RegTech: when the whole is greater than the sum of the parts

When the year 2008 is mentioned, it is generally associated with the untimely demise of Lehman Brothers and the ensuing financial chaos that engulfed the global economy and rocked it to its very core. Yet, for all the economic damage that the financial crisis is credited with causing, the year 2008 in fact marked the genesis of a societal phenomenon far more pervasive, divisive and corrosive than was initially appreciated.

When Lehman Brothers collapsed, governments, central banks and trusted financial intermediaries such as banks found themselves brutally exposed: at best, the public perceived them as hapless and impotent bystanders, caught in an economic maelstrom of a scale and complexity never seen before; at worst, they were unveiled as cynical and self-serving constructs that sacrificed the greater good on the altar of individual capitalistic gain. In short, the crisis in which the world is enmired is not only financial in nature: what we are experiencing is a profound and unprecedented crisis of trust, confidence and legitimacy with regard to the public servants who govern us and the organizations that serve us. The people, the voting public, have lost faith in the very institutions that are meant to represent, protect and further their interests.

From a macro perspective, the world economy has never known so much wealth, and yet never before has the global prosperity gap been so enormous. When 8 high net-worth individuals possess riches equivalent to those held by 50% of the Earth’s population; when populism is no longer a political pariah and rises to become a palatable alternative to a flailing status quo; when democratic process and freedom are facing a real and present threat; then the time has come to admit that our economic and financial system is not just imperfect, it is verging on fatally flawed.

So where does Regulatory Technology fit into this picture? RegTech is currently touted as being the next ‘big thing’ to hit the Financial Services industry, serving primarily to reduce the cost and complexity of complying with the myriad regulations that have been enacted since the financial crisis, in an effort to ensure that an imbroglio of such epic proportions could never happen again. But what if RegTech could do more than ‘just’ reduce the cost and complexity of compliance within the confines of a system that is increasingly acknowledged to no longer serve its societal purpose?

Regulation does not exist in a vacuum, and neither does technology: both evolve organically in a geo-political and economic context, and the direction their development takes is conditioned by the policies and decisions made at every level that serve to shape our societies.

“You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.”

- R. Buckminster Fuller

What if RegTech could jumpstart new thought processes around broad-based collaboration between industry stakeholders, inciting new regulatory approaches to support financially inclusive policies that foster social mobility and bring the ‘unbanked’ into a system from which they are currently excluded by design? What if RegTech could become an integral part of the ‘soft infrastructure’ necessary to support a new model that is adapted to the realities of the times in which we live? Imagine the full realm of possibilities when RegTech ceases to be just a bankable buzzword and becomes a Movement, embodied by people who yearn for ‘better’ and who are emboldened by this powerful purpose.