The future of RegTech: a skyrocketing industry?

Amid an increasingly regulated global business landscape, many financial institutions (FIs) are turning to regulatory technologies (RegTech) to help them cope with greater scrutiny and the potential for hefty fines for non-compliance. As a result of the uptake, RegTech – which according to Harvard Kennedy School is the "application of new technology to regulation-related activities in order to shift them from analog-era to digital and computational models and, thereby, gain dramatic increases in effectiveness, efficiency and scalability" – has risen to a position of relative prominence. Many FIs are utilising the technology to automate compliance tasks and reduce operational risks. The demand for RegTech products – be it machine learning, biometrics, cloud computing, blockchain or distributed ledgers – is particularly timely, with the implementation dates of new and complex regulations, such as the updated Payment Services Directive (PSD2), the revised Markets in Financial Instruments Directive (MiFID II) and the New York State Department of Financial Services (NYSDFS) Part 504, on the horizon. Yet despite its burgeoning status as a go-to regulatory compliance option, issues do exist with the adoption and implementation of RegTech.