October 19, 2022

The future of compliance will be like the future of most things: transformed by technology. Compliance and risk management will still be done by humans (not robots), but the humans will be using regulatory technology – regtech.

Today’s guest may be doing more than any other individual to make this future real. She is Deborah Young, CEO of The RegTech Association, which is based in Australia and is a worldwide force for change.

My roots in compliance go way back. I was working for the U.S. Congress when some of our major U.S. consumer protection laws were enacted. I was charged with implementing them for national banks when I was the first-ever Deputy Comptroller of the Currency for consumer issues. After leaving the OCC, I worked for decades in consulting firms helping the financial sector design and implement strong compliance programs. I founded my own consulting firm and was a partner and managing director at KPMG, among other roles.

And here’s the thing I learned: we’re not doing that well at achieving the goals of these laws. The outcomes of our consumer financial protection rules are mixed at best – even after the financial crisis inspired Congress to create the Consumer Financial Protection Bureau. Structural credit discrimination persists, for both consumers and small businesses. Cyber risks are increasingly alarming. Anti-money laundering is a complete failure – the criminals are clearly winning. And even on financial stability – the goal that bank regulators generally prioritize above all others – we still have periodic failures. The Great Recession was exhibit A.

And all these failures still plague compliance in traditional finance. What will happen NOW, as both regulators and industry risk managers face the mold-breaking, fast-changing risks (and opportunities) arising with new finance? How are we going to keep up with the head-spinning, global changes arising from crypto, defi, NFTs, DAOs, the metaverse, Web3, and the rest?

The financial watchdogs, in both industry and government, need better technology. That’s all there is to it.

This means they need regtech. At the heart of the regtech revolution is the shift of the global economy to the digital age. It’s driven mainly by the convergence of two things. The first is the fact that nearly all the information in the system is getting converted into digital form – into 0’s and 1’s. The second driver is the fact that this explosion of digital data can therefore now be analyzed using powerful new artificial intelligence tools, like machine learning (ML) and natural language processing (NLP). Suddenly, the combination of these two macro trends changes the whole game. Things that were never possible before, are suddenly possible.

A podcast introduction isn’t the place to lay out this whole landscape, but I hope many of you will come and look at our work at AIR, where we work every day to make the case that urgent modernization is needed. The fact is that regtech, done right, can solve problems we could NEVER solve before using analog-era technology that was built around tools that, even if they’ve gotten automated, were originally designed on paper. They need to be completely reimagined.

Fortunately, this is happening. It’s what the companies in Deborah’s alliance are doing. Obviously, some of them will be better than others, but as a group of innovators, these firms are building the bridge from traditional compliance to digitized solutions.

And done right, it is…Just. Flat. Better.

I’ve known Deborah for several years, but given the pandemic, I hadn’t met her in person until this summer, when she traveled to Santa Fe New Mexico for a conference I was hosting. (Check out the photo of us sitting side by side in the sunshine, instead of on a Zoom call.) We ended up recording this episode after she went home. It was 7AM for her, and 8PM for me, but despite the off-prime hours, we had an amazing talk. I know you’ll enjoy hearing what she’s doing, and why, and how, weaving together a global regtech ecosystem.

As you listen, ask yourself this: do we really want to solve the problems that financial regulation aims to address? Unfair treatment of consumers? Unintentional bias in credit? Fraud? Cyber risk? Money laundering that funds crimes like human trafficking? Financial system failures that crash economies and destroy jobs and lives?

If we do, we are simply going to have to use better technology. That’s all there is to it.

More on Deborah

Deborah Young is the founding CEO of The RegTech Association, a global non-profit industry member body focussed on accelerating adoption of RegTech solutions and creating a global centre of excellence. Since helping to establish the Association in 2017, she has led the growth to 180 organisations including 130 RegTech firms. The cohort also includes top tier banks, global technology companies and consulting firms. She has advocated for the industry with Government, regulators, investors and trade agencies. Deborah has led the recognition of Australia as the third highest concentration of RegTech producers in the world and is a sought after advisor on the global RegTech industry.

Deborah sits on the Australian Federal Government FinTech Advisory Committee, NSW Government ICT Procurement Task Force, The National Blockchain Roadmap RegTech Committee and is a member of ASIC’s Digital Committee & UTS Business School Women’s MBA Network Committee and a regular speaker, presenter and designer of RegTech programs for the association and its partners and engages with regulators globally.

Deborah is an accomplished chief executive, non-executive director, mentor and strategic business consultant. She has over 20 years’ experience as a senior executive across financial services, including investment banking, private equity, venture capital, superannuation and insurance spectrums. Deborah holds an Executive MBA (Global) from UTS Business School and was named as one of the Australian Financial Review’s 100 Women of Influence in 2019 for Innovation.

More for Our Listeners

We have great shows in the pipeline. Up soon we’ll have Jai Ramaswami from Andreesen Horowitz. We’re going to talk with the one and only Simon Taylor, on all things crypto and DeFi. We’ll have Tomicah Tillemann of Haun Ventures, going deep on Web3. And we’ll have a very special show with the FDIC and FinCEN on the joint TechSprint they did on digital identity.

Fall travel is picking up. David will be speaking in November at Regtech Insight Summit. I’ll see thousands of you at Money 20/20, and thousands more at the Singapore Fintech Festival next month!

AIR continues to grow! We’re hiring for a lead crypto person, a TechSprint program manager, an events manager, and two roles for our new program on Minority Depository Institutions. In the near future, we’ll also be recruiting for an executive to lead the delivery of our TechSprints and educational offerings. Visit our careers page to learn more and apply.

Don’t forget to follow AIR on LinkedIn and Twitter. Be sure to leave us a five-star rating on your favorite podcast platform. And please follow me personally on Twitter @JoAnnBarefoot.

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