AI and Regtech: the new black, pretty in pink or a grey suit? By Ake Freij (@doctorregtech) When combining Artificial Intelligence / Machine Learning (AI/ML) and Regtech, two of the most hyped concepts today are mixed. The promise of a new and better world for regulatory and compliance work is given, and a picture painted of radical improvements using new technology. But: what is the real content of AI/ML from the current Regtech universe? There has been an analysis of 600 Regtechs, looking at three dimensions:

1. Capability supported
2. Underlying technology
3. Specific regulations covered

Out of the Regtechs,60 were identified as using AI/ML technology. Three types of “AI Regtech” are identified:

1. The new black
2. Pretty in pink
3. A grey suit

It can also be noted that there is an element of “the emperor’s new clothes” here. The analysis is based on models and methods from over ten years of research on the topic regulatory management, where focus has been specifically on how value and innovation can be derived from regulatory changes. The capability model applied is considering “the future of regulatory management” (Freij, 2019, Journal of Financial Transformation), and the specific regulations identified are derived from empirical research of over 20 regulatory changes and 150 interviews with business managers. Regtech providers can understand how they are positioned relative competition. Buyers of Regtech solutions can look beyond the conference and blog hype into a clear view of reality.

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