Keynote interview during the ‘RegTech Summit Europe’ which was held in London on 27 September 2017.
Speaker: Stamos Fokianos, Credit Agricole Corporate & Investment Bank
Interviewed by: Ben Richmond, IRTA
Ben:The past year has seen a lot of development in RegTech, including the rise of AI. Compliance has become cool; and we’ve seen the regulators talk about machine-readable rules, which is a major step forward in our industry. Is RegTech delivering on its promise?
Stamos: Instead of having a long process of releasing new algorithms, what we’re trying to do is create a framework that will adjust itself in real time. The challenge is to convince compliance departments and regulators that you’re not creating an uncontrollable monster.
Ben: Have you seen practical examples of RegTech helping, and bringing regulators and financial institutions together?
Stamos: MiFID has created the ground for things like price caps/controls and price checks before we issue a price, whether it’s on our internal systems, an MTF, non-MFT, or single dealer platforms. Last year we thought MiFID would be universally implemented, and that the US would adopt it/provide equivalence. We now know that it won’t apply globally, so we are doing the opposite of building things to achieve economies of scale – we’re now building customised solutions for Europe and non-Europe, and fragmenting the market again. Everything is now focused, rather than harmonised, which increases expense and risk.
Ben: £5bn is expected to be deployed in RegTech over the next 5 years. Are you seeing new solutions coming to market? In which areas are you seeing the most innovation?
Stamos: We are investing a multiple amount more on technology today, to make money, than we used to. Margins are still compressing, and it feels like we’re running just to stay still. KYC is an inefficient and duplicative process , because everyone does KYC on their own. A few fintechs are trying to solve this, but the problem isn’t the technology – people need to be aligned.
Ben: How do you see the RegTech space developing over the next 5 years?
Stamos: I think that fragmentation will happen. Regulators in different regions won’t agree, and some people will benefit as we will need customisable solutions. I hope I’m wrong!
RegTech Summit US
November 8, 2017. New York
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