Risks and Opportunities of RegTech and SupTech Developments

In my short remarks I would like to focus on a few key-points relating to the opportunities and vulnerabilities associated with the implementation of new technologies in the financial sector, with particular regard to the RegTech topic—that implies the deployment and regulation of information technologies used in the context of regulatory compliance, including tasks such as regulatory reporting, securities transactionmonitoring, and riskmanagement—and the SupTech topic, related to the technologies used by supervisory authorities1. As everyone knows, what we intend as “FinTech” is the abbreviation for “Financial Technology,” namely the nowadays ubiquitous application of technology to the delivery of financing, payment, investment, and consulting services, which has become a powerful driver of innovation in the financial services market2. Among the main trends, we can identify key areas of application, including payments, personal finance, lending, investments, banking, and the new developments in robo-advisory. These new services offer the advantage of being “on-the-go,” efficient, easily accessible and convenient. Relevant developments are also taking place in relation to applications of distributed ledger technology (DLT), artificial intelligence (AI)3, Machine Learning techniques4, Big Data Analytics5, RegTech6, and SupTech7, precisely. In particular, it should be borne in mind that after an initial phase in which most regulators have chosen to observe, sometimes closely, the potential of technology start-ups (a sort of RegTech 1.0), it is high time that start-ups work alongside regulators in meeting challenges (that is the emergence of Regtech 2.0).