Application of Financial Regulatory Technology (RegTech) and Its Impact on Financial Stability

Abstract

Financial Regulatory Technology (RegTech), a significant branch of FinTech, leverages advanced technologies such as big data, artificial intelligence, and blockchain to enhance the efficiency and effectiveness of financial regulation. As the complexity and risk of financial markets increase, traditional compliance and risk management methods have become insufficient for modern regulatory needs. RegTech significantly improves compliance efficiency and risk management capabilities of financial institutions through automation, real-time monitoring, risk prediction, and reporting generation, while also enhancing the regulatory capacity of authorities, thereby promoting financial system stability. However, the application of RegTech also faces challenges such as technical malfunctions, data security, and regulatory lag. By analyzing successful and failed cases of RegTech, this paper explores its positive impact on financial stability and potential risks, and provides an outlook on future trends. Overall, RegTech has played a significant role in enhancing regulatory efficiency and market transparency, but further optimization is needed in terms of technical security, regulatory adaptation, and international cooperation to ensure its continued positive contribution to financial market stability.