Is Sharing the Next Wave in the Regtech/Fintech Evolution?
Consulting giant Accenture recently announced the financial-technology startups selected to take part in its fourth annual FinTech Innovation Lab Asia-Pacific, a prestigious 12-week accelerator that provides founders with mentorship and access to investors. This year there’s a clear trend among the winners: A third of them specialize in regtech.
Still in its infancy, regtech helps both financial-technology companies and traditional banks streamline the burdensome process of regulatory compliance. Until now, most regtech providers have focused on artificial intelligence, machine learning, and blockchain technologies, helping clients monitor customer behavior in an attempt to identify fraud and other activity that could land them in the regulatory doghouse (and to do so without armies of compliance officers).
The trend is a natural step in evolution of fintech, the high-tech products and services that have long been taking a bite out of the “legacy” banking business. The regtech movement is also being fueled from the top down, though: Government regulators both here and abroad are encouraging banks and financial apps to take advantage of regtech innovation, and have even created digital incubators to help foster its development.
One of the regtech startups that Accenture chose this year hints at what might be a new phase for the field. Still without its own website, FutureFlow helps financial companies detect possible crimes using a system that’s as revolutionary as it is simple: In a world where privacy is paramount, the service provides financial companies with a platform to safely and anonymously share and compare their customers’ private data. That information can then be used to locate patterns of fraud, money laundering, and other criminality.
FutureFlow is just a single provider, but could sharing be “the next big thing” for regtech and fintech? I think the answer could be yes. After all, the web itself has evolved into a massive platform for semi-transparency (due in no small part to services like Facebook, Twitter, and Reddit), and the radically public nature of blockchain technology has already shown banks the benefits of crowd-sourced accounting.
None of this means your checking account is about to be shared with the world, of course—but it could mean that the technological evolution of our banking system is on the verge of its next leap forward.