Abstract
This study examines the interplay between legitimacy and industry boundaries within the delivery of regulatory technology solutions (RegTech), an industry where both a well-defined business scope and a high level of legitimacy are critical. A key consideration when implementing compliance technology is the enhancement of user legitimacy. However, in the RegTech industry, it remains ambiguous what constitutes a solution that meets established standards, with grey areas emerging in the positions of providers. Drawing on a collection of global publicly available data covering over 750 providers of RegTech solutions and leveraging 30 in-depth interviews with both providers and users. We find six industry architecture positions, which, combined with industry segment coverage, lead to defining four bottleneck creation strategies. By comparing the four strategies to previous research, we shed new light on phenomena such as modularity, bottlenecks, and architecture positions. We propose the novel concept of “double bottlenecks” to illustrate the balancing of innovation with institutional pressures when new technology is implemented. Furthermore, we give practical recommendations to both providers and buyers of technology solutions, suggesting behaviors that could mitigate uncertainty in relationships and lead to a mutual increase in trust and legitimacy.