The wild world of regtech
Published 22 February 2019, Mike O’Keeffe, UK General Manager
The global regtech market is exploding. By 2023 revenues are expected to be worth $12.3 billion, growing at a compound annual growth rate of 25.4% over the next five years[i]. The pace at which it is evolving has even led Deloitte – who we are proud to be collaborating with on some new client engagements – to call regtech “the new fintech”[ii].
There are so many new players racing towards regtech because there are big problems to solve. Banks and financial services firms are grappling with an overwhelming volume of complex regulatory change and 2,500+ compliance rule books globally. With the cost of compliance to the banking industry estimated to be $270 billion each year, firms need help to the root causes of regulatory risk as efficiently as possible.
However, as with any new and fast-growing industry, the plethora of new tools and technologies has become difficult to navigate. Market consolidation will happen in the next 2-3 years, but right now banks and financial services firms aren’t sure which direction they should be looking to drive successful adoption.
Competition in the regtech market is, of course, a good thing. This is a relatively new industry and new entrants will drive innovation. You only need to look as far as Allen & Overy’s Fuse programme to see how progressive businesses in the legal and regulatory tech ecosystem are delivering cutting edge innovative work.
The problem is that we’re seeing too many other firms simply follow the money and rush new solutions to market, without an in-depth understanding of the regulatory landscape – not to mention the intricacies of the industries they are serving. For a very small minority, regtech has been reduced to a trend or a buzzword, when it is in fact a movement. A movement which has the potential to transform the banking sector.
When considering different vendor propositions, it’s important to investigate the team behind the tools. You could have the most seasoned technologists working on a potential solution, however it’s unlikely they will be able to fully solve regulatory challenges without working with legal and regulatory analysts, data scientists and risk practitioners. A 360-degree picture is critical. Also, take note of where the team is based. If you’re running a global business, you will benefit from a global team with feet on the ground in your core markets.
Next, look for evidence of close collaboration with major regulatory authorities. This is a sign that the regtech business is established, mature, and can be trusted to tackle the biggest risk for the world’s top 20 banks today.
Conversations with vendors should never just centre around why their technology is the best on the market. It doesn’t matter if it is the best black box if a vendor is not skilled in getting it to work for the customer. The focus needs to be on how adoption can be successful, sustainable, and not disruptive to an organisation.
This is a dynamic time for the regtech market. There is still huge potential for new and innovative solutions to tackle complex compliance challenges – as demonstrated by the level of market growth expected over the next five years. Yet until market consolidation happens, banking and financial institutions need to be able to cut through the noise. Reducing overheads and improving stakeholder outcomes means staying focused on the things which matter: team, relationships, global reach and a focus on successful adoption.
Hacking apart the (FinTech) problem
Published 21 November 2018, Michelle Wang, Regional Head of Professional Services
HACKING APART THE (FINTECH) PROBLEM For the second year running, KPMG Digital Village and the Monetary Authority of Singapore (MAS) organised the Global FinTech Hackcelerator for the 2018 Singapore FinTech Festival. The programme ran for 12 weeks where companies are given a ‘problem’ statement to solve. Corlytics were selected as one of the 20 companies out of 304 applications, across 30 countries to take part in the programme.
PROBLEMS BREWING IN THE FINANCIAL INDUSTRY
The Global FinTech Hackcelerator is powered by KPMG Digital Village, who provide a platform for global innovative start-ups to address the problems faced by the financial industry. This year, 80 problems across Financial Inclusion area, InsurTech area and RegTech & SupTech area were identified. Over the past 12 weeks, the Corlytics team attempted to solve this problem statement: “How can institutions share recommendations and information on regulatory changes across different international jurisdictions, assisting in the accountability and compliance of each regulatory body’s requirements more effectively?”
TEAM TRIP TO SINGAPORE In the first week of October, the team visited Singapore attending the mid-term checkpoint session with the Monetary Authority of Singapore (MAS) and KPMG on the current progress of the programme. Whilst we can’t openly discuss the project we worked on, Corlytics received positive feedback and useful suggestions from MAS, KPMG and Ryan Lou, our Corporate Champion. Ryan supported the Corlytics team on developing contextualised prototypes and enhancing solutions to be ready for the demo day on the 12th November and possible real business opportunities. In addition, the team also attended the networking session organized by KPMG, speaker sessions on doing business in Singapore and visited several innovation labs. Through those sessions, we got better insights about ASEAN market and got to hear about the fintech opportunities in Singapore. FINTECH FESTIVAL The second part of the programme was to further develop Corlytics’ products. Earlier this week, the team prepared a demonstration and presentation for the Hackcelerator as part of the Fintech Festival in Singapore and follow up with Singapore financial institutions. Whilst Corlytics wasn’t selected as a winner, we were delighted to take part in this exciting opportunity. The top 20 finalists from the 2017 hackcelerator are already seeing tangible outcomes from their participation, with some proceeding to work with corporates to pilot their solution, and another successfully exiting via an acquisition. Indeed, for Corlytics, taking part in hackcelerators and sandboxes has been a great way to expand our product offering and build new relationships.