Good to hear from our founder and procurement tech guru here on the UK/Europe site - hopefully we'll hear more from Jason in the coming months.
On Spend Matters yesterday, Chen Amit, CEO of Tipalti, penned a guest post that introduced the topic of “regtech”. He observes that: “In 2019, fintech will no longer be fintech anymore. Regtech, the concept of using technology to address increasing regulatory requirements and business risks, is marrying with fintech.”
In addition, “Finance departments don’t want to simply scale their core financial processes anymore. These departments want to address their business risks, such as fraud, in a productive way that removes data entry and red tape, while freeing finance to make a strategic impact versus pushing paper.”
Another definition of regtech from Investopedia suggests the phrase is a blended word of 'regulatory technology' “that was created to address regulatory challenges in financial services through innovative technology. Regtech (or ‘RegTech’) consists of a group of companies that use cloud computing technology through software-as-a-service (SaaS) to help businesses comply with regulations efficiently and less expensively.”
But as I see, it “regtech” is not just about an expanded definition of fintech to address financial regulations. Rather, regtech is something even broader, a concept (and class of technology) that should be on the radar of procurement and supply chain organisations as well – as an extension to not just fintech/invoice-to-pay solutions (inclusive of trade financing/KYC, e-invoicing compliance and related areas) but broader procurement technology suites. And this will be even more critical for UK and European procurement organisations than North American ones, at least in the near term.
There are many factors contributing to what will be an increased demand for source-to-pay “regtech” technology in procurement. To name a few:
- A growing regulatory climate (e.g., UK Prompt Payment) compounded by the notion that supply chain transparency and CSR linkages are likely to be increasingly on the minds of elected officials and bureaucrats alike (especially if a rising “labour” / left tide in coming elections proves true).
- The notion that VAT, duty and tariff considerations (including but not limited to the context of Brexit-related considerations) are likely to increase, not decrease, especially on a global basis.
- A rising confluence of different country requirements (e.g., environment, health, safety) may make it increasingly burdensome to manage supplier, contractual and transactional relationships in a cross-border environment.
- Silo-based solutions (e.g., invoice-to-pay / e-invoicing solutions) are likely to continue to address some aspects of compliance associated with transactions and supplier relationships -- but not all.
- Source-to-pay solutions will still likely not be bought to address compliance as a first concern (except in the case of highly specific needs such as those addressed by Hiperos/Coupa, Achilles, etc.). Rather, cost reduction, reduced spending, operational efficiency will remain, in the vast majority of cases, the primary drivers of adoption of existing “in the box” procurement technologies. Hence, specialised solutions will be purchased separately to address compliance.
What do you think? Will “regtech” become a driver of specific procurement technology buying decisions in the UK and Europe outside of niche requirements in 2019? And if so, what areas are likely to see the greatest initial adoption?
I’m curious to get your thoughts.