How RegTech Powers Growth in the Age of Real-Time Payments
Real-time payments are set to transform the financial landscape, with global volumes expected to reach $575 billion by 2025. In the European Union, new regulations are changing the financial sector. Banks and fintech firms across the SEPA zone must enable instant credit transfers by October 2025. These transfers mandate settlement within ten seconds around the clock. This accelerated pace is exposing significant weaknesses in existing compliance infrastructure.
Rising Fraud Risks
Faster payment rails come with heightened fraud exposure. Institutions operating legacy systems report fraud rates up to ten times higher on real-time transactions compared to traditional payment methods. Industry surveys reveal that 90% of EU financial firms consider their current systems inadequate to handle these risks effectively.
Andrew Davies is the global head of regulatory compliance strategy at ComplyAdvantage. He recently said that “the demand for real-time payments coincides with real-time financial crime risk.” He also noted that his company’s platform “uses AI to help firms screen transactions and monitor customers continuously.”
Continuous Customer Screening
Traditional compliance approaches that rely on static, periodic customer checks are no longer sufficient. Firms are increasingly adopting artificial intelligence tools. This includes those developed by ComplyAdvantage. These tools provide continuous monitoring of clients against sanctions lists and politically exposed person databases. These systems update risk profiles in real time, enabling compliance with dynamic regulatory requirements.
Instantaneous Payment Screening
The Instant Payments Regulation mandates transaction settlement in under ten seconds, requiring screening systems to operate at comparable speeds. Legacy solutions prone to false positives create bottlenecks that frustrate users and disrupt business. Advanced RegTech platforms, such as those offered by ComplyAdvantage, use machine learning algorithms. These algorithms balance speed and accuracy. They allow legitimate transactions to proceed while intercepting suspicious activity.
Adaptive Transaction Monitoring
Real-time payments leave little room for manual intervention. Emerging transaction monitoring solutions apply AI to analyse behavioural patterns across accounts and timeframes. This enables detection of complex fraudulent schemes that static rule-based systems often miss. Early identification of suspicious activity is critical to mitigate losses.
Compliance as a Competitive Advantage
Compliance is evolving beyond a regulatory necessity to become a driver of growth. Firms that streamline onboarding and automate low-risk decisions reduce operational costs and improve customer experience. Enhanced fraud prevention also helps build trust with regulators and clients.
Incremental Modernisation
Many institutions are opting for modular, API-first RegTech platforms that integrate with existing infrastructure. This approach allows gradual improvement without wholesale system replacement. Key features include real-time data processing, transparent decision-making, scalability, and robust security protocols.
Looking Ahead
As real-time payments become standard, firms that fail to upgrade compliance systems risk falling behind. Effective regulatory adherence at the speed of instant payments will distinguish industry leaders in the coming years.
