IBM RegTech Innovations

Promontory Financial Group CEO on the future of RegTech

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Gene Ludwig, the CEO and founder of Promontory Financial Group, recently sat down with Bloomberg Law in a wide-ranging interview to discuss his predictions for the future of RegTech, blockchain, and where he sees the markets going in the next three to five years. Promontory was acquired by IBM in 2016, and helps primarily financial services institutions navigate the increasingly complex regulatory environment. A former comptroller of the currency and banker, Mr. Ludwig founded Promontory in 2001. Promontory is now a key component of IBM Watson Financial Services.

During the interview, he describes how we are in the middle of a cryptocurrency “explosion” that is ripe for regulation. He expects regulation in crypto as a matter of when, not if, and the future success or failure of this new form of this volatile currency may very well hinge on how it’s regulated. He sees the future of regulation continuing in two directions. First, regulation of the financial services industry will continue in traditional areas  such as anti-money laundering and conduct risk. Ludwig also expects new regulatory interest in the vast expanse of emerging financial technologies and services. While clarifying that blockchain and cryptocurrency are two very different things – blockchain is the technology that underlies cryptocurrency – Ludwig believes that “blockchain could be the biggest thing that comes out of cryptocurrency.” He also predicts that for businesses, distributed ledger technology can be “as big as the internet,” stating that the secure and rapid transfer of claims and information, at an almost instantaneous speed, has not been seen at this level before in business. The level of impact blockchain can potentially bring should not be understated.

Another exciting area is RegTech and the combination of artificial intelligence with regulatory expertise. Ludwig says the advances in AI, as demonstrated in IBM Watson, are poised for major gains moving forward. Specifically, he anticipates advancement along two lines – the institution to customer relationship, and the application of AI to help institutions with their defense in areas such as,  credit judgments, anti-money laundering investigations, and analyzing systemic risk. In both cases, AI takes enormous amounts of information and permits better informed, data-driven decisions, ultimately allowing a regulatory ecosystem to operate more efficiently and effectively. Finally, Ludwig discusses his predictions that a market correction is forthcoming and that new technologies, such as AI, will become increasingly ubiquitous in financial services.

Learn more about Gene Ludwig and Promontory Financial Group.

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