We were delighted to host the RegTech Forum’s very first international event in Paris on May 22nd – in partnership with BNP Paribas and Tech Plug and Play, at their newly opened site on the Champs Elysée.

We combined the new global location with our established RegTech Forum approach: filling a room with Regulated Firms, RegTech Entrepreneurs and their service providers, and presenting them with a stellar line up of RegTech domain experts. Many thanks to our contributors:

Gabrielle Inzirillo kicked off from BNP Paribas Plug & Play. Following some words of welcome she outlined the FinTech & RegTech space, as well as the role ‘Tech Plug and Play’ has in this ecosystem. “We (BNP Paribas Plug and Play) work actively with the compliance teams of BNP Paribas and are very pleased to find that there is an active C-level engagement within these teams.”

According to the ESMA’s Patrick Armstrong, that is in part due to a willingness to try new approaches. “There has been a notable decline in trust of the established financial players, resulting in a lower barrier to entry and consumers more willing to try new services.”

He continued: “RegTech can be viewed as evolutionary not revolutionary” – a clear example of “Regulatory dialectic whereby the private sector is responding to public authority regulatory action. In some cases, that involves side-stepping regulation – however, the RegTech response enables regulated companies to deal with the onslaught of regulations more efficiently”

However, the ‘evolution’ of RegTech Patrick was talking about needs to learn from the lessons of the past. As Bearing Point’s Anne Leslie-Bini explained, “Regtech solutions within companies are potentially becoming siloed” and although innovation within market surveillance and financial crime is commendable we need new design thinking and for people to take some risks.

Anne advocated shared platforms (such as AU Rep and UK Rep), a view that was built upon by Bertrand Tillay-Doledec of Scaled Risk. Bertrand explained Scaled Risk were selected as the technology partner for the MGPF consortium (Modélisation de la Gestion du Passif des Fonds) which brings together the Asset Management industry to self regulate and reduce liquidity and credit risk in the French market.

We then dived into the topics of how Neuroprofiler introduce behavioural science and machine learning to solve a problem in KYC and investor profiling. Neuroprofiler a young company are in the process of training their models using customer data and believe the decision models will need to be open (not a black box) – a view shared by our final speaker, Serge Pierrard of Cardabel.

Serge explained how rule-based systems to detect rogue trading are sub-optimal, and even supervised machine learning models struggle to detect patterns of fraud. Cardabel use unsupervised machine learning and one of the most important features they implement is to avoid the “black box” – in other words the end customer must be able to see why an alert has been raised.

So what were the Top 10 things that the audience took away from the event?

1.ESMA is a digital native, even regulators have legacy.

2.RegTech is a clear example of Regulatory dialectic.  (Edward. J. Kane – Boston College)

3.MGPF and UK Rep shared platform are good example of cross industry collaboration to drive shared utilities/platforms

4.Innovation and collaboration need visionaries – Find the visionaries and don’t be afraid to shake things up

5.Products that profile investors, detect risks and raise alerts cannot be “black boxes”

6.European fines for market abuse are still fairly low – this could break the business model for companies trying to detect market abuse in capital markets in Europe.

7.Regulated companies that adapt to new technology for regulation will have a competitive advantage. Supervised and unsupervised machine learning approaches were outlined by Cardabel and Neuroprofiler.

8.French buyers may still be sceptical of the need RegTech addresses.

9.RegTech re-establishes trust into the market.

10.There was overwhelming support for another event in Paris, potentially in the autumn at Station F.

 

About RegTech forum:

RegTech Forum is part of the RegTech Markets business. We create meaningful Introductions, allowing Regtech participants to get to the decision makers. We create opinions that Influence: be seen, be heard – be informed. The result is we enable Opportunity: a marketplace to do business.

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