It is no secret that the pressure of regulation on financial services firms in the UK is a huge cost in terms of headcount. That’s what makes the advent of RegTech and automation so intriguing.

Austin Andrew have seen a rise in demand for candidates with an understanding of RegTech but the reality is the marketplace is still very new and somewhat unchartered.

We recently sat down with Paul Morrison who was formerly the Senior Partner for RegTech with the FCA and is now heading up the RegTech offering for consulting firm, Compliancy Services Limited. Here, we discuss Paul’s new role and what he sees as the future challenges that face RegTech.

Tell us a bit about your role with Compliancy Services.
Well, first of all it’s a multi-faceted role. As Head of RegTech I am responsible for the development of our entire RegTech portfolio. This includes setting the strategy, product/service development, marketing and sales.

Our RegTech offering extends across a spectrum of compliance management needs. At one end we offer Software as a Service (SaaS) through our RegTech training product Compliancy.Guru. At the other end we combine RegTech tools such as our Compliance Assurance Manager (CAM) - an e-audit due diligence product - with deep subject matter expertise to provide a blended product/consultancy RegTech service.

RegTech spans all our client sectors where I work closely with fellow Client Directors to both develop and sell our RegTech solutions.

How did you get into RegTech?
I think the first time the term ‘RegTech’ was coined was by Professor Philip Treleaven (UCL) as one of the authors of FinTech Futures - a report produced by the Government Office for Science in 2015.

The FCA’s RegTech activity was mandated by HM Treasury following this report, specifically to explore how the UK Regulators could support the growth and development of the UK’s FinTech market. 

Having worked in a variety of business change and technology roles at the FCA, I was asked to set up and lead a new FCA RegTech team to address this challenge, and we engaged with the industry directly by issuing a ‘Call for Input’ in November 2015, followed by a series of roundtables.  We asked the industry what they thought was important and what role the FCA should play.

This ‘voice of the market’ survey, combined with the political mandate informed the creation of an FCA RegTech Strategy that continues to influence the prioritisation of the themes the FCA addresses today.

Our core objective was to encourage technological innovation that improves compliance while reducing the cost of regulation.

What advice would you give to somebody who wants to begin a career in RegTech?
Probably the same advice I’d have given someone who wanted a career in Dotcom back at the turn of the Millennium. Namely…don’t just be lured by the attraction of new technology!  If you don’t understand the problem you’re trying to solve you can get lost very quickly chasing ‘trendy’ technology solutions that are often searching for a problem to solve!

The clue’s in the noun….and it’s the ‘Reg’ bit of RegTech that matters most. If you’re not interested in the challenges and problems facing Risk Management professionals or Compliance departments, chances are you’re not really going to get RegTech.

Being a Digital Identity, Machine Learning or AI expert in its own right will not cut it. It’s not the technology per se but the application of the technology to a specific problem that makes it relevant and real. There is no shortage of problems to solve in Regulatory Compliance and Risk Management, and yes, technology can certainly open new opportunities to solve those problems in much more creative and innovative ways.

What would you say are the biggest misconceptions about RegTech in the marketplace?
I guess it’s people thinking that RegTech must be about new ground-breaking technology born out of the FinTech industry.

Don’t get me wrong, there is some amazing tech that has emerged from the FinTech sector that has been packaged to address regulatory and compliance problems specifically. But for me, it’s more about innovation.

Innovation extends beyond new technology.  It’s as much about ‘re-thinking’ the way in which we might approach regulation and compliance as it is about skipping immediately to a technology solution.  Technology rarely solved problems in its own right. It’s people who solve problems.

What do you see as the biggest challenges facing the world of RegTech?
Well there is no shortage of challenges for sure – absence of clear standards; applying rules-based solutions against a principles-based regulatory regime; establishing a more collaborative ecosystem in financial services where RegTech firms can thrive together with established firms instead of competing at every point – particularly relevant in the development of shared utilities.  The list is not short, but if I had to distil them down, I see two distinct challenges – one on the ‘buy side’ and the other on the ‘sell side’.

The number one challenge for me on the ‘buy side’ is culture. Always remember…you’re not necessarily pushing against an open door when pushing a RegTech agenda.

I see a lot of so-called RegTech firms selling technology solutions without really understanding who the buyer is or what problems they are having to really deal with on a day to day basis. Sometimes those solutions could be exactly what a prospective client needs, but the inability of RegTech firms to engage in the right language and/or with a deep understanding of the challenges of regulatory and compliance professionals just serves to act as an engagement barrier.

Let’s be honest, most MLROs are not normally the most tech-savvy, and compliance functions are not often at the forefront of digital or technology adoption.
Without a deep understanding of these compliance challenges, particularly in the small to medium sized firms, the barriers to entry will continue to remain high.

On the ‘sell side’ one of the biggest challenges for RegTech firms is to be able to successfully navigate procurement barriers, particularly in larger firms.

There are some great RegTech solutions emerging from simple cloud-based compliance applications to more ‘exotic’ offerings deploying distributed ledger technologies, AI and machine learning.  Some of these could significantly dial down the cost of compliance, but the risk appetite and procurement practices of firms will often restrict access to smaller RegTech firms.

How do you think firms can address these challenges going forward?
Firms need to have a sharp focus on what they want to be seen to be ‘good’ at. This must extend beyond the technology they offer as they will need to establish credibility with a buyer community that will not often understand the nuances of the technology.

On the surface the choices are maybe simple – either a) hire the relevant subject matter experts to substantiate credibility, or b) find a partner who brings those capabilities with a commensurate track record. However, sourcing those skills is rarely that simple.

As a bare minimum, it is incumbent on RegTech firms to understand the scenarios/use cases that their solutions are targeted to address. It would make sense for firms to collaborate in developing those use cases. What is missing now is a true ‘Industry Sandbox’ where solutions could be safely tested with participation from the wider financial services ecosystem.

What are you and Compliancy Services doing to help firms address these challenges?
We combine strong subject matter expertise in the markets we serve together with adaptable and flexible RegTech solutions to reduce the overall cost of compliance for firms.

We recognise that one size does not fit all. Depending on the maturity of the firm we can take more or less of the compliance burden, flexing from self-serving RegTech tools to fully managed service offerings.

What does the future of RegTech hold?
I believe the future for RegTech is a bright one.

In her Mansion House speech of 2015, Tracey McDermott (acting CEO of the FCA) spoke about the challenge of a sustainable model for regulation.  The standard response to the increasing burden of regulation was to throw more bodies and funding at the challenge.  This had already reached a tipping point forcing firms to examine their response to regulation in a different way.  The need to automate processes and make better use of technology in delivering acceptable compliance outcomes has never been greater. The key to unlocking this challenge and delivering more efficient and effective compliance is what RegTech is ultimately tasked with delivering.


Austin Andrew are specialists in recruiting regulatory and compliance professionals within Financial Services. James Boxall recently helped Paul Morrison secure his new role as Head of RegTech at Compliancy Services Limited.

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