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Beyond FinTech: Conveying the RegTech Message

DATE - 23/08/2016   |   Martina Doherty   |   Blog

It’s interesting to note how quickly an industry buzzword becomes mainstream and the term FinTech is certainly a prominent example. This once fresh concept, used to describe innovation in financial services where technology is the key enabler, now covers such a vast array of different services and products that it has arguably rendered itself meaningless.

But FinTech has evolved and in its place we now have new innovative fields with better terminology to match up to their promise. In my opinion, RegTech is one of the most powerful and exciting of these emerging terms.

The UK regulatory body, the Financial Conduct Authority (FCA), defines RegTech as a “sub-set of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities”.

This is a key differentiator and the reason behind the rapid growth of RegTech firms. But their challenge now is essentially a marketing one: to ensure the distinction between traditional FinTech and today’s RegTech is effectively used, understood and conveyed to the wider market – and to potential future clients in the process.

Enabler more than a disruptor

Previously FinTech was viewed as a disruptive force in the market, with firms openly challenging incumbent systems and institutions. I would argue that in contrast RegTech is more of an enabler, offering technology-based solutions to key regulatory and compliance challenges facing financial institutions in the market today. As a result, RegTech firms tend to work in partnership with their clients and not necessarily even in competition with other RegTech firms as they tend to have a unique offering and approach.

Recently we’ve even seen an upsurge of larger institutions - such as Icap – providing venture capital and support to RegTech start-ups, which complement their existing business models.

Overcoming challenges

Financial institutions can struggle to keep abreast of the rapid pace of change and the sweeping changes in market structure, which new regulations often introduce. Coupled with this are the inefficient or outdated approaches still being used by many companies to meet existing regulatory obligations. But non-compliance is simply not an option, nor is a repeat of those past mistakes which regulatory reforms are ultimately seeking to address.

Recent high-profile scandals such as the manipulation of Libor and key global FX benchmarks have further served to highlight the reputational, and even personal, damage that can result from ineffective monitoring. RegTech introduces greater agility to existing systems, automates key processes and enables more granular reporting.

Market surveillance technology has also grown up with a range of software solutions now available to highlight breaches of rules in real-time.

And in the current environment where organisational and cost pressures demand a more streamlined approach, I think we will see the increase in technology at a corporate level, rather then departmental, to avoid duplication of effort and resources.

Conveying the message

Ultimately, the RegTech revolution will prove to be fundamentally different from the initial surge in FinTech start-ups for two main reasons:

  1. The distinct role of RegTech positions provider firms as delivery partners, addressing the key compliance, implementation and cost problems of today’s financial markets. This in turn allows institutions to re-focus on their core business – the customer.

  2. RegTech can play a central role in helping the market adapt to regulatory reform, which should hopefully prove key to preventing a repeat of past mistakes and avoiding future pitfalls. This is great news not just for the firms themselves but for the health and reputation of the market as a whole – and it’s a message which many companies will benefit from hearing.

If you would like any advice or assistance on how to effectively convey the unique nature of your business, contact MD Consulting or discover more about the services we offer by watching our video here.

MD Consulting is proud to be a founding member of the Global FinTech PR Network.

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