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The road to RegTech: the (astonishing) example of the European Union

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Abstract

Europe’s road to RegTech has rested upon four apparently unrelated pillars: (1) extensive reporting requirements imposed after the Global Financial Crisis to control systemic risk and change in financial sector behaviour; (2) strict data protection rules reflecting European cultural concerns about data privacy and protection; (3) the facilitation of open banking to enhance competition in banking and particularly payments; and (4) a legislative framework for digital identification to further the European Single Market. The paper analyses these four pillars and suggests that together they are underpinning the development of a RegTech ecosystem in Europe and will continue to do so. We argue that the European Union’s financial services and data protection regulatory reforms have unintentionally driven the use of regulatory technologies (RegTech) by intermediaries, supervisors and regulators, and provided an environment within which RegTech can flourish. The experiences of Europe in this process will provide insights for other societies in developing their own RegTech ecosystems in order to support more efficient, stable, inclusive financial systems.

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Acknowledgements

We would like to thank for support of this research the Australian Research Council as part of the Project, ‘Regulating a Revolution: A New Regulatory Model for Digital Finance’ and the Hong Kong Research Grants Council Research Impact Fund, as well as participants at the European Banking Institute annual conference in Frankfurt in February 2019 for their comments and Rohan Balani, Pamela Cela, Tsany Ratna Dewi, Zak Vidor Staub, and Robin Veidt for their most helpful research assistance.

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Authors and Affiliations

  1. UNSW Sydney, Kensington, Australia

    Ross P. Buckley

  2. University of Hong Kong, Pok Fu Lam, Hong Kong

    Douglas W. Arner

  3. University of Luxembourg, Luxembourg, Luxembourg

    Dirk A. Zetzsche

  4. Heinrich-Heine-University, Düsseldorf, Germany

    Dirk A. Zetzsche

  5. University of Zurich, Zurich, Switzerland

    Rolf H. Weber

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  1. Ross P. Buckley
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Correspondence to Ross P. Buckley.

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This article draws upon a much longer piece of work addressing a wider range of issues, by the same authors, entitled ‘The Future of Data-driven Finance and RegTech: Lessons from EU Big Bang II’.

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Buckley, R.P., Arner, D.W., Zetzsche, D.A. et al. The road to RegTech: the (astonishing) example of the European Union. J Bank Regul 21, 26–36 (2020). https://doi.org/10.1057/s41261-019-00104-1

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