The REGTECH Book

FinReg, FinTech, and RegTech – Quo Vadis, EU?

By Dr Ulf Klebeck

General Counsel, Montana Capital Partners and Partner/Co-Founder, Excelerate

From a start-up perspective, the European Union holds the largest density of RegTech start-ups. However, in an industry that is defined by regulatory rules and dynamic dissociating, whether initiatives are fragmented or harmonized is key. As with any new trends, it is important to identify the position in the cycles to appreciate the factors impacting the development of RegTech in the EU, all of which is explored below.

Financial Market Regulations as a Game Changer

Is RegTech just a subset of FinTech? Is RegTech a key component of FinTech? Or is RegTech even the new FinTech? It does not really matter when one acknowledges the three common denominators.

Firstly, both FinTech and RegTech are the logical consequence of the ever-growing digitization of the way people are interacting – be it in business or be it in private life. Secondly, for both FinTech and RegTech, the future seems to be bright, following the various predictions of the business opportunities coming out of and relating to FinTech and RegTech. Thirdly, both FinTech and RegTech have had a key driving force behind their rise; the exponential increase in financial market regulations over the last nine years, mainly as a reaction to the global financial crisis (GFC) that started in 2007–2008.

This event has catalysed the growth of the new tech era in the financial industry. ...