RegTechs, Banks & Regulators

This ménage a trois should keep an eye on the buy-side

Speaking at the lively Regtech Automation Compliance Forum, I wasn’t exactly prepared to hear the words “let’s make compliance sexy”. But I did – and sadly there’s no taking it back.

As I looked across the floor, RegTech vendors, banks and regulators were each trying to figure out how to create a healthy relationship that relieves the burden of regulatory change on the legacy operating models of large sell-side firms.

As you can imagine, this made for some interesting but uncomfortable viewing.

  • RegTech firms launched a charm offensive, pitching some impressive use of technologies-  in part to scratch the itch inflicted by regulators on banks. But, like the most attractive person in a bar, these lines are over familiar. They didn’t carry quite the intended impact, even with regulators playing the wingman role.
  • For banks, it was clear that remaining independent and arriving at RegTech solutions organically is far more palatable than inviting the risks associated with RegTech vendors. Some cheerfully admitted that playing cat and mouse with vendors provided a useful platform for R&D – I think they call that being in the ‘friend zone’?  The attitude was clear: there really are ‘plenty more fish in the sea’ where RegTech vendors are concerned.
  • Meanwhile the buy-side emerged as an important alternative market, characterised by fewer resources and subsequently greater openness to vendor relationships: a significant and fertile opportunity for RegTech vendors.

It all made for a fascinating dance around the emerging dynamics in the RegTech landscape – worth keeping in sight as technology develops and relationships mature.

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