As a technology company focused on the financial industry, with a number of prominent banks as customers, we are often grouped with London’s wealth of great FinTech companies delivering financial services in new ways to consumers. While it is an honor to be grouped with such pioneering enterprises, what we do is in many ways fundamentally different. Our platform helps banks with their regulatory obligations instead of competing with them, but then ultimately it is still for the benefit of consumers (a more transparent, stable and efficent financial system).
While tackling regulatory issues from new perspectives last summer, we quickly realised that within the financial system, regulation itself is another, unique customer-type that needs to be serviced better. A couple weeks later, we were introduced in a meeting as a leading ‘RegTech’ company and it kind of stuck.
RegTech was highlighted as a separate sector in the Treasury’s 2015 Budget Report (Section 2.272/p.98) and in the UK Government Organisation for Science FinTech Futures Blackett Review. UK regulators took note and have responded in a commendably agile fashion. The Financial Conduct Authority, as part of their Innovation Hub and successful Project Innovate, highlighted RegTech as a key focus area and even took it a step further by launching a proposal for a regulatory sandbox and a call for input in November 2015.
A previous Institute of International Finance report on RegTech provided some anecdotal but quantitative analysis of the size of the problem that can cost a single financial institution over $1bn every year. Christophe Chazot, Head of Innovation at HSBC also highlights a unique aspect of RegTech where the sheer size and complexity of regulatory requirements allows for focused RegTech companies to collaborate to solve an end-to-end problem:
“A network of companies, focused on developing common technological solutions to regulatory processes (RegTech) promises to make the financial system both more accessible and more secure.” – Christophe Chazot, Group Head of Innovation, HSBC
While still in its infancy, it is safe to say that RegTech has emerged as its own sector in 2015 and looks to be a key focus area for the industry in 2016. So yeah, Regtech is a thing!