The Disruption in RegTech
Much of the discussions in social media and in articles online has been about Fintech, but for those who truly understand what’s happening, we recognize that once you get beyond the pretty facade of the application, you wake up to the wonderful world of regulations. And that means “RegTech”.
It’s impossible for anyone in Fintech, LegalTech, InsureTech, or OrgTech to be truly a force for change and evolution without RegTech following steadfastly in their wake, defining and altering their current state.
Operating Alternative Finance Platforms today around the globe means facing many challenges to maintain competitive advantage over traditional ways of doing business.
Most portals are operated by a registered broker dealer in their home country, or under some form of financial operator licensing. For those in the business, they have a much better appreciation of how regulations work in the first place, as well as what’s required to ensure the firm doesn’t lose its license. Operators share a common problem, no matter how long they’ve been in business or where they’re operating, and it’s that none can grow their business with the traditional model, it simply doesn’t scale. Some have tried to cope by putting up a website to connect investors and companies, but that’s really no competitive advantage over traditional ways of doing business - it’s the same old system with a new, digital face.
The real opportunity is in how they implement RegTech to meet their regulatory requirements. This can be done several ways: you build your own, or you partner. Depending on what country you operate in, this choice is often made up for you. Regardless of the path, the operator needs to understand the role of RegTech, and how to use it to their advantage.
RegTech is having a major impact in 5 main areas:
· ID Verification
· Investor Accreditation
· Background checks
· Company Verification
These five major developments in RegTech have allowed Alternative Finance platforms to become billion-dollar companies, servicing users all over the world. This is game changing.
Each of these RegTech services have made it difficult for traditional broker dealers to scale their business by out manoeuvring and out adapting them. Alternative Platforms that adopt RegTech for all of these 5 areas listed above scale faster,as they’re able to leverage technology to change.
RegTech is not done, we’re just getting started. RegTech needs to be more than just verification. RegTech needs to bring the same level of innovative thinking to the digital assets each of these 5 areas involves. An Alternative Finance Platform provider relies on the verification of the individual and the company, but the transaction still has other regulatory requirements to meet that are often only partly automated or not at all.
RegTech is ready to adopt distributed ledger technology to provide these critical mandatory services.