Golden Copy: ‘Regtech’ Challenges

Who drives regulatory compliance data into real time, and how, will influence its future


A couple weeks ago, when considering what have been dubbed "fintech" start-ups, Inside Reference Data reporter Joanna Wright found that, at least in the UK, the fintech buzzword may be morphing into a new strain, "regtech." This appears to be because, in that market, half of new start-up businesses fold within their first five years, and the ones that more often survive in the financial services technology space are those that focus on back-office, compliance and post-trade functions.

Is regtech as a trend or a sector too broadly defined so far? That depends on what you think financial regulatory compliance technology ought to accomplish or provide. It also can depend on who the regtech is supposed to be serving—end-users, those who are regulated, or the regulators themselves.

It could actually be a combination of both, as Ian Manocha, CEO of Gresham Computing, a UK-based provider of regulatory compliance, risk control and data integrity services, suggests. "Should regulators have greater online, real-time access into the workings of what's going on inside an institution?" he asks.

Institutions can demand real-time regulatory compliance monitoring capability from their regtech—or they may already have it. If so, it may then be the regulators who are, as Manocha describes it, "ensuring that the next generation of solutions comes through."

This raises an interesting question: do providers who are making advances in real-time compliance data capabilities—or, even more so, the firms using that capability—want the regulators driving how intra-day or real-time regtech is going to work? Which side will have more influence on how real-time compliance data is handled?

What to watch for at ISITC

Financial industry operations group ISITC starts its 22nd annual Industry Forum and Vendor Show in Boston on March 20. You can find chair Jeff Zoller's take on issues that are high on the group's agenda here—including blockchain and operations vendor management.

In the data realm, in keeping with last week's consideration of machine learning and how artificial intelligence can improve data quality, ISITC's agenda will provide a take on how the data itself may have gotten "smarter than us," in the view of Olmstead Associates' Robert Hegarty and J.P. Morgan's Benjamin Sylvester.

Thinking of data as elements of storytelling, State Street researcher Suzanne Duncan, who is concerned with how stories emerge and are told in financial industry operations, will present a take on how investment management industry professionals can fall prey to misguided beliefs and behaviors in their reading of the markets and their decision-making. It may be that it's easy to find yourself crafting a story without consulting data, or without finding the right data.

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