Innovation or Disruption: Not Always Black and White

By Sean Hunter

CIO, OakNorth Analytical Intelligence

As a result of their global power and influence, systemically important banks are subject to swathes of regulations, from data privacy to cybersecurity to anti–money laundering (AML) requirements. While regulators are working to protect the financial system and consumers, their regulations can also unintentionally impede the ability of banks and start-ups to spur innovation.

This chapter looks at the differences between innovation and disruption and why disruption can be difficult for highly regulated firms, forcing them to pursue innovation incrementally. Specifically, it discusses challenges with introducing new technologies at institutions with legacy systems and strict information technology (IT) requirements and ways around the clash of cultures between Silicon Valley’s ethos of ‘move fast and break things’ and Wall Street’s need for IT compliance.

Successfully merging these two cultures could transform the future of RegTech.

RegTech has the potential to go beyond merely helping firms to automate monotonous compliance functions and reporting. It can empower small, dynamic compliance teams to understand risks in real time, conduct advanced analysis that allows them to further direct technology towards addressing their greatest risks, and make data-driven decisions about both compliance and overall firm management. Much of RegTech’s future depends on whether start-ups ...

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