A report released by venture capitalist Enterprise Ireland and Kapronasia provides insights into key initiatives, regulations and financial ecosystems across the APAC region, finding that a surge in the region’s regulatory requirements has boosted the need for innovative regtech solutions.
‘The State of Regtech in APAC’ report provides analysis across 10 key APAC markets including Australia, mainland China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
Zooming in on Australia for a country-specific analysis of the regtech landscape, the report delves into a number of factors contributing to the pace of the sector’s recent development. Some of these key highlights from the report include:
- Regulations invite innovation: The impact of the Royal Commission has heightened awareness around compliance and cultural issues and the rising cost of compliance is now starting to affect businesses, forcing them to look for alternative solutions.
- The Covid-19 effect: Covid-19 closed many service branches across Australia, which will remain closed as consumers demand more complete digital services. As a result, the need to manage the risks of cybersecurity, digital identification services and KYC are escalated.
- New entrants drive change: New players entering the market with purely digital platforms and built-in regtech solutions are forcing incumbents to up their digital game to remain competitive. These regtech technologies have usually been tried and tested in more advanced and mature regulatory environments, so they are well positioned for changing markets in the region.
- Time to value significantly reduced: As awareness has grown, the average time to value, a measurement of time taken from the initial conversation with a potential buyer to full production deployment by the regtech provider, has reduced from two years to 13.3 months.
- Australian regtech needs to export: While momentum in Australia is positive, it is not happening fast enough for Australian regtechs to survive without export to third-party markets.
- Expansion of the regulatory spotlight: As Open Banking and the Consumer Data Right regimes expand from banking to the superannuation, insurance, telecommunications, real estate and energy sectors, these areas will need regtech solutions to manage their increasing regulatory challenges.
Speaking on the report, Dr Dimtrios Salampasis, Director and FinTech Leader at Swinburne University of Technology explains: “The demand for innovation and redefinition of regulatory narratives are paving the way towards the emergence of new and novel business models leveraging and capitalising on the fusion of technological, business, societal, cultural and ethical underpinnings.
“Digital law and regulatory reforms remain at the forefront of disruptive innovation in the quest of addressing complex, multifaceted and integrative challenges. The outcomes and insights provided by the report will pave the way for further experimentation, inform key decision-making and promote regulatory-driven technological entrepreneurship and innovation”, he adds.
Scott Patterson, Enterprise Ireland’s APAC Fintech and Financial Services Lead, who is based in Melbourne notes: “While the Australian government’s significant investment in modernising businesses large and small and increasing fintech trade in the 20/21 federal budget was welcomed, Covid-19 has been the huge accelerant for the sector.”
“The pandemic has forced many financial services organisations to fast-track their digital transformation. This allows them to provide better digital banking services and to move away from legacy systems to cloud-based regtech platforms that are flexible enough to meet the current expectations of local regulatory frameworks, while also future-proofing against the ever-evolving regulatory landscape. This is set to grow across many ancillary sectors under the new Consumer Data Right regime.”