Enhancing banking performance through regulatory technology: Analyzing cost reduction, sustainability, and profitability in Bangladesh's banking sector

• RegTech for Anti-Money Laundering, Transaction Monitoring, and Risk Management significantly impact the Sustainability of Banking. • Compliance, Transaction Monitoring, and Risk Management have significant direct effects on Cost Reduction. • Indirect effects mediated by Cost Reduction and Sustainability of Banking on Profitability of Banks. • Risk Management shows the strongest positive influence on profitability. This study investigates the impact of Regulatory Technology (RegTech) adoption on cost reduction, sustainability, and profitability in the Bangladeshi banking sector. Using Structural Equation Modeling (SEM), the research analyzes the relationships between various RegTech components—such as RegTech for Anti-Money Laundering (RAML), Regulatory Reporting (RR), Compliance (COMP), Transaction Monitoring (TM), and Risk Management (RM)—and key banking performance metrics, including cost reduction (CR), sustainability (SUS), and profitability (PROFIT). The findings reveal significant direct effects of COMP, TM, and RM on CR, as well as notable influences of RAML, TM, and RM on SUS, underscoring their pivotal roles in enhancing operational efficiency. Additionally, indirect effects mediated by CR and SUS on PROFIT were observed, with RM and RAML demonstrating the strongest positive influence. A positive relationship was also found when SUS mediated the effects of TM and RM on PROFIT. This study contributes to the growing body of literature on RegTech by providing empirical evidence of its impact in an emerging market context—specifically, Bangladesh. It highlights how RegTech can optimize compliance processes, promote operational sustainability, and enhance financial performance, offering valuable insights for policymakers and banking institutions in developing economies seeking to leverage technology for regulatory compliance and efficiency.