Event Summary: RegTech Global Perspectives

On Tuesday 23rd June the RegTech Association of Australia hosted an online event, “RegTech Global Perspectives”. The event was focused on exploring the latest trends within the sector in the UK, Australia and Europe. The Nordic RegTech Association was delighted to participate in the event, and today we would like to summarise our key take-aways in our blog entry. You can watch the full recording of the event through the link above. 

After the opening remarks, Jennifer McKinlay, the Senior Trade Commissioner at Austrade (UK, Ireland and the Nordics) shared how the Australian Trade and Investment Commission could support both the Australian and foreign Regtech companies in their expansion to new markets. The contribution of the Australian government agency is twofold. On one hand, Austrade strives to attract, promote and facilitate the foreign investment into Australian economy by helping the potential investors to navigate in the Australian ecosystem and to find suitable business partners. On the other hand, Austrade actively works with foreign companies entering Australian market to help them learn more about the regulatory environment, Australian economy, its challenges and opportunities. Jennifer shared two successful cases of this collaboration within the Regtech sector. The first example concerned the TCC group, a UK Regtech helping firms to manage and assess their risk exposures and ultimately improve the customer outcomes by providing a wide range of solutions. Another example mentioned Feature Space, a Regtech that uses adaptive behavioural analytics to recognise anomalies in the data and feedback into the system. She also noted that the Australian market, although currently affected by the pandemic, is becoming an increasingly more interesting economic area, as Australia and the UK have recently kicked off the free trade agreement that is sure to provide a favourable ground for future Regtech collaborations between the nations.

After Jennifer’s presentation, Deborah Young, the CEO of the RegTech Association of Australia, announced the panel discussion. It was moderated by Michelle East, CEO and Founder of Certainty Compliance, and the participants included Deborah Young, Chris Cobb, the Investment Director at Austrade, Sian Lewin, the Co-Founder & Head of Client Delivery at RegTech Associates as well as Founder of RegTech Women, and Richard Rosenholtz, Chairman of the Nordic RegTech Association. The discussion revolved around two large topics, which will be discussed below in the context of the corresponding regions.

The response of the Regtech sector to the COVID-19 outbreak

Nordics: Although the response to the pandemic has been different across the Nordic nations, social distancing didn’t affect the operations of Nordic Regtechs. Flexible, tech-savvy and innovation-driven Regtechs used the time to develop their products without experiencing any hindrance due to working remotely – as many of them are digital by design. The biggest difference in how the Nordic Regtechs responded to the pandemic can be attributed to the regulatory approaches of the countries they represent. For example, in Sweden, the regulator assumes the role of an impartial regulator within the financial industry, while in Norway and in Denmark the regulators are more involved in developing financial industry by, for instance, funding the sandboxes and offering additional support to new players. You can read more about how the Nordic Regtechs responded to the pandemic here.

UK: The UK is currently emerging from the lockdown, and there is still a lot of uncertainty on when, and if, people would be returning to the offices. The regulatory focus on operational resiliency still pushes banks and insurers to accelerate digitisation of their processes. However, the industry experiences the elongation of procurement processes. At the same time, there is much more interest and inquiries from the incumbents in regard to Regtech adoption. The UK incumbents seem to use their time during the pandemic to research and review their Regtech strategies and therefore could be more likely to conclude that they cannot continue without automation of manual processes.

Australia: The Regtech sector in Australia is represented by a majority of mature SMEs who had healthier balance sheets before the pandemic, and thus were able to weather the storm a little bit better. There were two controversial consequences of the pandemic: first, some PoCs and trials were postponed due to the pandemic, while the second is an influx of daily new partnerships, deals and membership applications to the RegTech Association of Australia. Deborah noted that the Australian scale-ups are very familiar with working remotely, and thus the time zone is the only hindrance to international collaboration. She stressed that responses of the governments and established banks send an important message to the sector – if there is a will, there is a way. Therefore, the sector should continue to advocate accelerated adoption through faster procurement.

In addition, the panellists discussed the role of the Regtech in managing the recession triggered by the pandemic. Sian underlined the exogeneous nature of the impending economic downturn compared to its predecessor, which could lead to a different crisis management approach. She expressed hope that the regulators would introduce more clarity around the use of the cloud and provide more supervision within the ESG topics and sustainable finance. Deborah emphasized the role of Regtech in addressing the recession; Regtechs bring transparency, help businesses, boards, leadership teams to make better business decisions by bringing up the right information in critical times – not only in the financial industry, but in other highly regulated sectors as well – such as energy or telecom.

In conclusion, Sian stressed that there were still some barriers to the adoption of Regtech, and it is imperative to educate the market about Regtech and what it can achieve. At the same time, as noted by Richard and Deborah, is also important not to be afraid of being creative in adoption of new technologies and trialling the solutions in different industrial contexts. Finally, Sian concluded that only the collaborative effort trying to bring down the barriers would contribute to safety and reliability of the future financial system.

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