Regulatory technology (regtech) - construction of a new regulatory policy and model

The use of technology in banking and financial markets has grown substantially in recent years.1 Financial technology (FinTech) has resulted in substantial innovation. 2 This has led to the need for new forms of financial technology regulation (FinReg) to create a corresponding enhanced and embedded control framework. Several important measures have, in particular, been adopted in these areas at the international level and within the European Union which have since been implemented at the national level.6 It is against this background that technology has undergone substantial advances in recent years, especially in terms of computing and telecommunications capability and digital data collection and management with further advances in decentralisation, distributed ledger technology (DLT), and blockchain to follow. A recent phenomenon has also been the movement by large technology companies (BigTech) into the financial area (referred to as TechFin) such as with the continuing advance of such businesses as Alipay and WeChat in Asia, Apple, Google, Amazon, and Microsoft in the West and Facebook's announcement of the creation of its digital Libra Coin.7 Authorities have responded to technological progress through the construction of new forms of support arrangements, such as the Project Innovate initiative in the United Kingdom.8 This includes a Regulatory Sandbox, Advice Unit, Direct Support facility, and RegTech and Engagement facilities.9 The Financial Conduct Authority (FCA) has also been instrumental in constructing a Global Financial Innovation Network (GFiN) to bring together financial authorities and related organisations across the world involved with FinTech and RegTech.10 These initiatives specifically support new start-up platforms and businesses although issues remain with regard to maintaining financial stability and security at the national and international levels. A new financial environment and data system, ecosystem, or data biome has been created with the convergence of market and social change and regulatory reform and with technological advance and new technological threats.