Years after fintech began to shake up the financial services industry, regtech aims to allow traditional, legacy financial institutions to fight back by streamlining the regulatory process. But in the end, all three categories are expected to play an important role in the future of finance.
Parker Crockford, U.S. commercial director at identity verification company Onfido, sees regtech companies like his as a sort of intermediary between regulators and private businesses. On the latest episode of the State of Identity podcast, he said both regulators and companies might feel more comfortable speaking to an independent mediator than directly to one another for fear of consequences.
While Crockford admits Onfido was “birthed out of fintech,” he said his company has moved beyond that distinction, broadening its approach to provide services to different types of businesses with different use cases.
“Regtech is that next piece,” Crockford said. “And so instead of competing directly with the financial institutions, it’s there to help them be competitive with that sort of batch of fintechs that are out there now, that are trying to be very disruptive to the banking space.”
Also on this week’s episode is Ryan Zagone, director of regulatory communications at Ripple, a realtime cross-border payment network. He sees fintech, regtech and financial institutions all coming together to find common ground — an industrywide shakeup that could ultimately benefit consumers, especially those who are currently underbanked.
He said the more efficient the regulatory and compliance processes can become, the more likely it is that consumers will adopt tools from financial institutions, greatly expanding financial inclusion around the globe.
Ripple also noted that regtech is not changing the regulatory requirements placed upon financial institutions — it’s just simplifying the process that a bank needs to meet those requirements. In a world where banking is easier to access and still protects consumers, thanks to the teamwork of different industries, then everybody wins.
“I expect that people see this convergence of regtech, fintech, and financial institutions themselves, all coming together to leverage the core competencies of all of these different players,” Ripple said. “It’s really a partnership.”
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