The Land Down Under has had a busy year building up their RegTech sector. But what do the experts in the field think? Is the pace moving fast enough?
In 2016, I wrote on the early stage, but promising and well-received developments of the fledging RegTech industry in Australia. In a major milestone one year later, 13 RegTech startups have joined forces to form the Australian RegTech Association. To see how the industry is progressing, I spoke with CEO’s of two of the bodies founding members: Julian Fenwick of GRC Solutions and Anthony Quinn of Artic Intelligence and AML Accelerate.
As the body’s Chair, Julian says the association was conceived off the back of a meeting with ASIC where he and the regulator both drew significant comparisons between both their objectives with the realization that they could work together towards the common goal of increasing regulatory compliance. Indeed, building trust with regulators was one of the founding aims of the body, with both ASIC and AUSTRAC showing an interest in fostering RegTech technology through their respective innovation hubs. Further to this, they saw an opportunity to showcase the developments of the pioneers in the space and the ecosystem as a whole. Anthony notes another incidental consequence of such RegTech companies banding together is the beneficial societal effect of reducing corruption.
While only recently subject to wider attention, Julian and Anthony comment on the recent formalization of an industry which has far predated the coining of the phrase RegTech, with both having carried out the definitional criteria for years. Both founders say it’s pleasing to have it recognized in its own category, especially since it’s been an emerging niche that’s rapidly growing and attracting early stage investment and awareness. At the event, these exposure efforts were evident, with association members being introduced to prospective clients as part of the strategy to build international reach. Indeed Australia already has a relatively high profile position in the RegTech world, as cemented by the launch of the association.
RegTech’s gathering momentum as a startup sector comes at a time where regulators are under increasing strain to keep abreast of monitoring the ever expanding list of potential compliance requirements against business. This is particular so in areas such as Anti-Money Laundering, Counter-Terrorism Financing, and general Know Your Customer (KYC) diligence. For instance, association member identitii is working with financial institutions to improve financial crime compliance by enabling the exchange of rich payment information through distributed ledger technology
When asked about whether the Australian Securities and Investments Commission’s (ASIC) sandboxing scheme should extend to encompass RegTech, both noted the regulators’ sentiment to continue to engage with RegTech companies and determine if it would also be a viable value add. Currently ASIC’s “sandbox” exempts Fintech startups from certain licensing requirements when testing products under the regulator’s scope.
According to Anthony, one favorable approach which Australia could look to emulate is that which has been taken by Singapore, another major RegTech hub. The nation recently implemented the pragmatic consultation approach of surveying regulated entities to gauge their top 100 concerns, a move which put the buyer first.
Looking ahead, both envision that the association aims to act as establish a collaborative network for the use of all stakeholders to address customer pain points and help address complex issues such as compliance, cybersecurity, and data management.