RegTech and the law 

Working with developers of FinTech solutions, as well as investors and financiers, Ashurst's financial services team is committed to bringing innovative solutions to life to meet our client's evolving needs.  The financial services team works closely with the firm's newest initiative, Ashurst Digital Ventures, which supports the development of digital products for our clients.  Ashurst Digital Ventures leverages the latest technologies to incubate and accelerate digital product ideas through to commercialisation.  

Ashurst has partnered with Anthony Stevens, a leader in digital strategy and software development, to produce the second installment of a thought leadership series which explores the trends and impacts of regulatory compliance technology solutions and legal technology in the financial services industry.  

RegTech and legal professionals

Venture capital investment in the RegTech sector is growing dramatically, acknowledged with a five-fold increase in the last 5 years. While RegTech promises to ease the burden and cost of compliance for regulated entities, it also brings its own complexity, which only a collaborative effort among all participants in the now expanded regulatory ecosystem can hope to resolve.

RegTech offers law firms and in-house counsel teams the opportunity to transform the trusted advisor role, and legal professionals are embracing the shift toward more collaborative relationships within the regulatory ecosystem. Regulators themselves are leading the charge here, with the FCA in the UK and ASIC in Australia developing innovation hubs and sandbox environments to support the development and viability of RegTech solutions. While the global financial crisis demonstrated a system is only as strong as its weakest link, collaboration around RegTech development ensures all players work together to strengthen the system as it continues to evolve.

Managing the complexity

The number of players in the RegTech market itself is increasing, especially in key areas of identity management and control, general compliance and monitoring. While choice is always a good thing, it can become counter-productive if a Financial Institution makes a wrong vendor selection. Legal professionals need to upskill in order to continue to provide timely and relevant advice to clients using or considering RegTech solutions. This requires a deeper understanding than merely the interpretation and application of regulation, it also requires an assessment of the legal risks of RegTech solutions themselves in relation to their client’s business. Understanding the technology behind these solutions is critical. This includes assessment of vendor capability and stability, vendor alignment and ease of integration with the client’s business, the risk consequence of proliferation of solutions, and gaining clarity around 3rd party risk management and liability when things go wrong, such as algorithms are compromised, or data privacy and cybersecurity is breached.  

Conclusion

The aim of a high performing compliance system is not only to meet obligations, but to create value for the business. While RegTechs are delivering solutions to specific, often niche business problems within the client or regulated industry, it is the collaboration across the entire regulatory ecosystem which will eventually determine whether this goal is realised. Law firms and legal teams have an opportunity to transform their role and in turn support RegTechs, clients and the regulator through efforts to interpret, evaluate and navigate the RegTech landscape.  

jamie ng, ashurst

Sydney-based partner Jamie Ng is global head of finance, funds and restructuring and has over 15 years' experience in complex structured finance and derivatives transactions. Jamie has played a lead role in driving the firm's innovation agenda having introduced initiatives such as Ashurst's continuous legal process improvement framework known as "P90" as well as , as Co-CEO, Ashurst Digital Ventures, our digital product development business. Jamie has advised on some of the most complex, innovative and first-to-market transactions including DLT based capital markets transactions.

ANTHONY STEVENS, DIGITAL ASSET VENTURES

Anthony Stevens is the founder and CEO of Digital Asset Ventures (DAV). The co-founder of several start-ups, including cloud-based B2B commerce platform Devicedesk and regulatory compliance and third-party risk management platform 6clicks.io, Anthony was also former Partner and Chief Digital Officer at KPMG. In 2018, he published his first book, Chasing Digital: A Playbook for the New Economy, a comprehensive step-by-step guide to digital transformation, aimed at the leaders of pre-digital companies.