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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators




Mallory Kwiatkowski

As someone who spends my time on high-level ideas and trends in financial innovation and regulatory strategy, I took an important step last year:  I cofounded a startup.  It’s called Hummingbird Regtech, and it aims to transform compliance through cutting edge technology, starting with anti-money laundering.

For me this is learning by doing, and the practical, concrete process of designing a next-generation compliance tool has already brought me insights I never would have found by doing policy work at 30,000 feet. The breakthrough moments have come from brainstorming with my colleague Matt Van Buskirk, who is a regulatory expert. Matt likes to say that when you tell fintech engineers about regulatory requirements, their first reaction is usually disbelief, as in, “you have to be kidding -- why would we need to do that?” The next is that they set out to design an efficient, effective way to get it done. If you tackle that task with no preconceptions and no legacy tools, and instead just apply new technology to a blank slate, you can create tools that are faster, cheaper and more effective in reaching public policy goals, all at once.

The Hummingbird work is giving us more than ideas for compliance solutions. I’ve predicted that 2017 will be the year of “regtech,” a term that has two meanings. One is using updated technology to comply with regulations. The other refers to use of new technology by regulators, themselves, to enhance their own work. Regulators around the world are innovating, using big data, machine learning, API data feeds, and other new strategies to rethink everything from bank regulatory reporting to detecting patterns of insider trading.

As I spend time with tech people on these problems, we are finding ourselves evolving a whole new vision for how regulations could be designed in the digital age. The core shift should be from creating regulations as linear processes -- rules, policy, procedure, and the like -- to framing them as technology “systems” that can be flexible, easily updated, and constantly improving. I’m convening a cross-section of regulatory experts, engineers and designers to flesh out the concept and will expand and share this further in the coming months.

This is an exciting time, stay tuned as I will also be sharing more on Hummingbird as it launches live pilots this month! 

In addition to discussing fintech and regtech with global senior supervisors at the New York Federal Reserve Bank in early March, I am also very much looking forward to what's up next: 

  • April 10th, London - I’ll speak on regtech at Innovate Finance, and later that week I’ll  join in the regulatory forum of the Financial Conduct Authority

  • April 26th, New York - FINXTECH Annual Summit - Panel on Key Regulatory Perspectives

  • June 15th, Austin, TX - Center for Financial Services Innovation (CFSI Emerge), FInancial Health Summit.

Technology is transforming finance. It can transform regulation too! Exciting times ahead!