RegTech: case studies of cooperation with banks in Italy

Luca Federico Battanta, Marco Giorgino, Laura Grassi, Davide Lanfranchi


In today’s financial environment for banks have seen the costs of compliance augmented (Cosma, Salvadori, 2013) an activity that does not generate value and revenue, takes money away from innovation, with less financial resources available for innovative services and technologies, to create benefits for the customers through FinTech. The solution proposed by the market is to use technology to simplify compliance, changing the way of being compliant through RegTech. The scientific analysis of the subject cannot be separated from a systematic preliminary review of the literature on regulatory case studies in Scopus and ISI Web of Science, SSRN, Google Scholar and Microsoft Academic. The regulatory technology theme is very new, the existing academic literature is today narrow. Most of the studies focus on reviewing the literature on the macro context and the issues generated by the huge amount of regulation (e.g. Arner 2016). The state of art in the literature is not proposing any solution of cooperation experimented in Italy between RegTech’s entities and incumbents about regulatory field. Only in the banks' press releases, we read that some startups and consolidated companies are investing and focusing on the regulatory field to help banks in managing their regulatory obligations. Due to the lack of literature about cooperation between incumbents and Regtech’s entities, we adopt as a method, to explore the field an approach already used for the similar well-studied FinTech area which include mobile payment like M-Pesa in Kenya (e.g. Foster and Heeks, 2013), crowdfunding (e.g., Burtch, Ghose, & Wattal, 2013) and online peer-to-peer lending (e.g., Burtch, Ghose, & Wattal, 2014). In this article, we will, therefore, propose an exploration of cooperation between incumbent and RegTech companies through case studies in the FinTech sector applied to regulatory technology in Italy and we expect to answer the following research questions: 1) which are the RegTech’s application experimented in Italy? 2) How are small startups approaching collaboration with financial institutions about RegTech? 3) How big I.T. which providing services for banks and in general financial entities are refocusing and improving risk, compliance and core business through RegTech? 4) Which are the topics at the centre of the cooperation in the RegTech context by the actors involved (incumbents and RegTech entities)? The paper will provide a map of the RegTech applications of cooperation with incumbents and realities in Italy which invest in RegTech’s perimeter. We compare results through the different created network experiences. The aim is to have a broad perspective of the selected case that will be subjected to an exploratory investigation through in deep interviews. We want in particular to explore the peculiarity of RegTech company and the benefits of the alliances with banks. We expect to receive answers and feedbacks about lowering costs and improving the internal process of the banks in particular about compliance and also know your customer (KYC) and anti-money laundering (AML) functions.

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