Regtech: steering the regulatory spaceship in the right direction?

Abstract A spaceship steers by changing its existing orbit or trajectory. The current regulatory framework for financial institutions, albeit essential, is inefficient, thus steering the regulatory spaceship out of orbit. Regtech is an ever-evolving innovation which may have the potential to become a catalyst in financial services industry regulation. It provides automated solutions for monitoring, reporting and analysing regulatory requirements, thereby significantly reducing costs and improving productivity. This paper, however, argues that Regtech currently lacks the envisaged effective and widespread adoption because of risks, ambiguities, costs and difficulties associated with its application. The future of Regtech, therefore, remains uncertain. Yet through careful modification and implementation of recommendation initiatives, Regtech will be able to transform the way in which regulators and financial institutions observe and implement the current regulatory landscape, steering the regulatory spaceship in the right direction.