RegTech advice for financial institutions and start-ups – A conversation with Neira Jones

Ever since we launched The Planet Compliance Top 50 RegTech Influencers Neira Jones has been in the top 10 and even made it to No. 1. A renowned advisor and international speaker, she certainly is one of the most influential women in RegTech and FinTech and when we spoke to her, it quickly became apparent that she knows the industry like few people.

PlanetCompliance: What gets you excited about RegTech?

Neira Jones: I’ve always been very interested about regulations, as sad as it may sound, but I’m particularly interested in RegTech now because of the changes to the regulatory landscapeover the last 18 months. In Europe specifically, 2018 will be a very challenging year. I’m involved in various industries, but when you focus on payments, financial services and information security, we already have the stringent Anti-Money Laundering requirements (4th and 5th AMLD), but 2018 will bring not only PSD2, but also the GDPR, the e-Privacy Directive, MiFID II and many more. Businesses might almost be forgiven for getting confused by the apparent conflicting requirements set out in the different regulations. When it comes to corporate compliance, organisational structures may also be a hindrance. You will generally find that you have different teams in different departments will look at those regulations separately creating regulatory silos. For example, the Risk department may be responsible for AML, the IT Department for GDPR, the Regulatory Compliance department for PSD2, etc. This is a costly exercise and conflicts and overlaps will generate a lot of risk, and businesses may make separate investments to cover the same objective, thus creating regulatory silos. When you consider this, RegTech suddenly becomes very, very interesting, because it can help to reduce and automate this burden. This is why I always advise organisations to take a holistic approach, understand the industry they’re in and therefore all the regulations that apply. and create an umbrella programme that looks at all of those, with the purpose of deploying synergies , addressing overlaps and potential conflicts, as well as reducing risk across the board.

PlanetCompliance: How do financial firms usually respond to that advice?

Neira Jones: They are generally very receptive, but often shocked when I tell them about applicable regulations they are not aware of. This is because, one team may only be addressing only one regulatory initiative like the GDPR and may disregard others like the PSD2, which should be looked at in conjunction. You can almost see these people having a light bulb moment realising the wider implications.

PlanetCompliance: Do you think RegTech is all about the regulatory landscape we’re in right now then?

Neira Jones: Absolutely! I definitely think it is the key driver and I would say it is to some extend unfortunate that it has taken so long… Because we have so many important regulations coming in at the same time, regulatory risk is getting so much more attention at Board level. Taking security as an example, investment is often driven not by the desire to be more secure or to protect information, but by regulatory risk (or a serious event such as a major cyber attack). This gives RegTech the airtime it needs at technology and business executive levels.

Sounds like an advertisement for speed-reading courses: A recent report estimated that financial regulations will surpass 300 million pages by 2020!

PlanetCompliance: So do you think we’re going to see an even bigger wave of RegTech adaption across the financial industry in the near future?

Neira Jones: I have no doubt about that!

PlanetCompliance: So do you think we’re going to see an even bigger wave of RegTech adaption across the financial industry in the near future?

Neira Jones: Incumbents that have been in the market for a long time will have the burden of legacy systems, as well as, perhaps, distrust of new technologies.

PlanetCompliance: What is the role regulators should play?

Neira Jones: Regulators should make the regulations fair and accessible and disseminate their benefits. The UK Financial Conduct Authority takes such an approach and has, for example, recently published a paper on RegTech and AML, highlighting technologies like machine learning to help with the compliance burden.

PlanetCompliance: What’s your advice for RegTech start-ups?

Neira Jones: First of all, understand which regulation you’re aiming at. It’s all very well for a start-up to have a cool technology, but they also need to demonstrate that they understand the regulation and the many burdens that this regulation will place on the institutions and where they can ease the pain points.