RegTech continues to play a pivotal role in the UK payments sector, heightened by the importance of its role in economic recovery.
Writing for Payment Expert, Kompli Global CEO Jane Jee analysed the landscape for RegTech and its importance following the budget and the independent fintech review, which was issued by the government.
Following the release of the government-backed report, led by former Worldpay Chief Executive Ron Kalifa, everyone in the Fintech/RegTech space welcomes its release and the host of fine ideas it contains. Our hope now is that the UK government takes these on board.
The review is a shot in the arm for our sector as the report identifies the Fintech sector as a key area of focus and a priority for future industrial strategy efforts after Brexit. The fintech sector is estimated to be worth about £7bn to the UK economy, according to government figures, and employs around 60,000 people in the UK.
There are some stand-out observations for the significance of digital technology and how it empowers those in the financial services industry to prevent financial crime and remain compliant.
In particular: “Fintech (including Regtech) has the potential to deliver benefits for several aspects of financial services – including promoting competition (for the benefit of consumers), improving operational resilience, helping prevent financial crime, driving efficiency in the financial services industry, and supporting financial inclusion.”
However, there are also some vital recommendations that the Financial Conduct Authority and Bank of England simply must take on board, including: “encouraging regulated firms, as part of their operational risk assessment, to actively, and periodically, consider whether they are supporting their operational resilience with effective technology (including Regtech).”
Additionally, my favourite recommendation from the report is the need to “deliver a digital finance package that creates a new regulatory framework for emerging technology.” The Review points out that there are many stakeholders responsible for policy and regulation that impact the fintech sector, including Government departments (such as HM Treasury, DIT, DCMS, DWP, Cabinet Office and BEIS), the financial regulators (the Bank of England, PRA and FCA) and other regulators such as the ICO and CMA.
As the report says: “If a single body existed for such purposes, this would help fintech firms during their growth phase, as they may have limited resources at their inception and would find it easier if the number of bodies they have to deal with is reduced.” The Kalifa report recommends that this single body is set up asap and it is called the Digital Economy Taskforce – it’s specific mandate is to champion the Fintech sector.
Overall, the Review is a very welcome development and I hope the recommendations are implemented by the government promptly.
We in the RegTech, anti-financial crime sector work hard to innovate and provide the technology and expertise to enable regulated entities to keep progressing and refining their financial crime programmes and make the optimum use of their compliance budgets. By doing this they can avoid the risk of fines and reputational damage and, ultimately, reduce fraud and financial crime.
The RegTech sector must get the vital backing required to combat criminals from laundering their funds through their systems and positions the UK as the best place in the world to do business.