RegTech Solutions - BFSI Modernization

📌 RegTech Solutions for BFSI Modernization

1. Business Drivers

• Rising regulatory scrutiny (FATF, SEBI, RBI, EU AMLD, MAS, FinCEN).

• Increasing fraud & financial crime risks.

• High compliance costs (manual KYC/AML checks).

• Need for real-time onboarding and frictionless customer journeys.

• Pressure to modernize from legacy, rule-based systems → AI-driven automation.

2. Key Capabilities in RegTech Modernization

🔹 KYC (Know Your Customer)

• Digital onboarding with eKYC (Aadhaar, PAN, CKYC, DigiLocker in India).

• Identity verification: OCR, face match, liveness detection.

• Risk scoring: customer profile, geography, product, transaction patterns.

• Continuous KYC: periodic refresh triggered by material events.

🔹 AML (Anti-Money Laundering)

• Transaction Monitoring (rule + AI/ML anomaly detection).

• Screening against sanctions, PEP, watchlists.

• Network analysis for layered money movement (integration with graph DBs).

• Suspicious Activity Reports (SAR/STR) automated generation to FIU-IND / regulators.

🔹 Compliance Automation

• Regulatory reporting automation (XBRL, FIU-IND XML, SEBI/RBI submissions).

• Policy management & digital controls mapped to workflows.

• Regulation-as-Code (machine-readable compliance rules integrated with business processes).

• Audit trails & traceability with immutable logs (blockchain/DLT for sensitive jurisdictions).

3. Solution Architecture (High-Level)

Channels📱 Mobile / 💻 Web / 🏦 Branch

➡️ Digital Onboarding Layer

• OCR, Face Match, Liveness Detection

• Document Verification APIs (CKYC, Aadhaar, PAN, DigiLocker)

➡️ KYC Service

• Identity Verification Microservice

• Customer Risk Scoring Engine

• Consent Management Service

➡️ AML/Financial Crime Service

• Transaction Monitoring (Rules + ML)

• Screening Service (PEP, Sanctions, Watchlist APIs)

• Case Management & Investigator Workbench

• Graph Analytics for money-laundering pattern detection

➡️ Compliance & Reporting Layer

• Reg Reporting Service (FIU-IND, SEBI, RBI, FATCA, CRS)

• Policy & Control Automation

• Workflow Automation Engine

➡️ Shared Services

• Master Data (Customer, Account, Party)

• Event Streaming (Kafka/NATS for real-time transaction feeds)

• Audit, Logging, Immutable Store

• AI/ML Model Ops (fraud models retraining, bias checks)

➡️ Integration Layer

• API Gateway / Service Mesh (Istio)

• Secure Connectors to Core Banking, CRM, Payments

➡️ Security & Governance

• Identity & Access (Azure AD / Okta)

• Data Privacy (tokenization, masking, encryption)

• Consent & Data Lineage (GDPR, DPDP Act compliance)

4. Technology Enablers

• Cloud-native microservices (Spring Boot, .NET, Node.js).

• AI/ML: anomaly detection, NLP for unstructured documents, graph ML for networks.

• Blockchain/DLT: tamper-proof audit trails & regulatory reporting.

• APIs/SDKs: Jumio, Onfido, Trulioo, Refinitiv, Dow Jones for KYC/AML data.

• Data Platforms: Azure Data Lake, Snowflake, GCP BigQuery for regulatory analytics.

• Automation: RPA for repetitive compliance tasks, workflow orchestration (Camunda, Zeebe).

5. Benefits

• ✅ Faster customer onboarding (minutes vs days).

• ✅ Reduction in false positives in AML monitoring.

• ✅ Lower compliance cost via automation.

• ✅ Improved audit readiness and regulatory trust.

• ✅ Better fraud detection & risk management.

6. Challenges & Mitigation

• Legacy integration issues → use APIs, adapters.

• High false positives in AML → adopt ML + feedback loop.

• Regulatory changes → “regulation-as-code” framework.

• Data privacy → adopt DPDP/GDPR-compliant architecture (consent vaults, data minimization).

✅ This covers end-to-end RegTech modernization for BFSI — from KYC to AML to compliance automation.