By FINTECH Books Contributor, Scott Nelson
RegTech is emerging as the ambitious half-brother of FinTech. From its origins as the technology-driven backstop to the 2008 financial crisis, RegTech has dreams of going beyond automation to become a predictive platform used to monetize new business opportunities. According to a recent report by Let’s Talk Payments, the market is expected to reach $119B by 2020, assuming that growth remains consistent and market challenges are met with proactivity rather than retrenchment.
RegTech draws its lifeblood from the enterprises it empowers. Its status as a pure B2B offering means that incumbents need to be as innovative as the startups that serve them. Whereas it has too often been the model where disruptive technologies are built as offsite skunk works intended to disrupt established business practices, RegTech is a corporate creature that requires transparency and high-touch involvement.
In its breakdown of the Top Five RegTech Deals of 2016,Thomson Reuterslists Avalara ($40M), Skyhigh Networks ($40M), Cloud9 Technologies ($30M), Onfido ($25M), Kyriba ($25M). These are impressive figures—until we consider that for an expected $119B market, there is an uneven balance between risk and return. So while risk-aversion is RegTech’s first principle, we have a long way to go when it comes to investment in this burgeoning industry.
My company, BIGcontrols, is a RegTech startup helping global enterprises with lifecycle management and regulatory compliance for their government incentives. We employ many of the same technologies of other RegTech companies – automation, predictive analytics, AI – but we apply them to a very specific workflow and regulatory compliance problem in many corporations taking advantage of government grants and corporate tax breaks. Rather than focusing solely on the FinServ space, we are industry agnostic.