The value of the RegTech market has tripled in the last four years and is on course to continue the trajectory, especially in light of current events. Following sky-high fines in the aftermath of the Global Financial Crisis and beyond, the rising cost of compliance, and the breakthroughs of innovative technology, RegTech has been a success story for the financial industry in general and many RegTech firms in particular. With increased fame come more challenges though.
The honeymoon is over and the initial excitement has ebbed down. RegTech needs to prove that it is more than another buzzword and while in many ways has done so already, there remains plenty of work for it to overcome the challenges it faces. In a sense the key issues like legacy systems, third party risk, conflicting mentalities, costs and resources and more have not changed. RegTech companies still face the same challenges to find work and customers while the financial institutions still wonder too often whether the costs are justified and if the solutions are actually scalable. In the meantime, competition increases, rendering the whole situation even more complex.
There is, of course, no single solution, one fit for all for either RegTech companies that look to make it or financial services firms that need to address the aging compliance structure. There are, however, a number of things you can do that will help you. The first one should always be to try seeing things from the other side of the table. I have worked with dozens of RegTech firms and banks and not just once I got the impression that the two speak entirely different languages. When you identify the key challenges, it is a first step to overcoming it. The second though needs to be some deep thinking about how that can actually be achieved.
If you turn the table and look at it from a different perspective you will often find issues you may not have even considered. If you are a RegTech and frustrated with the fixed mindset you encounter at a potential client, don’t keep banging on about your mind-blowing technology, but rather think about why they are reluctant to change the way they work. If you are a compliance professional at a bank and wonder why the smart RegTech solution does not seem to care too much the fine details of a specific regulation you want it to address, try to understand why they are more excited about the technology than the rules.
It’s a lot of ifs (and buts), I admit. But if you start in the right direction, your RegTech journey will be much easier – no matter at what end you start. It is, of course, only the beginning of a long journey with more than just two steps and if you want to talk about it, why don’t you just drop us a line. Let us help you make better RegTech decisions!