RegTech is one of the more predictable targets of the FinTechs. The sheer volume of additional regulation imposed on the financial services industry after the financial crisis of 2007-08 demanded automation. Not just to contain the costs of data collection and reporting but to mitigate the risk of compliance failures leading to fines and reputational damage as well.

By 2018, a decade after the acute phase of the crisis, 11 major global banks alone had paid US$216 billion in fines for various breaches and misdemeanours. The banking industry as a whole had paid more than US$345 billion by then, according to Deloitte. No wonder Deloitte also found that compliance expenditure by banks had risen by 60 per cent since the financial crisis, and was still rising.

Regulations are not static, of course. Deloitte reports an average of 220 regulatory revisions a day, so keeping up with the changes alone is an onerous task for regulated firms, especially if they are operating in multiple jurisdictions, each with its different rules.

In reality, old-fashioned software-as-a-service (SaaS) from the Cloud plus application programme interfaces (APIs) to facilitate data exchanges have proved equally effective as enablers of regulatory automation. They can, for example, populate a regulatory report for checking prior to delivery to a trade repository.

RegTech is maturing. It is finding useful applications and starting to consolidate. Yet it continues to resist tidy definition. Deloitte divides a current total of 412 RegTech firms it monitors into five high level categories – Compliance, Risk Management, Identity Management and Control, Regulatory Reporting and Transaction Monitoring – which help to make sense of a broad range of activities.

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