FAQ

About RegTech

What is RegTech?

RegTech is the use of new technologies to improve the efficiency and efficacy of regulatory compliance and oversight. In recent years RegTech has emerged as a promising solution for financial providers, with cascading benefits to consumers. 


What is RegTech for Regulators?

RegTech for Regulators includes both:

  • The development and adoption of technology-enabled solutions for the collection, analysis and usage of data by financial authorities to:
    1. Improve market oversight.
    2. Reduce compliance costs.
    3. Develop smarter, proportional, risk-based regulation.
    4. Increase consumer trust, financial well-being, and participation in the financial system.
  • The innovation of the processes through which financial authorities:
    1. Develop and acquire technology solutions. 
    2. Use these solutions to complement their supervisory capacity and build evidence to develop policies.
    3. Maintain and improve the vision and use of technology in the regulatory space.

What are the potential benefits of RegTech for Regulators?

Improving oversight of digital financial services and data analysis reinforces broader regulatory goals of developing inclusive and resilient financial systems. We expect that RegTech solutions will enable financial authorities to:

  • Improve market oversight by streamlining and standardizing the collection and analysis of supervisory data, thereby facilitating day-to-day monitoring and enhancing the capability of supervisors to effectively and efficiently oversee marketplaces.
  • Develop smarter, proportional, risk-based regulation by encouraging a timely, data-driven policymaking cycle that:
    1. Addresses bad practices and abuses before they become widespread.
    2. Informs policy design with evidence from market and customer experience.

Moreover, the adoption of RegTech for Regulators solutions may impact the following:

  • Financial services providers’ cost of compliance: RegTech solutions may lower both direct and indirect compliance costs stemming from delays or mistakes that result in penalties. 
  • Consumer trust and participation in the financial system: RegTech solutions could strengthen consumer protection regulation by facilitating improved disclosure or customer recourse. This may bolster consumer confidence and trust in financial services providers, thereby encouraging consumers to increase their adoption and usage of financial products.

What are possible RegTech for Regulators applications?

Interviews with financial authorities have revealed several pain points and needs that RegTech for Regulators applications could address:

Consumer Protection

  • What financial authorities have said: Currently, financial authorities have limited visibility of customer complaints and key consumer protection issues in their markets. Most consumer protection-related complaints are handled internally, and financial authorities typically are limited to analysis of aggregate information supplied by the providers themselves.
  • Possible RegTech for Regulators applications:
    • Mechanisms for crowdsourcing DFS consumer experiences from, e.g., transactions or complaints, to allow the regulator to understand their experience and needs.
    • Interactive technologies, such as chat bots, to “triage” incoming communication and direct consumers to their appropriate point of contact.
    • Automated analysis of information available on the internet to proactively identify issues (e.g., natural language processing).

Fraud and AML/CFT

  • What financial authorities have said: Financial authorities face challenges with implementation of risk-based compliance systems for fraud and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT). Financial authorities have limited visibility over money laundering/terrorist financing risk, as they are reliant upon providers to identify and report suspicious transactions. Furthermore, the backlog of information and documentation to review creates challenges to investigate suspicious transactions or address the queries of other authorities in a timely manner.
  • Possible RegTech for Regulators applications:
    • Machine learning to identify patterns among a wealth of data on transactions across various channels.

    • Optical Character Recognition (OCR) and Natural language processing (NLP) to mine information.

 

Data Analysis

  •  What financial authorities have said: Digital financial services produce large quantities of data for regulatory analysis. However, collecting this information from numerous sources and synthesizing it into actionable insights remains challenging.
  • Possible RegTech for Regulators applications:
    • Dashboards and other visualizations to allow for more up-to-date, customizable policy analysis.

    • Tools for improving the timeliness and reliability of compliance reporting data (e.g., APIs), and for making them suitable for more complex analytics.

    • Prescriptive analytics to better target scarce resources for deeper review and on-site supervision.

 


About the RegTech for Regulators Accelerator

What is the RegTech for Regulators Accelerator (R2A)? What is it trying to achieve?

R2A’s vision is to help financial authorities accelerate the design and deployment of technology-enabled solutions for market oversight, data analysis and policy development. In the long term, by mainstreaming RegTech for emerging market financial authorities, we expect to contribute to the creation of a global RegTech marketplace with robust RegTech solutions that have been demonstrated to meet financial authorities’ needs.

Specifically, the Accelerator will aim to achieve the following in its first 20 months:

  1. Financial authorities and innovators in three markets have prototyped cutting edge RegTech solutions.
  2. Participating financial authorities have familiarized with innovative engagement processes to attract innovators and generate new solutions for market oversight and policy development.
  3. Innovators have familiarized with financial authorities’ work streams, pain points and requirements.
  4. Participating financial authorities play a leadership role in sharing learnings and good practices with peers.
  5. RegTech is recognized as an important capacity-building tool for financial authorities.
  6. The foundations of the RegTech for Regulators marketplace are built.

What financial authorities are partnering with R2A?

In its first 20 months, R2A is partnering with three leading emerging market financial authorities to prototype RegTech solutions:

Based upon the outcome of the first 20 months, the Accelerator may expand the scope of engagement to include a broader set of financial authorities.


Who are the supporters behind R2A?

The Bill & Melinda Gates Foundation, Omidyar Network and the U.S. Agency for International Development have joined together to establish the RegTech for Regulators Accelerator with the aim of addressing information and capacity gaps that hinder emerging market financial authorities. All three organizations bring a shared commitment, extensive expertise and resources to support financial authorities as they work to develop inclusive financial systems.


Who runs R2A?

R2A is a project managed by BFA and fiscally sponsored by Rockefeller Philanthropy Advisors. Both implementing partners bring deep global expertise in policy development and technology and data literacy.


What is the timeline for the R2A’s work?

R2A seeks to develop and test RegTech prototypes through a 20-month engagement. Key phases of this partnership include:

  1. Initial analysis to understand the financial authority’s key needs and identify a priority use case.
  2. Selection of an innovator/vendor that will partner with the financial authority to prototype the solution.
  3. Design, development and testing of a RegTech prototype.

Upon completing the 20-month engagement, partnering financial authorities will decide whether to roll out the tested solution.


Which are the R2A focus countries and partner financial authorities?

Initially, R2A will work closely with a small set of emerging-market financial authorities to identify a use case and develop and test a prototype RegTech solution. Three partner financial authorities have already joined the initiative.

Based upon the outcome of the first 20 months, the Accelerator may expand the scope of engagement to include a broader set of financial authorities and/or a broader set of supervisory issues. In addition, R2A may take a more active role in driving global RegTech into the mainstream.


 

Innovators

How can innovators engage with the R2A and its partner financial authorities?

R2A is keen to hear from fintech and RegTech developers, startups, and vendors as we partner with emerging market financial authorities (e.g., central banks) to collaboratively strengthen their market oversight and policy development capabilities. Specifically, innovators can pitch us their RegTech ideas, prototypes, or existing solutions. Submissions are encouraged from startups, entrepreneurs, developers, established vendors, and anyone else who has a relevant early-stage business, prototype, or solution. Please contact R2A@bfaglobal.com for more information.

In the future, R2A will share information about country-level engagement opportunities with specific financial authorities. We also will enable innovators to register in a RegTech for Regulators vendor database. Stay tuned and visit this website.


Why should innovators engage with R2A?

There are many potential benefits for innovators who engage with the RegTech for Regulators Accelerator, including:

  1. Business Opportunities
    • Develop or deepen relationships with the community of emerging market financial authorities.
    • Receive a monetary award to develop and test a RegTech prototype with a partner financial authority.
    • Register in our RegTech for Regulators vendor database.
  2. Participate in summits or interactive sessions to (i) understand the needs of emerging market financial authorities and (ii) explore innovative solutions.
  3. Recognition
    • Become known as a pioneer within the emerging RegTech for Regulators community.
    • Gain recognition for your ideas and products by submitting and pitching ideas to the RegTech for Regulators Accelerator and partner financial authorities.
    • Benefit from association with prominent international funding organizations such as the US Agency for International Development, Omidyar Network, and the Bill & Melinda Gates Foundation.

Who can participate in the market-level competition to receive funds to develop and test RegTech prototypes with R2A partner financial authorities?

R2A aims to attract Fintech and RegTech vendors, startups and developers who are seeking to engage with emerging market financial authorities to accelerate their ideas and solutions in a nascent RegTech industry. More information regarding the market-level competitions will be shared via our website in the second quarter of 2017.


Get Updates

Whom do I contact for further questions?

We would be happy to answer additional questions. Just send us an email at R2A@BFAglobal.com.

How can I stay up to date with project developments?

Visit our website periodically and follow us on social media @R2Accelerator. Register for our mailing list to receive periodic updates about the project.

 

FAQ

For Financial Authorities

How will R2A support financial authorities?

R2A is designed to be both customizable and adaptable to the specific context and needs of the partner financial authorities. R2A aims to help address key regulatory and supervisory pain points identified by the partner financial authorities by providing financial support, technical expertise and peer-learning opportunities.


How can an interested financial authority engage with R2A?

Emerging market financial authorities can:

Join our learning network: Financial authorities can stay up-to-date on lessons learned through the R2A by subscribing to receive updates, obtain notifications of upcoming briefings and connect with participating financial authorities through peer-learning opportunities.

Please contact R2A@bfaglobal.com for more information.


What resources will R2A contribute to the project?

R2A will contribute the following resources:

  • Technical specialists with expertise in financial regulation, supervision and the use of artificial intelligence and other technologies to work with partner financial authorities and innovators, both remotely and through periodic country visits.
  • A local project manager to work with partner financial authorities on a part-time basis to ensure effective support throughout implementation.
  • Peer learning opportunities (both in-person and online) with a cohort of financial authorities, expert fintech advisors and other selected stakeholders in the emerging RegTech community.

What resources are partner financial authorities expected to contribute to the project?

Partner financial authorities are expected to contribute the following resources:

  • An executive champion at the Deputy Governor level to act as Project Sponsor. The Project Sponsor will advise on the project’s strategic direction and sign off on major milestones.
  • A senior officer to act as Project Lead. The Project Lead will serve as the partner financial authority’s project manager for facilitating day-to-day project activities.
  • Other staff time as required for active participation in key R2A decisions, such as defining a use case and selecting/engaging with an innovator.