The End Justifies the Means: Putting Social Purpose Back at the Heart of Banking and Financial Regulation

This chapter argues that RegTech is currently touted as being the 'next big thing' to hit the financial services industry, serving primarily to reduce the cost and complexity of complying with the myriad regulations that have been enacted since the financial crisis. Academic research by V.V. Chari and Christopher Phelan suggests that a radically changed approach to bank regulation is required. Whereas incumbent regulatory frameworks focus on reducing the probability of a bank or group of banks failing, the proposed alternative originates from a different perspective by asking the question: what social purpose is served by a given liability structure and then fashioning regulations based on that social purpose. This approach, anchored in social purpose, diverges from the conclusion formulated by Arner, Barberis, and Buckley that the speed of FinTech innovation observed globally justifies that financial regulation be reconceptualized and redesigned with RegTech in line with the transformation of financial market infrastructure.