WEF | Roslyn Doktor, Robb Henzi, Landry Signé | Jun 21, 2022
As a broader culture of innovation sweeps across business, culture and society, regulators with an eye on the future are harnessing the power of Regulatory Technology (RegTech) – a market projected to grow from $7.6bn in 2021 to $19.5bn by 2026 – to create the best possible regulatory outcomes for society.
So, what is RegTech exactly?
RegTech can help both the regulator and the highly regulated to minimize risk, improve outcomes, and lower costs. It helps connect “the dots” more quickly and automates tasks. It can also translate complex regulation into code. Applying technologies, like AI, blockchain, and cloud, responsibly to augment the ability of compliance teams can help both the regulated and regulator to do their job more effectively and collaboratively.
For the regulated, it strengthens compliance while enabling agility to anticipate and dynamically respond to changing regulatory needs. For the regulator, it enables more transparency as well as agility in modifying requirements to meet new risks more timely. The nature of the relationship changes from “set-and-forget” to iterative and user-centred regulation design.
Embrace new engagement models
First and foremost, regulators must be aware of and embrace new engagement models to power more innovative and agile regulatory processes and outcomes. This means a reinvention of how the private and public sectors engage around regulatory matters, evolving from a producer/consumer dynamic to one grounded in partnership, co-learning and multi-stakeholder consideration – similar to Suade Labs’ support from the EU and successful collaboration with the UK government.
Increasing data-driven decisions and creating new design models
A second set of mechanisms poised to power the future of RegTech are new design models that offer transformative toolkits for regulatory bodies. Embracing the idea of radical user centricity, a practice area most frequently applied to product and service design, can help align regulation development with more agile, iterative processes akin to those that enable new software development.
See: The FCA Hosted CryptoSprints in May and June 2022: Here are The Outputs
This means embracing a dynamic approach that welcomes experimentation and iteration, seen in certain regulatory sandboxes over the last few years, and one that embraces an “adapt-and-learn” mindset over “set it and forget it”.
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