High Tension between Regulation and RegTech?

To celebrate the first birthday of DBS Asia X in Singapore, Chief Innovation Officer, Neal Cross hosted a celebration coupled with a healthy debate on growing tension between regulation, FinTech, and  RegTech.

Neal’s opening address ensured the audience an edgy spin on what’s become a regular one sided debate. Paying reference to the hype of activity amongst regulators 



Making reference to the hype of activity amongst the regions regulators around Fintech, Cross referred to a competitive region that feels like the key issues are: 

  • Who is the coolest?
  • Who can dress down the most? 
  • Who has the biggest conference?
  • And How big is your sandbox.

Watching regulators tackle Fintech, is like watching your grandparents learn to skateboard. It sounds cool, but it just looks awkward.

It’s like watching your grandparents learn to skateboard - Neal Cross DBS CIO

Kicking off the panel was Kevin Nixon of Deloitte's Centre for Regulatory Strategy, noting a positive perspective on the regional regulators making and effort to engage the market, at a time where many global peers are still hiding behind rules and regulations.

Respected Professor David Lee Kuo Chuen of Singapore University of Social Sciences weighed in that while the industry aims to embrace Fintech, the core worries about sustainability, AML remain front and centre. However, they should not be used as an excuse.  Singapore’s Monetary Authority (MAS) is a positive role model, as they accept and seek to understand new complexities, such as distributed technologies. Thus creating regional positivity, each regulator encourages each other, while still cautious of guarding against taking out a pillar and see the entire system collapse.


Heading DBS' efforts on the regulatory front is Lam Chee Kin, Head Group Legal, Compliance & Secretariat. Lam's outlook is one of practical acceptance, noting an ongoing battle juggling regulatory complexity and the desire for simpler rules to encourage growth.

‘We unlikely to find a happy middle ground in the near future’. As technology forces regulators to think disruptive in a complex world, the tension between regulation and innovation is significant. Instead we should aim to align to public policy intentions like financial inclusion, consumer protection and sustainability, not prescribing technology recipes. This remains a challenge as fragmentation inside regulation, makes it impossible find cohesion between policy makers and enforcers. Overall finance community has done a poor job of reducing complexity and fragmentation. 

Radical technology like distribute ledgers is way ahead of regulation, which is based on the paradigm of an Authority, said Prof Lee. The shift is so radical, very few regulators have experience to deal with it. As a hedge fund you can manage a billion dollar fund. But you have challenges with cryptocurrency. 

Financial markets have dramatically changed since the days of chalk board trading rooms, yet many of our current paradigms behave in the same way, explained Nixon. The move anyway from central ledgers to distributed ledger is so radical in world where even the most innovative bank still thinks about people walking into a branch.

What's the World's Most Disruptive CIO suggest to those wanting to understand the future? Read lots of science fiction.

So what’s the role for RegTech?

Many forget, focus on the regulatory intent, not the technology. Hunting bad guys will always be top priority, but that often makes it hard for the good guys. Why should I inflect the pain of AML on all the good guys? questioned Lam. People throw too many operational excellence and technology at that challenge, and forget the regulatory intent. He went on to suggest, maybe should focus on injecting context into regulation, would could be better than RegTech. He also proactively encouraged the financial sector players to consider centralising distributed efforts, such as Analytics and AI for fraud and risk management.

The trend of xTech has only been good for conference producers, RegTech is no different mentions Nixon. We need to focus on emerging technology to advance the core intent or problems within the money system. Compliance and AML involves over a billion dollars and over 10s of thousands of people. Amazon knows what you’re going to buy before you buy. What if you could catch the bad guy before they do the wrong thing?

Overall the panelist engaged a healthy, open and challenging debate that reflects the industries positive steps to date, but also paying homage to the need to do more. Technology evolution is only going to accelerate, so how do we help Granny ride that skateboard like a pro?

Scott BalesComment