A new worldwide regtech industry body has been launched with the objective to innovate and advance regulatory technologies across the financial services sector.
The International Regtech Association (IRTA) will gather technology companies, banks, lawyers, consultants, academics and other regtech players globally to collaborate on initiatives such as developing international regtech standards and promoting research and accelerator programmes.
The chair is Subas Roy, who has 23 years of experience in the financial services space, most recently as global head of regtech at EY.
He tells GTR that the new association has been in the making for almost a year. Its missions include developing global regtech standards, undertaking and sponsoring regtech initiatives and research, and not least help young regtech companies develop solutions that meet the banks’ needs and can be deployed into their systems.
“It was pretty clear to me and some of my other colleagues who are now on the board: You really need an industry lead, collaborative voice, where the new innovative regtech firms who are not yet big enough – who are not the IBMs or Bloombergs of this world – but have got good ideas can promote these ideas for the benefit of the financial services,” Roy says.
The association comes at a time when it is much needed. As GTR reported in its latest cover feature, there is a huge potential for new technologies to make compliance – an area dominated by manual and mundane processes – more efficient. This is especially the case in the trade finance space, which has historically been characterised by paper-heavy processes and the ineffective use of transaction and counterparty data in risk identification.
But despite being in need of assistance, many financial institutions are still hesitant when it comes to embracing new regtech opportunities.
“The preliminary state of the regtech market means that no dominant, widely used solutions have yet emerged,” says a report by the Institute of International Finance (IIF) published last year, adding that international financial institutions are “often still unfamiliar with new regtech solutions due to their short history”.
According to a recent article by Deloitte, the majority of regtech firms are still in the start-up phase and no older than three years, and although there is strong potential for the market, there is still “a long way to go before many of the regtechs have built up enough reputation to really get to the movers and shakers of the financial industry”.
“We have many examples of people who come up with fantastic ideas, but they are not able to scale it,” Roy says. “IRTA can help the newer generation of regtech firms to come out with products and services that are not only fantastic, but can also be deployed in financial services.”
The non-profit association already has more than 250 individual members, and plans to take the number above 2000 in the next month. Roy estimates that globally, around 700 regtech companies exist today, of which 50-60% are expected to join the IRTA within the first year. He says the association is currently in talks with five global banks, who are keen to join the initiative.
The keyword to success, he adds, is collaboration – not just between banks, regtech companies and industry experts, but also with the regulators. And the IRTA is off to a good start: Roy says they have already had conversations with regulators in some of the biggest financial services hubs in the world, who are “very excited” about the initiative.
Undoubtedly, regulators play a crucial role in the promotion of regtech, and some, including the UK, Singapore and Hong Kong, are already starting to pay attention to the regtech enthusiasm, creating sandbox initiatives where financial services companies are encouraged to test new fintech products without regulatory consequences. The IRTA is hoping to play an important role in further expanding the regtech uptake worldwide.
Roy outlines the four key goals of the association in the next 12 months: “Number one is to create an ecosystem, create the association itself, which is a big task. Two, to create chapters internationally, at least more than 12 locations, including the key big cities: New York, Singapore, Hong Kong, San Francisco, London. Thirdly, to create flagship regulatory technology events globally. Number four, we will start working to create professional educations, and we are going to help promote regtech accelerators globally.”