A second wave of the coronavirus threatens to sweep across the world, presenting the RegTech industry with several new challenges.
Countries around the globe have started to experience the signs of a second wave of increasing Covid-19 infections. As they do, this could present the RegTech industry with several new threats.
“Like wave one, there is a possibility market volumes would again spike with increased volatility, forcing regulators to again impose new short selling bans and similar measures,” says Nicklas Nilsson, regulatory reporting specialist at Compliance Solutions Strategies, the RegTech100 company.
“RegTech will certainly have to be on their feet and follow development from firms, markets and regulators closely. However, with the lessons learned since the first wave around how to collaborate remotely and the fact that firms have adapted to this temporary normal, we have found that the RegTech industry as a whole is very resilient.”
Indeed, so far the companies in the sector has faired reasonably well. In fact, investment into the global RegTech sector increased by 5% in the first six months of 2020, compared to the same period last year, according to FinTech Global’s research. In total, the industry raised $3.9bn between January and June this year.
But that doesn’t mean that there aren’t risks out there for a second wave.
“A perhaps bigger risk for RegTech with a severe second Covid-19 wave is implementation time where firms might be affected by employees being sick or incapable to work for other reasons because of a stricter lockdown,” Nilsson warns. “Our experience from this first six months is that implementation projects take longer and are more dependent on individual employees when firms are getting into core business first-mode and people are working from home.
“It has proven that work from home policies and business continuity plans actually have worked quite well for RegTech, meaning that we would not necessarily be heavily affected by these external factors should there be a second wave. Many firms have taken a proactive approach to BCP and have already updated their business continuity plans within the past few months to include specific requirements and adaptations since the start of the pandemic.
“We have also seen that the industry as a whole is quite resilient and flexible to cope with changes beyond our control, and generally are more prepared for what’s coming should there be similar measures imposed from governments and regulators because of a second wave.”
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