Regtech, short for regulatory technology, is a category of software solutions that helps its business customers to manage and de-risk compliance with the regulatory obligations of their respective industries. By its nature, regtech seeks first to understand and then to simplify and manage the highly complex laws written to regulate industry. While the right seeks to free business to grow and the left seeks to protect citizens and consumers, a good regtech solution supports both sides with technology that ensures compliance with the law while minimizing the resources necessary to do so.

Consider regulatory control over the financial services industry as a prime example from modern history. Speculative investment soared during the roaring twenties while production waned and unemployment rose. Over the decade, the stock market became increasingly over-valued and consumers took on more and more debt as banks turned a blind eye to obvious risk and over-leveraged cash holdings. Sound familiar?

Black Tuesday and the Great Depression were the result. The Securities Act of 1933, the Securities Exchange Act of 1934 to create the SEC, and the Investment Advisers Act of 1940, which increased the mandate of the SEC, were the government’s response. These laws enacted to guide financial industry and protect main street consumers and investors expanded and evolved over time with middling success at protection and increasingly vocal objection to the burden of regulatory compliance.

The compliance burden for regulated industries was exacerbated by a lack of systems and technology. Paper documentation could be misfiled or completed incorrectly with no easy way to be aware of the error. Audits by regulators could last weeks, months or even years as they poured over thousands of pages of documents. For nearly a century, regulations expanded as businesses struggled with compliance and the American people continued to be hurt by bad actors who remained difficult to catch.

Those days are ending. Today, one professional working for an investment adviser with billions of dollars in managed assets can, using a compliance software platform like SmartRIA, gather the necessary documents for a regulatory exam by the SEC in a matter of seconds. Just a few years earlier, it would have taken multiple people a week or longer to gather the same information. This advancement is possible because of regtech software solutions.

The ripple effects from this new class of technology solutions are far reaching and incredibly hopeful in this age of doom and gloom. Bad actors, mistakes and negligence are found quickly and are more easily remediated. Companies can divert human resources, time and money that used to be dedicated to compliance to more profitable, productive purposes without adding more risk to their business.

In short, for the first time in the history of human commerce, laws written to protect the people can be complied with without undue burden on business, and our society stands to benefit.

Obviously, there’s still considerable work to do. Good regulatory technology solutions still have plenty of room for improvement and many heavily regulated industries have yet to be successfully tackled by regtech entrepreneurs. Businesses and consumers in these industries are still struggling and being negatively impacted because of this dearth of regulatory technology. Data science needs to be applied to millions of documents and workflows in regtech software to find opportunities for fine tuning and modernizing rules and regulations that are no longer relevant.

Civilization has always and will always include good and bad people, heroes and villains, pervasive problems and human ingenuity. Law makers will continue to seek to protect the people as the pace of change accelerates and businesses seek to fulfil the expanding wants and needs of humanity. We need more technology entrepreneurs to fulfil the promise of regtech so we can move forward as a postindustrial society that’s capable of both economic growth and protection of our citizenry.

About Mac Bartine:

Mac Bartine is the CEO of SmartRIA, a leading regtech software company for the global wealth management industry.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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