The Connector Podcast - RegTech NZ

Welcome to The Connector Podcast, an ongoing conversation connecting fintechs, banks, and regulators worldwide. Join CEO and founder Koen Vanderhoydonk as you learn more about the latest available trends and solutions in the markets.

Welcome everyone. Welcome to a new podcast series of The Connector, and I've got a very special guest today. all the way from New Zealand, Janet Channery. And Janet is running a nice initiative. It's RegTech New Zealand. And that intrigues me a lot. Janet, who are you? What do you do?

Hi, Koen. As you just introduced, I'm Janet Channery. And I live in New Zealand, originally out of the UK via Singapore. I am one of 4 co-founders of RegTech New Zealand. Um, which is a not-for-profit forum to try to encourage, uh, regtech adoption and innovation down here in the financial services industry in New Zealand and plug a gap.

Interesting. And you immediately mentioned a gap. So what is the gap for you?

Um, the gap for us— so I've been in New Zealand for 10 years now, um, and After a while of doing regulatory change the same way and expecting it to be different, you start to look for different solutions. And really, that was sort of where I was looking about 4 years ago. I was trying to change the way that we did things. I went away and did a master's course on tech Futures, the local Academy X here in New Zealand, and studied regtech with a view that I could change it. At the end of my course, I basically proved my hypothesis. Know that I can't change it. Know that it's really huge. I can change it a bit, but know that it's really huge. But at least I then had the facts and the reasoning behind why I couldn't. sort of just wave a magic wand and make it happen. So it's a case of, we're a very long country, it's a very decent-sized sort of country in comparison to the UK in land space. We've only got a few million people. So the size of the companies are much smaller. So the budgets are smaller and the ability for people to do stuff is smaller.

Mm-hmm.

And the, the, um, dependence on Excel spreadsheets, um, were just getting to me. So I just have to get off of Excel spreadsheets and, and try and be more efficient with the way that we're doing stuff so that we can keep up with all the regulation that's coming to us as well.

You mentioned that you don't have the magic wand, but imagine that you had one. What would be the ingredients that you would fairy dust onto the market you're in at the moment?

Well, that's an interesting question. We were talking a similar kind of thing today. The fairy dust that I would put on would be collaboration, that we could all get in the room and have non-competitive conversations that focus on actually achieving the right outcomes. So collaboration, a good focus on what we collectively need to achieve, and a workforce that can actually deliver it in a really quick amount of time so that we can jumpstart where we are.

You're asking a lot to the universe today, Janet.

You gave me a magic wand.

Exactly, exactly. And do you actually see, because I think collaboration for me has always been the trigger or the difference between fintech and regtech. There's also the fact that regtech is solving regulatory issues, but collaboration was always strong amongst different vendors. particularly on the vendor side. I think the more complexity comes when, when you also involve, uh, the banks and potentially also the regulators. How does that work in New Zealand? How is that, that, that magic happening?

Yeah, that, that is our challenge. Um, I like to be quite simplistic about and pragmatic about stuff and sort of go, let's just get in the room and have the conversation. But then if you do think about it, you know, within companies, within regulated entities, there is still competition, and there's still a not very willing to open up and share things because it may be seen as competitive. Or you may be, you know, sort of giving your ideas to your competitors. So getting a bunch of banks in the room is one thing, but you're only ever gonna get so far in that conversation. So if we're— we've been looking to try and get what people's challenges are, what their problem points are.

Mm-hmm.

They don't really want to sit in a room with their competitors and tell everybody what their problem points are. So it makes it really hard for us to go, right, how can we now collaborate and all solve it together? So you've sort of got that element of you show me yours, but I don't want to show you mine on the regulated entity side. And then with the regulator, it's been— it is changing. You know, we are having conversations and we are seeing that change a little bit, but regulators here in New Zealand are no different to anywhere else in terms of they can't be seen to be choosing one system over another system or promoting somebody over somebody else. So they sort of need to keep that agnostic, tech-agnostic view, which makes it sometimes really challenging to sort of, again, get people in the room. Because they don't want to be seen to be supporting one person and not supporting another person. So yeah, that's sort of pretty much it. It's really hard to get people in a room to collaborate because when they come into the room, they bring all that constructed, restricted baggage with them. So, you know, you come in, you smile sweetly, and then you walk back out again. Yeah.

Yeah, no, I I understand what you see, and I see very similar things happening in the continental European markets. I think you see a glimpse of change if you go into the UK, because I think there's more involvement of the FCA. But then if you go Singapore, for example, MIS, they're really collaborative, and they are leading the path to change sometimes. And I think that's very aspirational in my opinion, because I think innovation is very often driven by the regulator, by regulations that come upon us and that sort of force us to make the next steps. Janet, what about the amount of regtechs within New Zealand?

Interesting. So in terms of our regtechs, we have very few, and I'm talking single digits in terms of registered regtechs that have registered with us or registered themselves within different communities as regtechs. The fintech side is much bigger. So the fintech is a much easier thing to understand and build and create. Easy in inverted commas. So the fintech community is quite big. It's also quite successful. Lots of solutions are coming out and lots of solutions are also being sold abroad very, very successfully. Mm-hmm. Regtech, not so much. And I think the reasoning, my reasoning has always been for that is whenever I've been having conversations around having to put regtech into technology solutions and doing it a different way, the response has generally been along the lines of, yeah, yeah, it would be nice to do that. Yeah, yeah, yeah, it's a great idea. But hey, look at this shiny app that we've got over here that our customers will like. So the—

Priority.

The delivery of a fintech is shiny and attracts customers, whereas fixing regtech is like keeping your central heating on, you know, twice a year you check it. So long as it's working, you don't worry about it. If it breaks, then all hell breaks loose and, and you You've got a whole remediation program. But on the whole, so long as it keeps ticking over and it's not causing us any problems, we can ignore it. Not ignore it.

No, yeah, I see what you mean.

We don't have to fix it if it ain't broke.

Don't fix it if it still works, right?

Yeah.

Sort of.

Yeah.

What you see in some other continents is that after I'm taking us back a long way. 2008 financial crisis, tsunami of regulations, and compliance departments were growing dramatically. And what I see nowadays, or what I hear a lot, is companies, banks are reflecting on the cost of compliance. And they are actually looking like, but hey, is the best solution actually to put people, additional people to solve the problem? Can we not do, or should we not do something different? And that has been for a lot of financial institutions, to my opinion, the trigger to say, hmm, there is regtech, I didn't know about it. Is that something that maybe from the start happened after 2008? Was that a similar impact in New Zealand? And how does that— where are we now in terms of maturity?

Yeah, so, so it is different. So from a regtech aspect, We're still quite low down on the curve. We have, and we and we have differing companies. So you've got you've got the the big banks, the Westpac's, ANZ's, BNZ's, ASB. So you've got those core big banks that are Australian owned. So very similar in in. in a way to, I think, somewhere like Jersey. When you've got those big companies, they tend to implement the regtech solutions. So you don't have to think about regtech, you just get this system because that's what head office have rolled out across the globe.

Mm-hmm.

So there's sort of that aspect. So you can get some of those solutions in that way. The other second tier of financial institutions that we have in New Zealand are more of the New Zealand banks.

Mm-hmm.

Less numbers, smaller budgets. They've still got to address the same regulation, but they don't have the big teams and the weight behind it. So for them, regtech solutions absolutely need to get done. But then it's the priority of all of the other things that you have to do as well. So it's not just the regulatory stuff, it's, you know, it's your customers, it's, you know, health and safety, all the sort of things that go into running a financial institution. And then you've got the next layer down, which are your much smaller companies. So your fund managers, your estate agents, your financial advisors that can be down to less than 10 people, less than 5 people in a company. And they won't have a tech team. They will have one person that's covering compliance. So again, they would also need tech solutions, but their budgets are way, way smaller. So you've got different dynamics or different constraints for each area of the financial services industry that need solutions but have different ways and different challenges for getting them. So what we try to do when we're looking at solutions that may be useful in New Zealand is to make sure that they— most people are looking for companies that scale up, we're looking for companies that scale down in terms of sort of price and coverage as well. So yeah, it's a slightly different market from that aspect.

It sounds like the RecTech Association has a clear mission purpose. It's maybe about sensibilization an education about what's happening. Is that sort of right, spot on, or maybe not really?

Yeah, so, so, so RegTech New Zealand, when we started up, our mission was, uh, one was to raise awareness. So we run webinars, we, you know, we get speakers to come in, we get people to come in and talk to us about what, what's happening in the market, um, raising awareness. showing people what good looks like. So we run showcases and we get demos and, and, you know, we've had some people locally and, um, from other places in the world come in and do that. Um, the other piece then is to help grow, um, regtech innovation from New Zealand.

Mm-hmm.

That's a slightly bigger piece, um, to, to bite off. Because that actually means that we need to sort of get people to buy into building the solution, understand what it is, and collaborate. So that's really where our journey is at the moment. We've done the raising awareness, or we do the raising awareness.

Yeah.

We do the showcasing. Now we're trying to walk the talk and actually create a sandbox, create an accreditation, pull together use cases so that we can, you know, sort of find a common issue that instead of 10 banks going out and building 10 different ways for the regulator to want to see in one way, well, it's how can we get those 10 banks to work together to Cut their costs, cut the time, and just make it simple.

I can only say I'm super supportive to the mission that you have. And unfortunately, we're already heading towards the end of our podcast. And I know both of us—

Everyone is done.

Yeah, probably we could go on for hours about regtech because that's where our passion lies for both of us. But maybe as a last question, Janet, if people want to know more about the association, How would they go about it?

So RegTech NZ, we operate out of LinkedIn. We operate on zero budget. So if you come onto LinkedIn, you can find me from there. You can link into our RegTech NZ site. By all means, follow us. We try and put interesting information out on there. We also put our webinars on there as well. We are a working group of the larger FinTech NZ group, so we also run events through them as well, which is also part of the ecosystem of NZ technology as well. So yeah, generally LinkedIn, come on, follow us, message me. You've got all my contact details in there as well. There are a couple of other founders in there, so we've all got different skill sets. We come from different um, parts of the business. So I'm sure there's something in there you can find to talk to us about.

Excellent. Janet, thank you so much for joining me in this podcast. Thank you also to the audience, and stay tuned— more fintech, regtech news will come to you. Thank you so much.

Thank you, Koen.

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