Fund management regulations bring excellent opportunities for regtech firms

The rise of automation has played a special role in the complex world of fund management regulation, and Irish companies are playing a significant part. “A lot of the larger global financial services companies have a presence in Ireland and some have headquarters based out of here. This sets the scene for a strong regulatory landscape as governed by the Central Bank of Ireland, who also play a large role in European regulations. As a consequence of this, there are excellent opportunities for regtech firms to operate in this space and deliver globally scalable solutions,” says Ogie Sheehy, chief executive and founder of Kerry-based firm ViClarity.

The company started out in 2009, building a system that allowed credit unions to automate newly introduced compliance and risk management criteria. The system was subsequently rolled out across different industries, including healthcare, insurance, and funds management. “The Central Bank of Ireland has numerous different regulations across different sectors. So over time, we’ve built a library of different templates for different types of regulations. So it’s covering everything from fitness and probity to CP86, as well as anything else that the Central Bank comes out with it,” explains Neil O’Sullivan, business development manager at ViClarity.

High-profile collapses such as Lehman Brothers and Custom House Capital encouraged the Central Bank of Ireland to issue revised frameworks in 2015 and 2016, which gave new regulations for investment firms and fund service providers.

"Around that time we partnered with PwC to build these new regulations into our system," says O'Sullivan. "That was a very popular piece of regulation that had just come out, and many fund management organisations didn't know where to start. So we built out the content, offered them the templates and that's how we got a number of the funds companies on our books. Since then, we've built out a lot of fund-specific content."

Ability to adapt quickly

Part of being successful in the regtech industry is the ability to adapt quickly as regulation changes, suggests O'Sullivan. "To continue the growth you have to stay up to date with what's happening in the regulation, and you need to stay up to date with the technology, so you can change as the client's needs change. If you look at the US, our competitors would be the big SAP structures like RSA Archer, where they're a massive beast of a company where it could take a year or two to implement a software, and a lot of consulting fees. We are different because we are more agile. If the regulation changes, we can change quite quickly."

Another major factor to the growth of the regtech industry in Ireland is the easy access to multinationals, according to O’Sullivan. “The fact that so many global companies have a Dublin base and a Dublin operation is fantastic for us,” he says. “It is a lot easier to get a foot in the door with the Dublin office. We can implement the system into an Irish branch, and roll it out globally over time.”

Regtech growth in Ireland looks set to continue, with Brexit playing a significant part, suggests Ogie Sheehy. "In the next few years I think the trend will continue where we see significant growth in regtech firms setting up in Ireland," he says. "This will be further increased by many UK financial services firms relocating their business operations to Ireland as a result of Brexit uncertainty. Ireland has set itself up as a strong base for regtech firms and I think this will continue over the coming years, strengthening the competencies and skills for Ireland positioning itself as a hub and centre of excellence for global regtech.