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IncollaborationwiththeGlobalFutureCouncilonAgileGovernanceRegulatoryTechnologyforthe21stCenturyWHITEPAPERMARCH2022Cover:@gremlin/GettyimagesContents357RegTechdefined1ThevalueofRegTech2RegTechcasestudiesCasestudySuadeLabs:FIRECasestudyGeneralMotors:IBM’sOpenPageswithWatsonCasestudyNovoHamburgo(Brazil):SupportingSMEsCasestudyColombia:EcosystemforSmartRegulationCasestudyXalgorithms:Oughmation3Commonsuccessfactors3.1Engagement13163.2Design3.3Applications4RegTechroadmaps4.1Findyourentrypoint4.2Findyouropportunityareas4.3Choosethetechnology4.4ExperimentwithRegTechapplications4.5PrioritizetheRegTechapplications5Finalremarks222323ContributorsAcknowledgementsDisclaimerThisdocumentispublishedbytheWorldEconomicForumasacontributiontoaproject,insightareaorinteraction.Thefindings,interpretationsandconclusionsexpressedhereinarearesultofacollaborativeprocessfacilitatedandendorsedbytheWorldEconomicForumbutwhoseresultsdonotnecessarilyrepresenttheviewsoftheWorldEconomicForum,northeentiretyofitsMembers,Partnersorotherstakeholders.©2022WorldEconomicForum.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,includingphotocopyingandrecording,orbyanyinformationstorageandretrievalsystem.RegulatoryTechnologyforthe21stCentury2RegTechdefinedWhatisregulatorytechnology?Regulationiscentraltogovernmentalmanagementofcomplexsystems.Itisroutinelyusedbygovernmentstoincreasemarketefficiency,ensureactors’accountabilityandsupportcoordinationacrossactivities.However,ifdesignedorappliedineffectively,regulationmaytriggersignificantlosses,imposeunnecessaryfinancialburdensandstifleinnovation.Asaconsequence,governmentshaveshiftedfromtraditionalset-and-forgetregulationstoiterativeanduser-centreddesignpractices,includingexperimentalregulation(prototypingandtesting)ofagilegovernancehaschangedpolicy-makingandpromotedtechnologicaladvancement,providingmanyopportunitiestodesignnewregulatorytoolsandenhancetheregulatoryprocessthroughRegTech.Forexample,artificialintelligence(AI)canbeusedtomonitordataforregulatoryrisks,natural-languageprocessingcanhelporganizationsbetterunderstandregulatoryrequirements,andblockchaincanhelptrackandverifycompliancedata.Emergingtechnologieshavechallengedgovernments’abilitytoregulatetheFourthIndustrialRevolution.Ontheonehand,thereisaneedtominimizeoreliminatetechnologicalrisk.Ontheotherhand,thereisadesiretooptimizethepotentialbenefitsofnewtechnologies.Below:@LanZhang/GettyimagesReflectingSociety:TheStateofDiverseRegRepresentationulatoryTechnoinloMediagyforandtheEntertainment21stCentury3DefinitionForthepurposesofthispaper,RegTechisdefinedas:Theapplicationofvariousnewtechnologicalsolutionsthatassisthighlyregulatedindustrystakeholders,includingregulators,insetting,effectuatingtechnology.Solutionslikecodified-regulations,AIcompliancesystems,blockchaintrackingandsmartcontractingallpresentpotentialtoimproveregulatorysystems.andmeetingregulatorygovernance,reporting,complianceandriskmanagementobligations.Thequestionremains:howtobestadopttransformativenewRegTechapplications–movingfromstatictodynamicregulation–whilekeepingregulationandgovernancetruetotheirmainobjectives.ThegoalofRegTechistoprioritizeandimprovetheeffectivenessofregulationsandgovernancewhilereducingthecostofcompliancethroughmodernWhythisdefinition?––First,thedefinitionrecognizesregulatorypractices.RegTechaimstosimplifyregulationandstreamlinecomplianceprocessesbytranslatingcomplexregulationintocode.Thiscanreduceassociatedrisksandcostswhileharmonizingstakeholders’viewpoints.Legacyregulatorysystemstendnottopromotetransparencyandagilitybutnewtechnologiescancounterthisopaqueprocesses.Second,thereisaninterdependencybetweenregulatorsandtheregulated.Focusingononestakeholderatatimewillnotimprovecurrentsystems.RegTechisautilityforthewholeindustrythatreducestheburdenofcompliancefortheregulated,butalsopromoteseffectivegovernancefromregulators.Whynow?CollaborationamongallstakeholdersandtheuseofRegTechcanfacilitatebetterregulation,governanceandcompliance.Technologicaladvancementshavereachedsatisfactorymaturityandahighlevelofcommunityunderstanding.Therefore,suchtechnologiescanbeconfidentlyappliedtoimproveefficiency.21stcenturyThe21stcenturyposesnewchallengesasregulatorysystemsstruggletokeepupwiththerisksandopportunitiesofemergingtechnologies.Itisimportanttorecognizethechallengesofbalancingtheneedtoinnovateandthedutytoprotectandbuildtrustamongstakeholders.Often,lawandbureaucracyarehardtoreconcilewithtechnologicalchange.Asaresult,regulationcanhindernewideas,productsandbusinessmodels.Industriesandcorporationsindifferentverticalsstrugglewithambiguous,staticornon-existentregulatoryframeworks.Moreover,technologiestranscendtraditionalindustrydefinitions,straddlingsectorsandjurisdictions.Post-COVID-19DuringtheCOVID-19pandemic,economicconditionshaverequiredagilegovernanceandtechnologydeployment.Regulatorsandregulatedindustrieshaverevealedaneedformoreagileandresponsiveregulationwhenfacedwithsocial,economicandpoliticaldisruptions.Inaworldofincreasingregulationandgrowingenvironmental,ethicalandsocialneeds,minimizingtheburdenofcomplianceiscrucialtosuccessfulregulationandgovernance.Policy-makingshouldthereforeberapidwhilemaintainingoperationalfunctionalityandsocialstability.RegulatoryTechnologyforthe21stCentury4Below:@martin-dm/GettyimagesThevalueofRegTech1Regulatorytechnologiessupporttheshiftfrom‘reactive’to‘dynamic’regulation–enablingregulatoryformationandcompliancetomoreeffectivelyevolvewithchangingmarketdynamics.RegulatoryTechnologyforthe21stCentury5Regulatoryframeworksareoftenaresponsetomarketfailuresinastaticmodel.Theyarefrequentlyappliedafterrecessionstoavoidtherecurrenceofpastsystemweaknesses.This‘reactive’naturecanmakecompliancecomplicatedandcostly.andinfactincreaseconsumerwelfare.However,italsoexposesthreatstomarketcompetition,andlabourandconsumerprotectionthatregulatorsstruggletomanage.RegTechenablesaregulatorysystemtocontinuouslyevaluateandupdatewhensuchloopholesareidentified.Forexample,itmakesiteasiertoadjustprocessestoreduceregulatoryburdensonincumbents,orenforcerequiredmarket,labourandconsumerprotectionsonnewentrants.HighlyregulatedindustriescanfindinRegTecharelieffromsuchburdens,hencefreeingfinancialandsocialcapitalforreinvestment.EffectiveRegTechdeploymentbuildsgreatercapacitytopre-emptchangesinregulatedmarkets,simplifiescomplexsystemsandquicklyupdatesbasedonregulatorychange.However,greaterpotentialreturncomesfromtheadoptionofRegTechandagilegovernancetogether.Thisincreasesthesystemflexibilitytoadjustunderlyingregulatorymeasuresasopposedtooverhaulingorcreatingnewprocesses.Theconcerninemployingthis“agile”approachisthatitcanresultinahighlevelofregulatoryuncertaintyforbusiness.Anagileregulationmodelthatemployscontinuousintegrationanddeliveryofregulationsmayincreasetheriskoflong-termbusinessinvestments.However,insightsfromotherfields(seeBox1),suggestthatagileapproachescansupportcompetitionandencouragetrueinnovation.Likewise,RegTechcanmakeregulatorysystemsmoreresilienttodisruption.Manymodernbusinesseshavebeenabletodisruptmarketsnotfromfundamentalinnovation,butbydiscoveringaloopholethatallowsthemtoignorethecomplianceburdensoftheincumbentcompetitors.DiscoveryoftheseloopholescanhighlightingrainedTherestofthispaperprovidescasestudiesandbestpracticestosupportmeaningfuldialogueamongregulatedindustries,regulatorsandtechnologyinnovatorsforthesuccessfuldeploymentofRegTech.inefficienciesdrivenbylegacyorover-regulation,BOX1ParallelsofagilegovernanceandagilesoftwareInthe1990s,theagileapproachwasintroducedtosoftwaredevelopmentandbegantodisplacetraditional“waterfall”monolithicdevelopmentmethodologies.Themethodwasdrivenbyevolvingbusinessneedsthatwerenotmetbyexistingcommunicationandprojectdevelopmentstrategies.Manysoftwareprojectswerecancelledbeforecompletionbecausethedesignprocesswasnotstructuredtoallowforproductstoadapttochangingconsumerpreferencesovertime.Whatemergedwasafocusoniterationanddynamismtocontinuouslyevaluatetheoperationalstateofanapplicationwhileindeployment.Thiswastoensureclientinteractionwasprioritizedandthatindividualinteractionswerevaluedinfinalspecifications.Theresultwasfasteraccesstonewsoftware,withmorerapidfeedbacktodevelopers,allowingforsoftwaretobeadjustedwhileindevelopment.Properinfrastructure,well-definedinterfacesandefficientautomatedprocesseshavebeenthekeyfordevelopmentobjectivestobemetdespitecontinuouschange.RegulatoryTechnologyforthe21stCentury6Below:@TeroVesalainen/GettyimagesRegTechcasestudies2ThroughaseriesofRegTechusecasesfromadiversegroupofindustriesandmarketsegments,theopportunitiesandchallengestosuccessfuldeploymentofRegTechcanberevealed.EachcaserevealsinsightsintohowRegTechcanbeappliedandinformsasetofprinciplestoguidenewtechnologies’applicationforregulation.ThegoalistoencouragegovernmentsandindustriestoimplementRegTechandgrowconfidenceinhowandwhenitcanbeadopted.RegulatoryTechnologyforthe21stCentury7CasestudySuadeLabs:FIRESuadeLabs’FIRE,astandardizedfinancialregulatorydataframework,streamlinedreportingprocessesandmadetheirdatastandardopensource.AProblemThefinancialindustrylacksacommondatastandardforfinancialregulatoryinformationwhilethecomplianceburdenontheindustrycontinuestoincrease.BActionWhoSuadeLabs(withinitialfundingfromtheEuropeanCommission)WhatAfterthe2008financialcrisis,significantregulatoryreformswereimposedonthefinancialindustry,increasingthecomplianceburdenontheindustry.SuadeLabsdevelopedanopen-sourcedatastandardcalledFIRE,shortforfinancialregulation.FIREisanintuitivelydesigneddatastandardforfinancialregulatoryinformationthatisavailableopensourceforalltouseandcontributeto.ChallengesExpandingtheFIREdatastandardtocaterfornewregulatoryreportingrequirementsandjurisdictionsrequiressufficientexpertiseinfinancialregulation,datamanagement,riskmanagement,financialmarketsandcoding.Technicalelements–––JSONprogramminglanguagewasusedtoenablealowbarriertoentry.GitHubwasusedfordatastorageandtoenablestakeholderstovieworcontributeopenly.FIREcreateshigh-qualitydatathatallowsnaturallanguageprocessingandmachinelearningtoolstofunctionintheregulatoryreportingprocess.ImpactFIREfacilitatesregulatoryreportinginfinancialservices.Ithelpscentralbanksandregulatorsevaluatedatasubmittedfrominstitutionsbystandardizingthedatatofacilitateregulatoryreportingandcompliancetasks.Ithelpsfinancialinstitutionsbystreamliningthereportingprocessandmakingreportingmoreefficient.CInsightsScalablestandardsMutuallybeneficialRegTechtoolsshouldfocusonadoptingscalablestandardstoallowforincreasedefficiency,transparencyandautomation.RegTechworkswellwhenitismutuallybeneficialandwhenthereisbuy-infromregulatorsthemselves.FIREbenefitsbothfinancialindustryplayersthatimplementit(throughincreasedefficiencyandautomation)aswellasregulatorsthatregulatethem(throughtransparencyandimprovedfinancialstability).OpensourceOpen-sourcestandards(ratherthanproprietaryonesorbespokesolutions)bringmanybenefits;forexample,qualityassurance,costeffectivenessandadaptability(andsubsequentlynolockintoaparticularvendor).FIREhasbeenmadeavailabletothefinancialservicesindustryasapublicutility.Itcanbeusedbyanyone,independentlyofSuadeLabs’reportingsolution,andanyonewithsuitableexpertisecancontributetoandexpandthedatastandard.RegulatoryTechnologyforthe21stCentury8CasestudyGeneralMotors:IBM’sOpenPageswithWatsonGeneralMotorsusedIBM’sOpenPageswiththeWatsonplatformtoconsolidateauditingdataandprocessesforbetterriskmanagement.AProblemRiskmanagementintheautomobileindustryrequiresanintegratedsystemthatcanmonitor,measureandmitigaterisksfromacrosstheentirebusiness.BActionWhoIBM,GeneralMotorsWhatAutomobilemanufacturershavetoconfrontawidevarietyofrisksintheirdailyoperations–fromnaturaldisastersandcyberattacks,tosupplychaindisruptionsandchangestoregulations.Asaresult,riskmonitoringandmitigationisanimportantcomponentofthemanufacturer’sday-to-dayconsiderations.GeneralMotorsrecognizedthatitsexistingsystemsandprocesseswerenotintegratedandthereforenotoptimizingriskmitigation.GeneralMotorsoptedtoconsolidatetheirvariousriskmanagementprocessesandproceduresusingIBM’sOpenPageswiththeWatsonplatform.ChallengesBuildingtrustinanexternal(asopposedtoin-house)technologymanagementsolutionwasovercomewithastrongfocusonstakeholderbuy-in.TechnicalelementsImpactOpenPageswiththeWatsonplatformGeneralMotor’sAudit,RiskandControldepartmentsnowbenefitfromasharedapproachtotheirinterpretationofthecompany’sbroaderstructureandprocesses.Itbecameeasiertounderstandpotentialrisksandinvestigateandresolveriskprofilesthataffectdifferentdepartments.ItdroveoperationalefficiencyandmoreeffectivesortingofrelevantinformationaswellassavingconsiderablecostsonITmaintenance.CInsightsTransparencyDatasharingIntegrationandstandardizationallowforincreasedtransparencyacrossriskprofilesofthebusiness.Crossdepartmentaldatasharingpracticesandstoringdataonasingleplatformenablesmoremeaningfulanalysisandimprovedbusinessinsightstobeprovided.Stakeholderbuy-inAgileRegTechadoptersshouldfocusonearlystageplanningandbuy-infrominternalstakeholders,trainingusersearlytoallowuserstotakecontroloftheimplementation,andshowcasingvalueandoutcome.Thisshouldleadtoincreasedorganisationalbuy-in.IBMandGeneralMotorsadoptedanagilemethodologyandusedpilotenvironmentstodevelopandrefinebusinessrequirementsRegulatoryTechnologyforthe21stCentury9CasestudyNovoHamburgo(Brazil):SupportingSMEsToincreasetheeaseofestablishinganewbusiness,theCityofNovoHamburgoimplementedaseriesoftechnologicalsolutionstoincreasethespeedofadministrationalprocesses.AProblemTheaveragetimetoopenanewbusinessinNovoHamburgowas480days,leadingtostuntedlocalgrowthandabreachoftrustbetweenthepublicandprivatesector.BActionWhoNovoHamburgo,mayorandlocalcityadministration,inpartnershipwiththeMunicipalSecretariatofEconomicDevelopment,BrazilianServicefortheSupportofSmallandMediumEnterprises(SEBRAE),andvariouscivilsocietyorganizations.WhatTheproblemmadenewbusinessformationbysmallandmedium-sizedenterprises(SMEs)unattractive.ImprovingadministrativeprocessesforSMEsinvolvedde-bureaucratizationthroughthedevelopmentandapplicationofaseriesofevidence-basedpolicies.Thiswasdrivenbyinvestmentintechnologicalinfrastructure,suchasgeo-referentialplatformsthroughsatelliteaccess(ArcGISandSIG),integratingdistinctlicensingsoftwareanddigitalizingprocesses.Italsoinvolvedpassingnewmunicipallegislationandotherregulatoryinstrumentstodiminishbureaucratizationandtostrengthenthecapabilitiesofcityhallemployees.ChallengesSuccessrequiredachangeinmindsetandlocalcultureregardingtechnology-drivendecision-making.Inaddition,theprojectwasconstrainedbyareducedbudget,especiallyduetoCOVID-19andthetrade-offbetweeninvestingineconomicdevelopmentandhealth.ThiswasovercomethroughanIDBloan.Technicalelements––ESRIGeospatialCloudMETROVERSEImpactTrustCurrently,70%oftheprocessesforopeninganewbusinessareconcludedonlinewithinanhour.CInsightsInstillingarelationshipoftrustbetweenregulatorsandregulatedindustryplayersisakeybenefitofRegTechadoption.Trustcanbeachievedthroughtransparency(e.g.leveragingdataandmakingevidence-basedpolicies).Transparency,coupledwithcommunication,isalsobeneficialwhenachangeofmindsetisrequired.TechnologyadoptionUpskillingRegulatorsshouldactasrolemodelsfortheadoptionoftechnology.ThissetsahighstandardandencouragesindustryplayerstoleverageRegTechandtobeagileandinnovativeintheirapproach.Regulatorsshouldinvestintechnologyupskillingandparticipateinknowledge-sharingexercises.Thisusecasebenefitedfromcapacitybuildingofthemunicipalcivilservantsandculturaltransformation.SMEsRegTechpresentsalargebenefitforsmallbusinessesinparticularduetoanoften-disproportionatecomplianceburdenexperiencedbySMEs.IdentifyTegTechchampionsThisusecasebenefitedfromthepoliticalwill,visionandcommitmentofthosethatpushedthischangeforward.RegulatoryTechnologyforthe21stCentury10CasestudyColombia:EcosystemforSmartRegulationTheColombiangovernmentdevelopedadigitaltransformationroadmapandanecosystemtosupportRegTech.AProblemTheincomingGovernmentinColombiaidentifiedalackofcoordinationandguidancetointheirdigitaltransformationagendathatimpededtheadoptionoftechnologies,includingforregulatorypurposes.BActionWhoThePresidencyoftheRepublicofColombia,DevelopmentBankofLatinAmerica(CAF)andassociatedteams.WhatTheteamsetouttocreatepolicyinstrumentsthatwouldactasamainguidelineforthedesign,developmentandimplementationofdigitaltransformation,AIinitiativesandsmartregulationinthecountry.ChallengesInformationasymmetryexistedinthepublicsectorandtherewasalackofgeneralknowledgeregardingdigitaltransformationamongpublicofficialsandotherentitiesinvolved.Theteamsinvolvedalsofacedcompetingprioritiestoallocateresourcesonhealth,educationandsocialwelfare.Politicalwillfromleadershipandaccesstofinancetoovercomethesechallenges.TechnicalelementsImpactNotapplicableThecreationofaPrivacybyDesign,DefaultSandboxforAIProjectsandtheuseofdatatodraftsmartregulations.CInsightsTrustCreatingtrustandconfidenceinregulatorsamongtheprivatesectorisfundamental.Data/evidence-baseapproachConvinceregulatorsthatregulationshouldbebasedondata,andsubsequentlyleveragedatatounderstandwhichareasshouldberegulatedin.Thesetwostepsovercomeissuessuchasinformationasymmetrywithinthepublicsectorandpromotetransparency.Stakeholderbuy-inThisallowsfordeploymentandimplementationtobecarriedoutefficiently.RegulatoryTechnologyforthe21stCentury11CasestudyXalgorithms:OughtomationRegulationscanbedifficulttoimplementinatechnicalsystem,butsolutionslikeXalgorithmsprovideinnovativesolutionstointerpretandcomplywiththeserules.AProblemAneedwasidentifiedtoautomatehigh-precisionrules,suchasjurisdictionaltaxation,efficiently.BActionWhoXalgorithmsApplyingdynamicecologicalconstraints(rules)wasidentifiedasaneffectivewaytomanage/executeregulatoryprocesses.However,fiscalandregulatorymethodsweretooblunttobeappliedatthetime.“Oughtomation”isageneral-purposerequest-responsemessagingsystemunderfree/libre/openlicensingforuseacrossanydigitalnetwork.WhatChallengesBalancingthetimerequiredtodevelopinterestfromdiverseindividualsandorganizationswiththeneedtofocusonsystemdevelopmentanddocumentationpresentedchallenges.Technicalelements––––IPFSorCassandraRustElectron/reactDiversedatasourcesImpactDeploymentof“Oughtomation”willmakeiteasyforanyonetopublish,discover,fetch,scrutinizeandprioritizerules,tobedirectlyreadandunderstoodbynon-specializedhumansandmachines,foranypurpose,inanylanguage.Itcanalsolowerthecostsassociatedwithinteractionsacrosscommercialsystems.CInsightsMultidisciplinaryteamsCross-divisionteamshelpconvertrulesintoaformthatcanbediscoveredandleveragedbyindividualswhoarenotspecialized,aswellasmachines.InteroperabilityTheabilitytousethesystemacrossdifferentformsofregulationsandsystemsisimportant,especiallywhennavigatingafragmentedregulatoryframework.Stakeholderbuy-inReceivingbuy-infromregulatorsandgovernmentstosupportinnovativeRegTechinitiativesisanongoingchallenge.OpenrelationshipDesignprinciplesEnsuringfree/libre/openrelationshipswasidentifiedasakeysuccessfactor.Followingasetofdesignprinciples(i.e.simplicity,intuitiveness,decentralization,modularity,leastpower,tabulardeclarativestyle)makesasignificantimpactontheuserexperience.OtherAdditionalkeysuccessfactorsincludeddirectingtheteam’sfocustohuman-centredautomationandbeingatolerantbrandthatisdrivenbycommunity.RegulatoryTechnologyforthe21stCentury12Below:@LeonidSukala/GettyimagesCommonsuccessfactors3RegulatoryTechnologyforthe21stCentury13WhenRegTechisviewedasanemergenttechnologytrendthatallowsdigitalinnovationtotransformhighlyregulatedindustries,onecanmakeacaseforthemechanismsthat,inmostsituations,makethesetoolsmoreeffectiveincreatingandmeetingregulatoryobligations(mechanismssuchasengagement,designandapplications).Inthedynamic,lesspredictableenvironmentofreal-worldproblems,RegTechprovidesstrategictoolstosupportstandardization,automationandstreamliningofregulatoryprocesses.Intimesofdisruption,likerecenteventsinthefinancialsystemandtheglobalpandemic,suchmechanismshaveprovencriticaltocuttingthroughredtapeandkeepingessentialservicesrunningwhilealsoensuringthatoptionalityismaintaineduntilthedisruptiveperiodisover.3.1EngagementPublic-privatepartnerships2.0(PPP2.0):RegTechrequiresanactiveevolutionofmoretraditionalcollaborationmodels.Itrequiresdesigningwithpartnersratherthanforthem,and,indoingso,creatingmoreconfidenceinthemarketasaresultofsuchpartnerships.Thekeyisfornon-publicsectorpartners,bothbusinessesandpeoplesectororganizations(whererelevant),tobeactiveplayersinthework,andnotmerelypassiverecipientsofpublicsectordecisions.Stakeholdercapitalism-ledToensureequityandsharedresponsibilityacrossstakeholdersandregulatorsfromtoptobottom,RegTechdesignandimplementationneedstobegroundedinstakeholdercapitalismprinciples–creatinglong-termvalueforallthoseinvolved.Itisparticularlykeytosecurebuy-infromstakeholdersforregulatoryprinciplesthatmaybeevolutionaryratherthanpermanent,sothattheycansupportandensureeffectiveoperationalisationoftheseprinciplesevenastheychangewiththetimes.Champion-driventrustBuildingcomfortwithRegTechapplicationscanbedifficult,especiallywhenthegeneralpublicisinvolved.Thereisaneedforclearcommunicationtoreduceinformationasymmetriesandgeneratebuy-intoanewsystem.Includingtrusted“champions”–suchaspublicofficials,seniorprivateleadersorcommunityactivists,whocancommunicateRegTechinwaysthatareaccessibletoawiderangeofdemographics—canbeaneffectivemeansofdrivingadoptionatscale.3.2DesignRadicalusercentricityApproachingregulation,enforcementanduseradoptionthroughtheexperienceoftraditionally-productandservicecentreddesignthinking,includingstandardsemanticsandreferencepointsthatenablestreamlinedprocessesandglobalpolicycoordination.Thefocusshouldbeonminimizingpainpointsandenhancinguserexperiences,notjustonwhatisefficientorpossiblefromasupplyperspective.Here,theparallelswithagilepracticesinsoftwaredevelopmentareparticularlyapt,astheradicalshiftemergedwhensolvingusers’problemswasprioritizedovercomprehensivevision.RegulatoryTechnologyforthe21stCentury14Regulationforrisk,safetyandmitigationTransitionfromthe“regulate-and-forget’’tothe“adapt-and-learn”eraofregulationtotapintothebroaderinnovationandcreativityspaceandnotsolelyfocusedonsafetyguardrails.ThisisparticularlycriticalfortheemergentphenomenahandledbyRegTech,whereexistingtemplates,standards,benchmarksandostensible“bestpractice”arenolongerapplicableDynamicAregulatoryapproachthatnurturesexperimentation,iterationandprototypingviaregulatorysandboxesandothermechanismscreatesanenvironmentthatSingaporeandUKFinancialConductAuthorityArizonafintechsandboxes.However,dynamicdoesnotmeanerratic.Itisimportantthatregulatoryupdatesareconsistent,soastonotunderminetheabilityforbusinesstomakelong-termdecisions.ThebestRegTechbalancesbetweentheopennessforiterativeexperiments,andsufficientstructureforreasonablypredictableoutcomes.3.3ApplicationsHumanandmachineintelligenceBalancingqualitative(human)andquantitative(machine)insightswillleadtopolicydecisionsinformedbymultipleandvarieddatasetsandcreatemorepredictivemechanismstoensurethatpolicy-makingstaysinfrontofculturalchange.IncreasedinvestmentsinAI,analyticsandgeneraldigitization(e.g.hybridcloudadoptiontodriveprocessautomation)willhelpcreateapreferablefuturewithamorefrictionlesspathforimplementingRegTechcompliancesolutions.Theseinvestmentsshouldincludesufficientspacefortheunderlyingalgorithmsthemselvestoevolveinordertoaccommodatedynamictechnologicalshifts.RegulatoryTechnologyforthe21stCentury15Below:@Bertlmann/GettyimagesRegTechroadmap4InemployingRegTech,regulatedindustriesandinvolvedstakeholdersareembracingadynamicregulatoryenvironmentandtakingthefirstnecessarysteptowar