There are plenty of defining years in the history books, and as 2020 draws to a close, it’s almost certain that the global pandemic will ensure that this year is featured prominently. With events cancelled, launches delayed, and country-wide lockdowns, the way we work has changed forever. Still, for financial technology and surrounding industries, this was also a year of challenge and opportunity.
This December, The Fintech Times is asking industry leaders for their ‘View from the Top’ to gain an insight into the decisions behind the last 12-months. Today, we’re looking at the issue of regtech, hearing from Wayne Johnson, Bryan Stirewalt, Sarah Earl and Carlos Torres on their 2020 thoughts, plus a look ahead to 2021. Will there be a Happy New Year? Read on…
Regtech is one of the slightly lesser well-known fintech verticals and comprises of technology solutions to help enhance regulatory processes. These regulations are essential for fintechs and other financial services organisations to follow, as most can’t operate without complying. With a boom in the use of fintech solutions this year, regtech has seen a similar rise. In this View from the Top, companies Encompass Corporation, DFSA, RingGo and YG Consultores outline their own 2020 experience.
Wayne Johnson is CEO and co-founder, Encompass Corporation, an SaaS business driven by the belief that the best decisions are made when people understand the full picture. In his view, the pandemic has shown that regtech is now more important than ever.
“Nobody could have predicted the events that we have witnessed in 2020. As a result of the Covid-19 pandemic, life as we know it has been significantly altered, with business and the economy impacted worldwide.
“While we have undoubtedly faced challenges, like any organisation, what the last months have shown is that regtech is more vital now than ever before.
“With businesses across sectors and locations reimagining how they operate, and customer expectations evolving, the need to embrace solutions that deliver, while helping to meet increasing compliance obligations, has never been more apparent.
“In the case of the banking sector especially, the emergence of new technologies has transformed the industry, with automation reducing costs while also improving the standard of Know Your Customer (KYC) programmes.
“Digital customer experiences drive effectiveness and efficiency. In today’s landscape, where consumers have come to expect instant services across the board, this is all the more crucial. Statistics from Encompass research show that 38% of UK businesses have deliberately abandoned an application for banking services due to ‘slow due diligence processes’, underlining the importance of fast, effective processes as all facets of business become increasingly competitive.
“As we adjust to what the ‘new normal’ means for us, one thing we do know is that the need to meet these expectations will remain front of mind, with technology continuing to play a key role. Covid-19 has accelerated the need and appetite for digital transformation, and it is those that grasp the opportunity for change who will reap the long-term rewards.”
Bryan Stirewalt has been the chief executive of the Dubai Financial Services Authority (DFSA) since 2018. The independent regulator of financial services is conducted in or from the DIFC, a purpose-built financial free zone in Dubai, UAE. He agrees that due to the fast-changing nature of financial services, regulation has been crucial.
“Technology has played an ever-increasing role in society and business for many years. For the financial services industry, the role of technology has been a progressive and disruptive force. Old and new financial services providers are using technology to serve their customers better, to support new business models, to create new products and services, and to solve regulatory and compliance requirements. The driver of this change traditionally was to increase operational efficiencies, but this is steadily being driven by a desire to enhance the customer’s experience and remain competitive in a more diverse financial marketplace.
“The Dubai International Financial Centre (DIFC) builds on the entrepreneurial spirit of Dubai to provide a unique financial services ecosystem which brings together the largest financial institutions in the world with the new entrants in the world of technology to create an environment where innovation can thrive. In this age of rapidly developing and accelerating change in financial services, it’s just as important for regulators to create and facilitate an innovative approach, both in our role as a regulator and in our own organisation.
“The Dubai Financial Services Authority (DFSA) supports innovation through our Innovation Testing Licence (ITL) Programme. The DFSA has hosted two virtual regtech events this year along with a cyber-risk awareness event, aiming to generate awareness of available technologies to our community and to demonstrate the DFSA’s and DIFC’s support for the development and implementation of regulatory technologies. We will continue to build on this in 2021 and beyond.”
Sarah Earl is Product Director at RingGo, a UK based cashless parking app that provides solutions to councils, towns cities and private operators. As PSD2 is due to be enforced in 2021, she thinks the payments industry is going to see a big change as a result.
“Regulations and compliance have always felt like a corporate chore. They force us into creating features or solving problems that were never on the roadmap. However, as more and more regulations are likely to hit the payments industry, I challenge us to think of how we can use regulations as an opportunity.
“In 2021, PSD2 will finally be enforced, and while this has been pushed back to September, I think it will be part of a year of change in the payments industry. As we try to work around a system that introduces friction for users, it is our opportunity to innovatively create solutions that are compliant and friction-free.
“The need for a smooth payment process will drive consumers towards SCA compliant payment methods such as Apple Pay and Google Pay in 2021. If your app or website does not feature these payment methods, customers are likely to disengage due to the authentication step up.
“2021 is the year to get ahead of the regulation curve by listening to customers and driving innovation through the payments process.”
Carlos Torres is a lawyer at YGConsultores, a Mexican law firm specialised in fintech, payment methods, anti-money laundering, corporate law, and e-commerce. He thinks 2021 is the time for regtech companies to step up.
“On March 9, 2018, Mexico published the Fintech Law, becoming the first country in Latin America to implement a law specifically focused on this huge sector, which over the years had shown to have not only a great growth but a great potential in Mexico. But 2 years later…
“No one expected a huge pandemic would attack all the world, so, Mexico as a Fintech leader in Latin America has to put a brave face on it and now has faced a new challenge that is to accelerate the regtech market that was increasing well over this years.
“Definitely, when life gives you lemons, the start-ups have learned to use the “seed” and 2021 is the time for regtech companies to grow and help, sooner than expected, the financial entities to comply the regulation in an easier and faster way, making their processes better, preventing fraud and money laundering, managing risks, avoiding sanctions and speeding up their times.
“See you soon and may the fintech be with you.”