When I was asked by Halston Marketing to speak at Regtech Talks, it was a no brainer. I’m a huge fan of tech, although I wouldn’t describe myself as a techie at all. What I am interested in is the outcome, the customer experience, specifically making things better:
How can technology improve efficiency, reduce waste or just make someone’s day that little bit easier.
I’ll admit, I struggled to think of something of impact to say. The truth is my day to day doesn’t sit entirely in either of those camps – regulation or technology, however both things will crop up in my day intermittently.
Regulation is a strange thing. A necessary evil some might say. The fun police. The red tape to strangle innovation. A pain in the ass.
It doesn’t have to be. We can get to a point where we’re all regulations hotties.
Prior to joining Hark I worked in a large marketing organisation, where the feeling of having hoops to jump through stifled the creativity and innovation. As a marketer I wanted to move fast and respond to customers needs, but processes felt like they were in the way.
That in itself is an interesting paradox. Customer expectations are set by their most enjoyable experiences. That means complex transactions should be as simple (and satisfying) as buying a cup of coffee. That’s where technology can contribute in RegTech (and other industries). But the operations of a company take much longer to accelerate than stakeholder expectations.
In short – tomorrow’s experience, is expected today.
Expectations today are operations tomorrow
We’ve all heard some variant of the old adage; change will never be as slow as it is today. Something that is put brilliantly by Scott Brinker. Technology moves at an exponential rate, organisations move at a logarithmic rate. Typically, organisations have to go through a huge reset to try and course correct the trajectory and sophistication of their operations.
What is Regtech?
My first experience of regtech was in finance, running marketing strategy for a startup in the financial risk investigation space. The company has an algorithm that is able to investigate lending risks in 45 seconds. Therefore automating the role of an analyst in the form of Anti Money Laundering (AML), Customer Due Diligence and Entity Investigation. Reducing the amount of manual labour involved in an investigation, increasing efficiency and reducing waste. Importantly, that efficiency doesn’t mean getting rid of those people, but freeing up time for them to work in other areas.
For me this represents one example of what regtech is:
Technology solutions to solve compliance and regulatory issues
A common misconception is that RegTech is reserved for only finance businesses. It shouldn’t be, but for most ,the financial technology portmanteau “fintech” is the most familiar to them.
Regtech is not just for finance
The reality is that there are so many industries that are regulated and those regulations differ depending on country. Regulation isn’t going anywhere, but the way that regulations are weaved into an organisations operation will change and equally the amendments to those regulations will be improved.
Finance isn’t even the most regulated industry, at least not in the US, according to George Mason University’s regulation tracker:
Interestingly, as industries evolve we are likely to see the need for new regulation, to regulate the technology in use. Industries and sectors will start to converge.
Sectors (and therefore tactics) over borders
Something I’m really interested in is the concept of sectors without borders. The idea that through the internet and apps traditional borders don’t apply. For the most part you could start a business in an evening now and be advertising to a different country by the weekend (which has implications for compliance).
That is essentially the essence of Regtech – regulation is being disrupted through technology. I’m not sure ‘disrupt’ is the right word for this as it implies a challenge to the status quo, and that has negative connotations. A better phrase is simply technology is improving regulation. This is something McKinsey describes and visualises brilliantly in their digital ecosystems piece.
The founder and executive chairman of the World Economic Forum (WEF), Klaus Schwab, asks for government leaders to adopt more agile approaches to governance. “We need much more agile legislation and rule setting because it is difficult for the political community to cope with the fast technological progress,” says Schwab.
This was a point echoed at a recent conference, I attended – AI Tech North. Should technologists be doing more to positively encourage the regulation of technology? The reality is that as well as technology, regulation is changing at a rapid rate meaning the expectations for technology assistance with that challenge is increasing. The point was made that instead of waiting for AI to be regulated by government why doesn’t the industry offer ways for the technology to be regulated.
There are around 200 regulatory revisions to keep track of dailyDeloitte, 2017
Tactical implementation, tools for the job and technology
In Hark’s world, tactical implementation is different depending on the size of company in question. For enterprises, our solutions sit squarely in the realm of digital transformation, where the core aim is reducing costs of regulation or simplifying the process. We find that every enterprise is at a different point on their journey, so finding the right way to introduce a change is paramount to the success of any IoT project and likewise any regulation process change.
That’s really where the solution lies for removing fear of reg tech. Start with something small, be tactical. Find one outcome or problem which is frustrating, that you know should be simpler. Have a technology provider scope the tools required and validate the idea of a fix for that one problem. Then go about finding the correct technology architecture to make it happen. And then, do it again and again.
You can view the slides from Regtech Talks below and on Slideshare.