Official business

In the UK, the Department of International Trade is looking for RegTech firms to come with it on a trade mission to the United States in the middle of next month. In true bureaucratic fashion, it is asking publicly for 'applications.' The lucky winners will show their wares to American regulators and venture capitalists. They will also be welcome to attend a RegTech 'summit' at the Convene Conference Centre in New York on 14th November, organised by the A-Team Group.

The Americans, meanwhile, are preparing a 'RegTech bill' in their federal legislature. HR 4476 (which, if passed, will become the Financial Transparency Act) calls on the Treasury secretary to create uniform, machine-readable data standards for information reported to financial regulatory agencies, including the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Deposit Insurance Corp., Federal Reserve, Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the National Credit Union Association and the Federal Housing Finance Agency.

Congresswoman Carolyn Maloney (Dem) and Congressman Patrick McHenry (Rep) introduced it, hoping to make financial data more easily available and less opaque by requiring federal regulators to organize it better and make it available online. 'Open data' is the catchphrase. Maloney says that she has long been an advocate for structured data in financial reporting. McHenry hopes that it will benefit 'tech start-ups.' They want to make all data available in an open-source format that is electronically searchable, downloadable in bulk and without licensing restrictions.

The Australian Government wants to create a FinTech and RegTech select committee to look at the implementation of open banking and the 'policy settings' for FinTech and RegTech firms. Unlike Singapore, whose monetary authority oversees all, Australia has a phethora of regulators in the RegTech area. The Australian Competition and Consumer Commission oversees the so-called "consumer data right" (Australia's answer to open banking) and wants to help consumers to compare and switch between products and services, while the Australian Securities and Investments Commission has overall responsibility for RegTech. Meanwhile, the Reserve Bank of Australia oversees the payments system as a whole, which encompasses a wide variety of payment instruments (cheques, payment cards, massive corporate payments etc) and the Australian Prudential Regulatory Authority is the author of Prudential Standard CPS 234 regarding information security. The select committee – proposed by Sen Andrew Bragg in a motion that the Senate passed - is to be a means of cutting through this fragmentation and raising Australia's game in this highly competitive arena.

The six-man Select Committee on Financial Technology and Regulatory Technology, when it is set up, is expected to look closely at the ways in which RegTech helps banks conform to the recent recommendations of the Banking Royal Commission. It is also to look at:

• the size and scope of the opportunity for Australian consumers and business arising from FinTech and RegTech;
• barriers to the uptake of new technology in the financial sector;
• benchmarking;
• how to reduce costs;
• the effectiveness of current initiatives in promoting FinTech and RegTech start-ups; and
• any related matters.

The motion calls for a 'final' report in October next year. The committee will be able to - and undoubtedly will - hold some sessions in camera.

What the regulators say

The FCA, meanwhile, is moving much of its data - meaning data that it has gleaned from the firms that it regulates, many of whose compliance officers are reading this article - to the Cloud. This global network of servers, each with a unique function, is eminently hackworthy, notably by various state agencies around the world that operate above the law, as revealed in the Schrems case and the Snowden revelations about GCHQ, which cost director Iain Lobban his job. The disturbing implications that this development has for the security of such data in the face of such threats are obvious.

Meanwhile Nick Cook, the director of innovation at the Financial Conduct Authority, told the recent Sibos conference: “I think in the UK market, RegTech as an offering is somewhat struggling and plateaued at the moment. We see a reduction in the number of new entrants into the RegTech ecosystem. In the US, the situation is different." (Source: Waters Technology.)

Prizes and awards

The awards have been flowing strongly and steadily in the RegTech world of late. AQMetrics and Fenergo were the joint winners in the RegTech category of the Deloitte Financial Services Innovation Awards in Dublin. Each entrant had to have "developed an innovation" in the financial services industry, had to operate in Ireland, had to have an annual turnover in excess of £850,000 (€1 million) and had to have been in operation for three years at least.

Meanwhile, Trulioo's platform, GlobalGateway, has been ranked number one in the verification tools/identity checks category of Market Fintech Ltd's RegTech Supplier Performance Report (this year's edition is on sale for £850) for the fourth year in a row.

Kaizen Reporting, the regulatory reporting firm that developed an assurance service called ReportShield, has also won an award, having topped the "Technology Provider for Regulatory Compliance" category of the FinTech and RegTech Global Awards at a gala ceremony hosted and run by Central Banking in Singapore. The 'shield' is actually a suite of services which help financial firms meet their reporting obligations. It is attuned to MiFID II, EMIR, the Dodd-Frank Act, the SFTR and other regulations patronised by the 'Group of 20' (actually only 19) most industrialised nations in the world.

Other developments

• American RegTech guru David Caruso is joining Treliant as a managing director. Over the past 24 years he has written anti-money-laundering and sanctions compliance software, led complex financial crime investigations and built up AML RegTech companies with an emphasis on suspicious activity monitoring, investigations, customer risk ratings and 'due diligence' operations in the US and elsewhere. His most pertinent words of wisdom are: "The promise of AI in AML is overstated. Artificial intelligence is an imprecise concept - 'better software' is a better term than AI. Better software will create more AML work, not less."
• BearingPoint RegTech has bagged the financial technology company of Revolut as a new customer for its Abacus360 banking software. Revolut will be using it to report things to the European Banking Authority and for AnaCredit reporting. AnaCredit (which stands for "analytical credit datasets") is a project to set up a dataset containing detailed information about individual bank loans in the euro area that is standardised througough the EU.
• The integration of RegTech into normal electronic business unfolds. In the middle of the month Compliance.ai became one of WesPay’s 1,000 financial industry members. Wespay is one of the oldest electronic payment associations in the world. Compliance.ai prides itself on automating the tedious, manual and complex steps in the regulatory change management process to help its customers keep up with banking and other financial regulations. The oft-heard phrase "AI does the ordinary so that humans can do the extraordinary" seems apposite here.
• The Fintech Association of Malaysia is now a member of the APAC RegTech Network, which itself was set up by the RegTech committees of the FinTech associations of Hong Kong, Japan and Singapore in May. This development came to light at the Fin/SUM Fintech and RegTech Summit in Tokyo on Friday 6 September. So far, however, the association is just a talking-shop.