The REGTECH Book

What a RegTech Compliance Killer System Will Look Like

By Bernard Lunn

CEO, Daily FinTech

Compliance is a big, ugly problem, and it is getting worse, and nobody has nailed it yet. In short, compliance is a tremendous opportunity. Investors say: ‘Show me compliance deals’. Bankers say: ‘Show me a solution’. Financial technology (FinTech) companies say: ‘We must spend our precious cash on lawyers and regulatory experts’.

Nobody loves compliance. Everybody hates compliance. That is why it is a massive opportunity. Like a cure for cancer or cheap and abundant renewable energy, the problem is easy to state, but the solution is far, far harder to build.

We have seen a lot of regulatory technology (RegTech) solutions, but we have yet to see the killer system. We see lots of lawyers and outsourcing firms willing to throw worker-hours at the problem. We also see lots of point solutions. These are, at best, putting bandages on the wound.

So far we haven’t found a killer solution; however, we do know what a killer solution needs to look like. There are five attributes that we detail later, after presenting a requirements checklist.

Before detailing the checklist, here are the seven reasons why compliance is so hard.

1. It is a moving target. Since the financial crisis, we have had lots of new regulations and lots of new scandals (which trigger new regulation). At the same time, we have the emergence of bitcoin, which is entirely uncharted territory.
2. It is a territorial hairball of complexity ...