Fintech Trending: RegTech Reality Check, Blockchain Bandwagon, and IBM’s New Wallet

By David Penn for Finovate Blog

The Dream of RegTech is Alive at Finovate

Deloitte recently asked what we should make of “regtech” in a new report titled, “RegTech is the new FinTech: How agile regulatory technology is helping firms better understand and manage their risks.” To the extent that regtech represents technologies, strategies, and solutions designed to help firms better meet regulatory obligations, remain compliant, and/or secure their processes, there may be less new here than meets the eye. Compared to “insurtech” – regtech firms have been prominent players in the fintech firmament for years.

To its credit, Deloitte is aware of the “old is new again” aspect of RegTech. The company notes “while the name is new, the marriage of technology and regulation to address regulatory challenges has existed for some time with vary degrees of success.”

Indeed. Consider companies like Gremln (F14), which demonstrated a social media platform specifically for regulated industries, and Finect (F13), which unveiled a compliant communication platform for financial professionals. Qumram (F16) provides software that helps ensure complaint communication by recording digital interactions from web, social, and mobile channels.

My Virtual Strongbox (F14) introduced the kind of secure document storage technology that can help FIs better manage customer documentation. Global Debt Registry, another F14 presenter, provides compliance and risk management solutions to the account management industry. OutsideIQ (F16) enables FIs to uncover regulatory risk using a combination of machine learning and human analysis. FundAmerica (F15), arguably one of the most explicitly “regtech” companies to demo at a Finovate, provides crowdfunding platforms with APIs for a wide variety of “mission-critical, back-end regulatory requirements.”

Additionally there are a sizeable number of credit risk analysis innovators such as QCR(F15), CreditHQ (F16), and FICO (FD16); companies like Avalara (FD15) that help merchants recognize and satisfy sales tax requirements (or by that token, even a VATBoxF15 – that helps recover VAT fees for international travelers), cloud-based auditing technologies like those available from Auvenir (F16) – whose identity as a “fintech” company was a topic of our deliberations.

And all of this is to say nothing of the even larger number of security and authentication specialists whose technologies – at least by Deloitte’s definition – can be considered “regtech.” Note that Deloitte’s Ireland-based rundown of regtech companies includes Finovate alum Trustev (F14), whose online ID verification technology is very much in same category as dozens of other security, authentication, verification, anti-fraud innovators.

The question is whether or not regtech as a “thing” (as the millennials say) is separable from the broader fintech discussion, then, is probably more a marketing decision than anything else. Clearly the regtech has the ranks, the issue is to what degree does distinguishing them as a type of innovator apart from the larger fintech world make it easier for these companies to attract top talent, develop necessary solutions, and raise the capital to drive and grow their businesses. From the perspective of fintech in general – and Finovate/FinDEVr in specific – we’re happier having regtech innovating from “inside the tent,” as opposed to being on the outside the tent trying to find a way in.

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Blockchain Bandwagon

Two more major players jumped on the blockchain bandwagon, IBM (FD16) showed it’s Hyperledger at FinDEVr last week and Visa (FD14) announced its cross-border payment system built on blockchain-like distributed ledgers in an apparent challenge to Swift. The technology is powered by Chain (FD15) which counts Visa, Capital One (FD15) &Citibank as investors. According to Javelin Strategy, banks will invest $1 billion this year in blockchain initiatives.

Mobile payments gets another huge player

Speaking of IBM, one of the more surprising announcements at Money2020 was the launch of IBM Pay, a private-label mobile payments and POS system. Detail are sketchy, but in the IBM video below, it looks like a Starbucks-like QR code system. It’s part of IBM’s Watson Commerce initiative.

First appeared at Finovate Blog