the means to successfully address critical challenges such as revenue assurance, regulatory monitoring and compliance in both the telecom and mobile Internet ecosystems. As for the FIN X platform, its digital platforms provide governments, banking authorities and financial intelligence units with full metrics and actionable information regarding mobile money and remittances. These two platforms process and analyze 8 billion transactions on a daily basis, which gives the authorities the means to tackle problems such as telephone fraud, money laundering and terrorism financing.
In the light of the above, it is easy to see why RegTech is on the rise in the telecom and financial services sectors. According to PricewaterhouseCoopers, the adoption of RegTech is likely to continue to accelerate, with a marked interest for financial crime surveillance, consumer compliance and enterprise risk management. However, in addition to the benefits it brings in terms of efficiency, productivity and reactivity, RegTech enables governments and regulatory authorities to create socioeconomic opportunities for their respective country and population, by taking away the need to focus on administrative loads.