With fintech startups piling into the regulatory technology space at a frenetic speed, FN polled 25 industry experts for the firms most likely to rise above the competition.
Financial institutions’ ongoing battle to ready themselves for high volumes of regulatory change has prompted compliance costs to swell in recent years. In an effort to ease the burden, firms are pinning their hopes on powerful new regulatory-focused technologies.
Known as RegTech, these digital tools promise to help the industry cut costs by streamlining their compliance processes. And firms have plenty to choose from.
In early 2016, according to UK industry lobby group Innovate Finance, just 13 of its 175 members identified as RegTech providers. By April 2017, Mark Beeston, the chief executive and founder of venture capital fund Illuminate Financial Management said that his team had counted around 700 regtech firms in the sector globally.
Jason Boud, an adviser to the RegTech sector and the co-founder of RegTech networking group the RegTech Forum, said: “We’re in wave one of RegTech, where people are jostling for position.“
Finding the best prospects in that arguably–over-hyped environment can be challenging.
FN asked 25 RegTech founders, venture capitalists, compliance professionals, lawyers and other advisers which RegTech solutions had caught their attention, and which they expected to prosper in an increasingly competitive sector.
With 79 suggestions, we then narrowed the list down to 10.
Suade wins praise from those that have seen its technology in action. A partner at Simmons & Simmons, a law firm that has been providing legal advice to support Suade’s development since 2015, said it has the potential to “revolutionise the entire process chain of regulation from publication to implementation”. One RegTech adviser familiar with the product said Suade was “cautious about saying what they’re doing” because “they’re one of the only [firms] doing what they do” and they want to keep their competitive advantage. Run by the dynamic former trader Diana Paredes, Suade is focused on prudential regulation stemming from Basel III and Mifid II, and provides products including a stress testing platform for capital requirements and scenario testing for liquidity management. A well-known investor in the sector, but not a backer of Suade, said they knew “their stuff inside-out”. But Paredes said the company, which raised £150,000 in seed funding in 2015, was “not looking at fundraising anytime soon in order to remain neutral”.
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