The regulation of RegTech and SupTech in finance: ensuring consistency in principle and in practice
| DOI | https://doi.org/10.1108/JFRC-01-2022-0004 |
| Published date | 08 July 2022 |
| Date | 08 July 2022 |
| Pages | 186-199 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation |
| Author | Jonathan McCarthy |
The regulation of RegTech
and SupTech in finance: ensuring
consistency in principle and
in practice
Jonathan McCarthy
School of Law, University College Cork, Cork, Ireland
Abstract
Purpose –The paper’s aimis to consider how best to formulate sturdy regulatoryframeworks for RegTech
and SupTech. The paper appraises how key features of EU and UK regulatory and policy initiatives can
contributeto a functionalframework for RegTech and SupTech.
Design/methodology/approach –The paper refers to the most comprehensive empirical findings
within the EU and the UK on RegTech and SupTech, including reports released bythe European Banking
Authority and the Bank of England. As data is only gradually becoming available about the true rate of
adoption of RegTech and SupTech, the paper identifies salient areas that warrant analysis from emerging
findings. In lightof the relatively restricted sourcesof empirical data, the article’s methodological approach is
directedtowards the most wide-rangingand detailed sources thatare currently available at EU and UK levels.
Findings –The paper reveals distinct variations in how the EU and UK have pursued regulatoryapproaches
towards RegTech and SupTech growth. However, there are many shared features in the respective approaches.
The paper argues that a regulatory framework should ideally be imbued with overarching strategies and policy
objectives, as well as with practical measures through innovation facilitators, such as sandboxes. Yet, legislative
(top-down) intervention will be the significantingredient in guaranteeing legal clarity for RegTech and SupTech.
Originality/value –By understanding the nuances in EU and UK approaches, the paper advocates for
pragmatic reasoning when formulating a regulatory response.The importance of the article is in its focus on the
elements of EU and UK regulatory approaches that are most capable of guaranteeing clarity on standards
relating to RegTech and SupTech. The paper makes a vital contribution to existingcommentary by determining
how a balance can be struck between “top-down”and “bottom-up”typesof regulation (i.e. should regulation be
entirely concerned with industry-drivenstandards, such as codes of conduct?).
Keywords Financial services, Reporting, Finance, Financial regulation, Banking regulation,
Financial law
Paper type Viewpoint
1. Introduction
In the years since the Global Financial Crisis (GFC) of the late 2000s, financialtechnology, or
FinTech, has conveniently materialisedas a means by which banking and financial services
internationally could be transformed. As well as seamless provision of services for
customers, substantial cost savings should result for regulated financial institutions as the
© Jonathan McCarthy. Published by Emerald Publishing Limited. This article is published under the
Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and
create derivative works of this article (for both commercial and non-commercial purposes), subject to
full attribution to the original publication and authors. The full terms of this licence may be seen at
http://creativecommons.org/licences/by/4.0/legalcode
JFRC
31,2
186
Received13 January 2022
Revised2 May 2022
19June 2022
Accepted20 June 2022
Journalof Financial Regulation
andCompliance
Vol.31 No. 2, 2023
pp. 186-199
EmeraldPublishing Limited
1358-1988
DOI 10.1108/JFRC-01-2022-0004
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