# Book review: The RegTech Book
- URL: https://www.petrikajander.com/the-regtech-book/
- Author: Petri Kajander
- Date: 2019-08-22
- Language: en

FinTech has been around for ages and it is starting
to shift its focus from digitalisation of money to monetisation of data in the financial
sector.

After 2008, compliance has been a major
issue for financial companies. Massive increase in regulation and reporting
requirements have resulted in governance, risk and compliance (GRC) related
costs racking up to 20-30 % of total costs in banks.

Nobody loves compliance. It’s horrible for
customers and tedious for the financial institutions. If done in a wrong way it
scares away existing and new customers.

Old legacy banking systems and isolated
vertical data structures translate into manual labour intensive tasks and
parsing of reporting data from multiple sources. This is the opportunity RegTech
startups are starting to realise and materialise.

The old ways of doing things do not work
anymore. Costs need to come down and productivity gains are expected. Yet, it
is still early days and relatively little VC capital has been poured into the
sector.

RegTech is a relatively new term that
potentially can be used in respect to regulative processes in any sector, not
just in the FinTech arena. Its earlier forms have been focused on streamlining
compliance and reporting processes, often by means of digitalisation.

The latest trend is to start to see RegTech
not just as a cost-centre but also as a means to provide business benefits and
gains for the customer and revenue side of the business. Automation can provide
valuable business data and improve customer experience if properly realised and
understood.

Bank bashing is an easy target for
politicians and public authorities since like compliance banks do not have many
friends. Yet, even regulators have started to realise in some countries that
they cannot just kill the financial companies with GRC without consequences to
the overall economic activity and GDP growth.

Innovative companies have choices and they
can move to more friendly business environments. For this reason some countries
have started to introduce financial sandboxes where the full weight of
regulations and compliance do not hit new ventures immediately.

UK, Singapore and Switzerland are examples
of FinTech and RegTech sandboxing nations. The current $100 billion market of
compliance spending is a good incentive for entrepreneurs to consider whether
it’s worthwhile to enter the market despite its less than favourable appeal.