Regtech: Not Cool, Who Cares?
Fintech's younger sibling is growing as regulation bites financial institutions
Every hype cycle contains its own backlash. Gartner poetically calls this the Trough of Disillusionment: the stage between excitement about a shiny new technology and calmer acceptance and adoption. The backlash stage seems to come round quicker than ever in these cynical, post-dotcom days—we are already seeing negative op-eds about blockchain, for example, not all that long after it first made headlines. Fintech has been in this trough for a while.
Case in point: recently I attended a talk provocatively named "Why Fintech Isn't Cool." The theme of the discussion was that "fintech" is just spin, a marketing term designed to conceal the fact that business-to-consumer financial services start-ups aren't really doing anything different. Deloitte seems to agree; in May, the consultancy released a report that said peer-to-peer lenders will not disrupt banks.
Perhaps fintech isn't cool. Perhaps the cool factor matters when you have to sell a concept to the general public. But in the capital markets, fintech's younger sibling—early-stage businesses aimed at helping financial institutions with one of their biggest difficulties, regulation—is emerging. The spaces these businesses play in—data management, data reconciliation, automating manual reporting—are not sexy, but investors see potential.
This is now enough of a phenomenon to warrant its own ugly portmanteau. "Regtech" isn't cool; but then, it isn't trying to be. You'll hear the language of "innovation" thrown around as much as in fintech, but really regtech doesn't position itself as disruptive. Rather, as a business-to-business sector, its potential lies in partnerships with financial institutions and even existing solutions providers.
These businesses are increasingly supplying solutions focusing on specific bits of specific regulation. Perhaps this tactical approach is at odds with the holistic data hygiene regulators would like banks to practice, exemplified by BCBS 239, but that's a column for another day. I predict this will be the space to watch in months to come, even though it lacks the buzz that has characterized the fintech market.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Finra clears hurdle with CAT launch, but several others remain
Two major components of the consolidated audit trail are now in place. But wrangling over the CAT’s future continues.
Bloomberg, industry bodies push back on Cboe’s proposed OEMS rule change
Some industry bodies disagree with the options exchange’s proposal to carve its Silexx OEMS out of the SEC’s definition of an exchange facility and place it into a separate business line.
GenAI: US Fed reveals its five use cases
Internal sandbox used to assess viability and risks; coding and content generation on the agenda.
Zeros and ones: Industry contemplates T+0 as the next step
With the North American transition to T+1 settlement complete, same-day settlement could be the next goalpost set, though skeptics are many.
The IMD Wrap: Déjà vu as exchange data industry weighs its options
Max highlights some of WatersTechnology’s recent reporting on data costs and capacity issues facing the options industry, and asks, haven’t we seen this before somewhere?
FRTB data quality issues persist amid shifting implementation dates
Banks are finding market and reference data challenges posed by the FRTB’s standardized model tricky, compounded by uncertainty over when the regulation will take effect.
Cboe pushes rule change to make way for proprietary Opra alternatives
As US options data has grown in volume and cost, Cboe says changing the public feed's governing document would make way for more competition from private alternatives, including its Cboe One Options Feed, launched in 2023.
Regulators urged to promote cyber security investment
Public interest in stopping cyber attacks that could trigger bank runs, says Bundesbank researcher