Regulatory Technology Strives for New Era of Effective Governance


Regtech, short for regulatory technology, is a category of software solutions that helps its business customers to manage and de-risk compliance with the regulatory obligations of their respective industries. By its nature, regtech seeks first to understand and then to simplify and manage the highly complex laws written to regulate industry. While the right seeks to free business to grow and the left seeks to protect citizens and consumers, a good regtech solution supports both sides with technology that ensures compliance with the law while minimizing the resources necessary to do so.

Consider regulatory control over the financial services industry as a prime example from modern history. Speculative investment soared during the roaring twenties while production waned and unemployment rose. Over the decade, the stock market became increasingly over-valued and consumers took on more and more debt as banks turned a blind eye to obvious risk and over-leveraged cash holdings. Sound familiar?

Black Tuesday and the Great Depression were the result. The Securities Act of 1933, the Securities Exchange Act of 1934 to create the SEC, and the Investment Advisers Act of 1940, which increased the mandate of the SEC, were the government’s response. These laws enacted to guide financial industry and protect main street consumers and investors expanded and evolved over time with middling success at protection and increasingly vocal objection to the burden of regulatory compliance.

The compliance burden for regulated industries was exacerbated by a lack of systems and technology. Paper documentation could be misfiled or completed incorrectly with no easy way to be aware of the error. Audits by regulators could last weeks, months or even years as they poured over thousands of pages of documents. For nearly a century, regulations expanded as businesses struggled with compliance and the American people continued to be hurt