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

Moving The Regulatory Mountain: CEO of JWG and Founder of Regtech Council, PJ Di Giammarino

Barefoot Innovation Podcast

Moving The Regulatory Mountain: CEO of JWG and Founder of Regtech Council, PJ Di Giammarino

Mallory Kwiatkowski

My guest today is one of the world’s foremost thinkers on how to modernize financial regulation through technology.  He is PJ Di Giammarino, CEO of JWG and founder of the global RegTech Council.

JWG is a multi-client platform that uses AI natural language processing to ease and enhance regulatory compliance. PJ started the RegTech Council several years ago as a grassroots effort to connect the public and private sectors working toward regulatory technology. The Council, which I’m a part of, is based in London and works with over 100 organizations and 240 participants all over the world.

Two years ago, few people in the US had even heard the term regtech. Today the sector is booming, with rising venture capital investment and a growing group of regulatory agencies that are directly driving change. It has become clear that we’re in the process of digitizing finance, and that therefore, we can -- and must -- digitize financial regulation too. We have to do that partly to make it better, since when things get digitized -- from phones to cameras to sending messages to hailing taxis -- they get better, faster and cheaper, all at once. We also need to do it because traditional, analog regulatory and compliance systems just won’t be able to keep up with the change underway in finance. As they lag behind, risk will skyrocket, both for customers and for the system. At one point in our talk, PJ points to what he calls “the waves and waves of human suffering” that come from managing things the old way. The regulatory and compliance worlds simply have to speed up, and they have to be made capable of handling a LOT more data, and they’ll have to do that in real time.

One way of thinking about this is that regtech is to regulation what fintech is to finance. Just as fintech innovation is profoundly changing financial services, regtech innovation will revolutionize regulatory processes. In fact, they’re both being driven by some of the same people -- tech innovators who came into the financial sector with fintech startups and when they got there, discovered the regulatory situation and said, in effect, “I can’t believe we do it this way.”

The technology already exists to do better. What we lack is institutional and cultural capacity to leverage it. PJ thinks of this challenge as a mountain -- an enormous, complex ecosystem of finance and financial regulation that looks completely different from different angles. To shift it to a holistic, scalable system, we’ll have to change the regulatory processes themselves, including that governments have to create uniform standards that enable frictionless connection and efficiency. Moving mountains isn’t easy, and his advice is to start small with concrete projects and small teams that have senior access, and then to connect these up with each other. That process is underway throughout the world. In our talk, PJ gives the example of a podcast with Dan Gorfine, Director of LabCFTC in the US, in which Dan calls up Nick Cook, who leads the FCA’s Regtech activities in the UK, and Nick picks up the phone. That’s progress.

PJ says the RegTech Council follows the wisdom of the crowd but is focused mainly on three key areas. The first is KYC and money laundering -- how do we solve bigger problems, better? The second is regulatory reporting -- specifically, how to do digital reporting? And the third is managing regulatory change -- how to introduce technology into that process?

Regtech has emerged faster outside the United States than inside, partly because our uniquely complex US regulatory structure makes it so hard to get traction here. PJ talks about how large banks struggle to adopt new technology, and offers some advice for regtech startups: “hunt in packs,” teaming up to offer banks compelling solutions.

He also talks about JWG’s RegDelta System, which can take any kind of document from any jurisdiction in any language and marry up to a bank’s policy using AI-driven natural language processing.

For listeners interested in regulatory and compliance modernization, this episode is a goldmine of insight, information, and inspiration. It’s also an urgent call to action. PJ says we have to move beyond “toe-in-the-water” dabbling with regulatory technology, and commit to the hard work of changing this system to a modern one.

We need to convert it to a digitally-native design.

It’s a mountain of work and PJ’s efforts are at the forefront.

LINKS

Transcript of episode

JWG

RegTechFS

JWG Press Release on RegDelta Project with BMO Harris
CFTCLabs

My Podcast with Dan Gorfine

My Podcast with FCA’s Nick Cook and Chris Woolard

My Podcast with FCA’s NIck Cook

Milken Institute

Milken Report, RegTech: Opportunities for More Efficient and Effective Regulatory Supervision and Compliance

G30

Financial Stability Board

World Economic Forum

More on PJ Di Giammarino

PJ is an author and international public speaker on the role of new technology for the financial services infrastructure. Based in Europe for 20 years and London for 15, he has served as founder and CEO of JWG Group, a think-tank that has been recognised globally by regulators, financial institutions and technology firms since 2006.  JWG helps senior executives in the public and private sectors regain control of global regulatory change by adopting a technology-enabled, standardised and collaborative approach.

PJ is the driving force for progressive change behind a wide range of RegTech forums.  He is an active member of the International Organisation for Standardization, through the ISO UK committee for financial services, IST/12, and serves as the Secretary for the Fintech Technical Advisory Group. He also serves as Chairman of the Committee to Establish the RegTech Council.

More for our listeners

We have great podcasts in the queue. We’ll have a far-ranging conversation with Peter Renton, who leads Lend Academy and the LendIt conference series. We’ll talk to Anju Patwardhan of CreditEase and Stanford University, who describes fintech developments in China. And we’ll have a show with the co-founders of EarnUp, and one with Walter Cruttenden, Co-Founder of Acorns and Co-founder and CEO of Blast. I’ll also be recording episodes in Singapore and London while continuing my fall speaking world tour.

A few places I’ll be speaking this fall include:

One of my trips this fall will have me circumnavigating the globe. I’ll be posting mini-videos of the highlights of my journeys on social media.

Also watch for upcoming information on my collaboration with Brett King on his new book, Bank 4.0, which you can now buy on Amazon. I co-wrote the regulatory chapter with Brett, and we’ll have a show and events on that as well.

If you listen to Barefoot Innovation in ITunes, please be sure to post a review! Please also follow along with me on Twitter, LinkedIn, and Facebook and come to jsbarefoot.com for more information and to subscribe to my newsletters and get the latest podcasts as soon as they come out. And don’t forget to send in your dollar a show, to keep it going.

Until next time, keep innovating!

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