What does the future hold for RegTech?

RegTech is one of the UK’s most nascent tech sectors, encompassing a whole range of different solutions — from identity verification, through to KYC and AML compliance and employee monitoring. We gathered a group of founders from some of the UK’s leading RegTech businesses, including Onfido, Behavox, ComplyAdvantage, DueDil, Suade Labs, TruNarrative, Trailight, along with representatives from financial institutions, investors and the Financial Conduct Authority — to discuss some of the key opportunities and challenges ahead.

A shared challenge for many scaling RegTech businesses is how to sell their solutions into large financial institutions, who are often tricky to navigate and risk-adverse (especially when presented with cloud-based technologies). The long on-boarding process which comes with winning a flagship client can potentially kill a startup. As an alternative, one strategy could be to focus on winning “Tier 2” customers, including more digitally-minded FinTechs and eCommerce businesses who must comply with the same regulations as incumbents. In doing so, RegTechs can build up a critical mass of customers which will eventually lead to the larger institutions coming to them.

The discussion also touched on the forthcoming General Data Protection Regulation (GDPR), which will affect how businesses handle and manage data. The RegTechs around the table were largely unfazed by this change, given that their businesses are inherently adaptable.

The outlook for RegTech seems bright, with UK regulators widely praised for their attitude towards FinTech, which has also produced a fertile environment for cultivating RegTech. We look forward to watching this burgeoning sector progress.