The trend toward consolidation in the regulatory technology (RegTech) arena may be heating up. Last week leading compliance technology and surveillance firm, Smarsh, announced its acquisition of Entreda, a fintech provider focused on helping RIAs and broker-dealers address information security and cybersecurity risk. Together, the firms seek to provide a more holistic RegTech solution spanning regulatory and compliance, as well as security and cybersecurity risk.
An increasingly competitive field
The acquisition is further evidence of a trend toward blending related risk and compliance services for those who support the RIA and broker-dealer markets, a trend undoubtedly buoyed by the SEC’s increased emphasis on cybersecurity issues. Leading TAMPs, custodial and other platforms, including Orion and LPL, have seen this trend coming for some time and continue to expand their suite of services to include compliance and/or cybersecurity. Other fintech providers are recognizing this as well. Last year, RIA in A Box, a compliance software and consulting services provider, announced the addition of a cybersecurity solution to round out its toolkit. Traditional compliance service providers including ACA/Cordium and Aurora also offer a range of cybersecurity services as well.
A key challenge for RegTech consolidators is to ensure their ostensibly all-in-one solutions can compete with the bevy of discrete best-in-breed compliance, surveillance and cybersecurity solutions on the market. This will be particularly important for those RegTech providers wishing to move “upstream” to service larger RIAs – where more established TAMPs and custodians maintain a strong foothold.