Great guest post by Jason boud Startup CEO
@enterprisebe, Advisor @Vis_io @clarifyio #FinTech Mentor/Investor @clausematch @cutover @sbcFinTech @FinTechLabLDN @01Ventures @techstars #RegTech see more by him for Irish Tech News here.
Another article jumping on the bandwagon of RegTech? Well, yes but as I wrote about in Solve a real problem. I see an increasing number of words written about RegTech, however products or companies applying their intellect & knowledge to real industry problems still seem rare. In this multi part article I decided to explain more about RegTech and interview some companies that are solving real problems.
What is RegTech?
Welcome to the world of regulation technology or “RegTech”. The term itself is an amalgamation of Regulation and Technology and has taken off since former UK chancellor George Osborne raised it in last year’s budget, promising to support “new technologies to facilitate the delivery of regulatory requirements” to the financial services sector
Compared to it’s big cousin Fintech, RegTech is emerging from the shadow of FinTech (0.002%** of the number of articles written about it) and a fraction of the money invested in it . As Jan-Marteen Mulder notes, it’s also wider than Financial services, covering other regulated industries.
Is RegTech real?
As a 2015 report by Thomson Reuters noted “Regulatory matters are consuming disproportionate amounts of board time, from correcting non-compliance and preventing further sanctions to implementing structural changes to meet new rules”. Without action regulated firms will see a never ending increase in the cost of being compliant, a cost that some market participants will decide is not worth the reward.
How real are the problems RegTech promises to solve? How is technology being applied to solve the problem? And does RegTech have the potential to save the banking industry?
As Sean Smith, Deloitte notes is his 2016 report “In the short term RegTech will help firms to automate the more mundane compliance tasks and reduce operational risks associated with meeting compliance and reporting obligations”
With 8 regulators now following the FCA’s lead in creating collaboration opportunities (sandboxes and hackathons***) there is no doubt the regulators see this as real. For further reading see RegTech 2016 facts.
Will RegTech save the banking industry?
In short, No not on its own, but with profit margins continuing to shrink, regulations continuing to add further complexity on an already muddled landscape. Automation of process using technology, innovative use of technology to reduce risk and improve conduct is a golden opportunity for the RegTech players.
But don’t believe me, I sought out inspirational CEO’s, Evgeny Likhoded (CEO and founder ofClauseMatch*), and Taras Chaban (CEO of Sybenetix) to see if they could help me find an answer. I also talked to a senior manager in the industry who has worked in both a regulated role in a bank and at a regulator and their interview will be published shortly.
What should you do next ?
2017 promises to be an exciting year in the RegTech arena. Here are 5 simple steps you can take to keep pace with developments.
- Social media is a great reference tool. Although there is a lot recycled content keep an eye on my feed to hear more about the companies and individuals that are influencing this area. Hashtag #RegTech
- Watch out for announcements on new RegTech focussed VC funds, accelerator programs.
- Attend an event – There are some good free events and paid events. I expect more in 2017.
- Read my next blog post for insight on use cases.
- Join the conversation.
This article first appeared on the Beyond Mobile Blog
Notes and Reference sources
RegTech is real @MulderJmm
FCA Promotes RegTech to Bring Automation to Compliance @Tomgroenfeldt
*I am an early stage investor in Clausematch
** Based upon number of google results for a search on #RegTech compared to #FinTech
*** The FCA hackathon (called FCAsprint) which is part of their Project Innovate: Regtech initiative took place . As usual the event was well attended with over 130 participants. 2 companies familiar to me already Clausematch (@clausematch*) and JWG Group (@jwg) were in attendance and what they have is worthy of writing about.