Conundrum: the financial rulebook in the UK runs to 638,000 words. As the governor of the Bank of England put it, this is "longer than War and Peace. It is also somewhat less interesting and infinitely more complex."
How can any company comply with such a rulebook? The answer? Regtech. This emerging field uses the might of artificial intelligence and machine learning to help finance organisations comply with the law. Naturally, London is the world centre. A third of the REGTECH100 ranking of the hottest firms in the sector are from the UK.
Its big business, with spending estimated to reach £115 billion by 2023. But this could be money well spent. Banks have paid more than £300 billion in fines since 2008, and the average global bank until recently employed 7,000 compliance officers, up four-fold since the financial crisis.
Home to pioneers
Quantexa is a great example of a regtech pioneer. It uses AI to detect financial crime. Its algorithms search through piles of data (too large for any human to sift through) to discover anomalies to combat anti-money laundering, credit risk, and errant consumer behaviour. Quantexa's thinking is cutting-edge, and London is the ideal home. Not only does Quantexa have a client base on its doorstep, it is able to raise funds too. After three rounds, Quantexa raised a total of £17.9m, a sign of the faith investors have in both the team and the sector.
ClauseMatch is another London rising star. It puts all compliance documents into a single portal. An AI assistant alerts users for the impact of new policy announcements, identifies policy gaps, and spots compliance failures. ClauseMatch has won clients from across the fintech and banking world. And it's also supported by London's start-up scene. It joined an accelerator programme run by Lloyds of London, the venerable insurer. ClauseMatch made use of free co-working space, mentoring by legal experts, and access to funding.