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RegTech is composed of the words “regulatory” and “technology”. It is a collective term for the application of modern technologies, to get the increasing regulation in the banking- and financial sector under control both from an IT and a legal standpoint.
Introduction
Attitude of the country towards RegTech-services
In recent years, there has been massive rise in the number of banks acquiring or partnering with FinTech firms and it is expected that this trend will accelerate in the next few years with banks eager to digitalise their regulatory operations. This trend corresponds with the growing global interest in Regulatory Technology (“RegTech”) solutions.
The Irish Government is strongly supportive of FinTech and RegTech, recognising the significant benefits it can bring to consumers, economic growth and competition. The Irish Government has expressed its commitment to a strategy “Ireland for Finance 2025” (IFS 2025) to ensure that Ireland continues to be regarded as one of the world’s leading global financial centres.
Legal affairs
Obligations and requirements to provide RegTech-services
Ireland does not have a specific regulatory framework for FinTech businesses. However, FinTech businesses providing regulated activities which cannot avail of an exemption will fall within the existing body of financial regulation and so prior authorisation from the CBI to conduct business.
If authorised, firms will be subject to Irish legislation and various CBI requirements, but FinTech companies authorised by the CBI can avail of regulatory passporting across the EU.
Additional comments regarding the legal situation for RegTech-services or what RegTech’s must be aware of in this business area
A case-by-case analysis is often required when regulating the provision of RegTech services. Depending on the service provided, and the particular financial services firm receiving those services, they may fall within the legal and regulatory requirements governing outsourcing and this may have an impact on the contractual provisions required.
The CBI Outsourcing Guidance applies to all Irish regulated firms and is to be implemented alongside any specific sectoral legislative outsourcing requirements. The CBI Outsourcing Guidance imposes similar contractual requirements to the EBA Outsourcing Guidelines (which apply directly to credit institutions, certain investment firms and payments/e-money institutions).
The EBA Outsourcing Guidelines require, inter alia, that outsourcing agreements specify service levels and precise quantitative and qualitative performance targets to allow for the timely monitoring of the performance of the outsourced function. In addition, specific termination rights, provisions around business continuity, data and access and audit rights for the regulated firm and its regulators are also required.
RegTech providers may have legal and regulatory or contractual obligations to notify certain behaviour, depending on their regulatory status and contractual arrangements, the sector in which they operate and the information and material that they come into contact with.
Economic conditions
Market size for RegTech-services and biggest companies in this business area
It has recently been shown that 8 Irish firms operate within the top 100 globally, ranking Ireland above Hong Kong as a RegTech hub.
Irish RegTech firms that have achieved international successes include AQMetrics and Gecko Governance.
Additional comments regarding the economic situation for RegTech-services or what RegTech’s must be aware of in this business area
The Irish financial services industry is aware of the potential to better deploy technol