The association’s chair talks to AB+F about the priorities the industry needs to undertake and what Australia can learn from regtech developments around the world
Access to capital and a better framework to trial innovative ideas are among the big priorities for the Australian RegTech Association in 2018..
“There are forecasts that show that the regtech industry is due to grow to US$20 billion by 2020. In Australia, our big four banks are already spending vast amounts on compliance technology,” RegTech Association chair and managing director of GRC Julian Fenwick said.
“Financial services is a key industry for Australia, with over 450,000 people employed in the sector and vast amounts of funds under management. We need to highlight the size of this huge addressable market to the investment community and encourage them to broaden their remit to evaluating and investing in Australian regtech,” he said.
“Another priority is providing a framework for financial institutions to experiment with their regtech technology. While ASIC has implemented a sandbox for experimentation with fintechs, Fenwick said a “design box” would better support the regtech sector where ASIC could encourage proof of concept projects (PoCs) trials to be undertaken by financial institutions. This would enable learning from all parties involved without fear of repercussion”
“We need to create environments where PoCs projects can be trialled in a ring-fenced way. This must include the ability to deploy cloud-based platforms to ensure that PoCs can be done in a cost-eﬀective and time efficient manner,” he said.
Fenwick added that examples that allow financial institutions the freedom to innovate can be found in services such as access to Amazon Web Services and Microsoft Azure. “These services allow for inexpensive approaches to innovation, and if Australia is going to be on a level playing field with countries like the US, we need to find ways to leverage cloud services without risking data security,” he said
Luscan founder and adviser to the RegTech Association, Harold Lucero, said further engagement with all parts of the industry was needed to support Australia’s growing regtech market. This is will allow for better management of regulatory reform in a smarter, cheaper and eﬀective manner.
“Strong support and collaboration from key players in the industry is needed including regulators, end users, vendors and investors. There will also be a need to better understand the regtech industry by identifying a common cross-market taxonomy to better understand regtech solutions,” he said
Fenwick also highlighted a number of countries that were adopting eﬀective ways to support and grow their regtech industry.
“Singapore is seen as a world leader in the fintech space thanks to vast amounts of government support for the industry there, including significant sponsorship from the Monetary Authority of Singapore.”
Trust in government together with the support of MAS has given rise to opportunities for collaborative projects such as piloting a national know-your-customer(KYC) utility for financial services aimed at reducing duplication of these processes.
Fenwick also highlighted positive developments in regtech in countries such as the United Kingdom and Ireland with enterprise systems such as the data software platform Suade and software solutions provider Fenergo, who both work closely with their client communities to collaboratively improve their product oﬀerings.
“In the US, there is a much more aggressive approach to investing in companies and the systems they are developing so that they can reach scale faster.
“Globally, there is also a movement toward collaboration fostered by organisations such as the newly formed International RegTech Association which is ensuring that there is a global connectivity between the innovators in the industry,” he said.
Therefore, Australia needs to recognise its competitive advantage and exploit it “while at the same time being open to the world of new regtech solutions coming into the market.”
While Australia and the wider Asia Pacifc region is becoming a great hub and a Centre for Excellence in the regtech space, Luscan’s Lucero added that most of the investment funds still seem to be going towards the Americas and EMEA regions.