The Irish Regtech Explosion

Scott Patterson – Fintech and Financial Lead, Enterprise Ireland APAC

With Covid-19 ruling out most foreign travel, it is easy to assume that Irish companies have had to postpone expansion plans into far-flung markets such as Australia and New Zealand. But this is far from the truth particularly for Irish Regtech companies, many of whom experienced unprecedented levels of global growth in the last 12 months.

Whilst the pandemic forced many Australian financial services organisations to commit to increased levels of investment in digitisation, and customer experience initiatives, it also shone a light on the need for organisations to accelerate their development of robust compliance and regulatory standards.  Against a tide of rising costs, decreasing revenues, and more stringent regulatory expectations, organisations have very quickly intensified their focus on the role of regulatory technology to help create sustainable risk environments of the future. 

This paradigm-shift began in 2019 with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industy.  It was a water-shed moment for the industry and a pre-cursor to increased levels of regulatory scrutiny, fines, and the introduction of the Banking Executive Accountability Regime (BEAR) which established additional levels of responsibility of nominated company Executives and Directors.  

The Royal Commission forced organisations to shelve much of their focus on innovation, customer experience, and revenue generating technology investments, and re-direct spend and prioritisation on the remediation of major risk and customer related issues to ensure that they met regulator deadlines. It was a process that has been labour intensive, costly, and largely unsustainable.  

During the following year, Covid-19 created a burning platform for digital transformation across the industry.  This was also a catalyst for organisations to fast-track the transition from legacy risk processes and systems to Cloud based Regtech platforms that were flexible enough to meet the expectations of local regulatory frameworks whilst also future proofing against the ever-evolving regulatory landscape.

Given the enhanced regulatory requirements and scrutiny there was an industry and regulator call for global assistance, with an emphasis on Regtech solution providers with proven experience of solving regulatory problems for the biggest and most complex organisations in the world.  

Enter Ireland. Irish companies have consistently punched well above their weight, with a number regularly ranked among the top 100 Regtechs globally. Supported by a strong and rapidly expanding Australian presence, Irish Regtechs have long had support from the Irish government and regulators, a well-established international financial services hub and access to world class tech talent.   Irish Regtech’s also have experience of working with leading global organisations to remain compliant in the most advanced regulatory regimes in the world.

A standout example is Fenergo who have now supported each of Australia’s leading Banks to solve regulatory onboarding issues with their Client Lifecycle Management Solution capable of enabling a variety of functions from Remote Account Opening, Onboarding and Origination, and Financial Crime and Compliance. Fenergo has also created an active APAC community of leading Australian Financial Service organisations which they refer to as compliance by design which is a powerful collaboration initiative that mutualises the effort and cost of compliance. This allows tiers two and three financial institutions surety that their approach to AML/KYC, combating financial crime, and counter terrorist financing is the same as the tier-one institutions.

Whilst Vizor, a global leader in the Supervisory Technology market also stepped in to provide industry wide reporting support through partnering with Australian Prudential Regulatory Authority (APRA).  Through the deployment of a new data reporting solution which will soon be used by more than 4,500 financial sector entities, Vizor’s web-based platform was selected for its ability to provide a more user-friendly data collection system capable of improving speed, and accuracy of financial organisation reporting to APRA.   

Daon have also had significant impact in the Australian market, and have demonstrated the utility of Regtech solutions to provide value across a variety of industry verticals.  Daon’s Biometrics and Identity Assurance Software has now been deployed by leading Australian organisations such as Australia Post to digitally manage the identification and privacy of their customers.   

Through continued Australian Government support, and the work of progressive industry associations such as the Regtech Association, both of whom welcome international competition, Ireland is very well placed to help solve Australia’s compliance problems of the future and continue to drive the development of local Regtech industry standards. Indeed, the next twelve months look just as good as the last twelve.

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