RegTech has made a significant impact in the banking domain, and the same might apply to reviving the slowly declining Correspondent banking system.
Here is a snippet from the article published in consumerandsociety.com on why the banking system is on the decline,
“Between 2011 and 2018, the number of corresponding banks dropped by 20%, primarily due to increased regulatory pressures on banks to adhere to an increasingly complex catalogue of compliance rules. Tellingly, regulatory fines have surpassed $300 billion in the last ten years, while the cost of compliance is only set to rise further. This has led many banks to cut ties to their local correspondent banking partners, opting to “de-risk” rather than deal with now-outdated compliance regulations related to cutting terror-financing and money-laundering imposed by the US Treasury and Federal Reserve on the global banking system.”
And how RegTech can help the struggling correspondent banks make a comeback,
“While regulatory pressures are behind the current decline in correspondent banking, the trend could be reversed using state-of-the-art vetting technology. Advanced tools such as biometrics, blockchain and data analytics can already be leveraged to make compliance less time-intensive and, importantly, less costly, doing away with the need to “de-risk” altogether.”
For further read, here is a link to the source article: How RegTech can help correspondent banking make a comeback – Consumer & Society (consumerandsociety.com)
