Emerging opportunities in RegTech

By Kieran Garvey, Head of Regulation & Policy at the Cambridge Centre for Alternative Finance

RegTech (Regulatory Technology) is a rapidly developing area of market activity encompassing a wide array of firms adopting and applying innovative technologies to facilitate the delivery of regulatory requirements and services to individual consumers, businesses as well as governments, regulators and other related entities. The team at the Cambridge Centre for Alternative Finance (CCAF) is thrilled to be supporting Cambridge Enterprise and the upcoming InsureTech and RegTech Venture Creation Weekend.

According to Bloomberg Professional Services, total accumulated investment in RegTech firms exceeded $2 billion USD by 2016, with an estimated 200+ identified RegTech firms operating globally – most of which commenced activities since 2015. The Cambridge Centre for Alternative Finance (CCAF) is developing a RegTech research programme to help establish a common working taxonomy to analyse the varied RegTech business models, contributing to a better understanding of the global RegTech market dynamics, its disruptive potential on traditional service providers (e.g. law firms, accountancies and regulatory consultancies), and opportunities for offering technology-enabled new services and products. To achieve this, the CCAF will be working to generate empirical datasets to benchmark national and regional market activity, inform evidence-based regulation and policy-formulation and help to raise awareness of the emergent global RegTech industry.

Some of the RegTech business models the CCAF is particularly interested in focusing on are digitisation and automatic interpretation of regulations, as well as executing regulatory processes and compliance – much of which is quite new and innovative. Other aspects of RegTech, especially relating to tax compliance and reporting software have long been in existence. For accountants, compliance software has been around for decades having considerably changed the way public and in-house accountants do business, whereby software, and even Artificial Intelligence (AI) are taking over day-to-day compliance and record keeping.

Recent technological breakthroughs in fields such as machine learning, natural language processing and distributed ledger technologies, have precipitated a proliferation of RegTech companies serving a range of different clients. A core component of the emergent CCAF research program will be to track the growth and development of these different RegTech market activities over the past years. To this end, the CCAF RegTech Research Programme will initially focus on the following areas:

• Identification & authentication
• Document automation & interpretation
• Monitoring & supervision
• Compliance & reporting
• Risk identification & management
• Data management & security

As this research programme evolves, additional industry verticals will likely emerge, contributing to the resulting Global RegTech Industry Taxonomy which will frame and underpin our future research agenda. What is clear, is that RegTech firms are not simply applying a single existing techniques to a particular area of regulation, but are rather addressing multiple regulatory issues via technology-enabled approaches. They are bundling a new range of products, services, infrastructure and protocols which can be more efficient, streamlined, cost-effective and highly disruptive.

The RegTech ecosystem is facilitating the emergence, refining and growth of innovative approaches and business models. For example, quite a number of regulators are developing regulatory innovation hubs and other initiatives (e.g. the UK, Australia, Malaysia, Singapore, UAE) which include emphasis on RegTech as well as other private and public sector accelerators, associations and market development activities. All of this ecosystem development activity should help to facilitate a vibrant, diverse RegTech industry.

This InsureTech and RegTech Venture Creation Weekend led by the Entrepreneurship Centre at Cambridge Judge Business Schools provides an opportunity to contribute to this emergent ecosystem and our team at the CCAF is eager to see what emerges from the top talent with their ground-breaking new concepts and business ideas.

Kieran Garvey, Head of Regulation & Policy at the Cambridge Centre for Alternative Finance, will be mentoring start-ups at the upcoming Venture Creation Weekend, organised by the Cambridge Judge Business School’s Entrepreneurship Centre on 17-19 November. For more information and to register your attendance, please visit Venture Creation Weekend webpage >

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Kieran Garvey

Kieran Garvey is Policy Programme Manager at CJBS's Cambridge Centre for Alternative Finance (CCAF). The co-author of nine alternative finance industry reports covering market activity globally, as well as more specifically within regulation in East Africa and UK sustainable energy, Kieran is leading the Cambridge-World Bank 2017-2019 Regulator & Policymaker Surveys in addition to a research programme to develop a technology solution to more efficiently conduct regulatory reviews of different FinTech business models in developing and emerging countries. Kieran previously worked at the UK Crowdfunding Association, as a UK parliamentary crowdfunding advisor and has aided a large number of companies to secure finance via equity crowdfunding. He also helped establish a microfinance social enterprise in Northern Vietnam, inspired by Kiva. Kieran holds an MSc from Imperial College London and a BSc from the London School of Economics.

Latest posts by Kieran Garvey (see all)

• Emerging opportunities in RegTech - 18 October 2017