Åke Freij

This study examines how regulatory ‘waves’—clusters of interrelated legal requirements—reshape technology usage and value creation in financial services. Drawing on content analyses (topic modeling) of 44 major European regulations complemented with 45 interviews with expert from the industry, we highlight the interplay of regulatory complexity, data capabilities, and technology strategy. Regulatory waves impose overlapping compliance demands, intensifying coordination challenges within firms and across external collaborations. In response, organizations pursue proactive or reactive adaptation strategies, each with distinct risks and opportunities. Our analysis shows that regulatory waves elevate data from a technical resource to a strategic asset, enabling new business synergies but requiring major operational and architectural changes. Firms struggle with source fragmentation and interpretation complexity, facing new risks in data management and system integration. By exposing how regulatory waves influence internal governance, external partnerships, and data-driven value propositions, this study advances theories on policy diffusion, information systems, and strategic adaptation. It offers guidance for managers and policymakers navigating complex regulatory landscapes and leveraging data as both a compliance enabler and a source of competitive advantage.

Technology promises to offer significant benefits in operating a business. At the same time, firms have major challenges in dealing with regulatory requirements. Despite this, studies of technological capabilities offer little insight into the functionality available for supporting regulatory compliance requirements. With both compliance demands and technological complexity evolving at record speed, this is an area demanding increased understanding. This paper analyses data from 107 regulatory technology solution providers for the anti-money laundry compliance field. Conclusions from the study point to a strong availability of basic capabilities for managing products, understanding end markets, and tracking linkages between actors. There is weaker support for capabilities in basic operations. Also, advanced support is less frequent, and the ability to innovate is close to non-existent. The conclusions offer tangible recommendations to practitioners and policymakers concerning the potential benefits and pitfalls of applying technology for regulatory compliance.

Technology is a driver of survival and profit for firms. For technology to create value, it should be implemented in products, processes and infrastructure. The impact of regulatory change on technology can be significant, but this topic has been less thoroughly explored than the impact of research and development and customer demands. Hence, researchers have struggled to explain why some firms are more successful than others in responding to regulatory change. The present study examines three major regulatory changes that occurred over a 25-year period in the Swedish life insurance industry, and how each change impacted technology. From these data, a picture of mitigation capabilities relative to regulatory change emerges. The complementary mitigation capabilities stand in contrast to the previous dyadic division between ordinary (or administrative) and dynamic (entrepreneurial) capabilities. Practical advice is offered on how to achieve business benefits from regulatory changes.

The link between regulations and innovation is puzzling. Some studies point to higher innovation performance as an effect of regulation, whereas other researchers disagree. A literature review shows empirical inquiries into various industries, with the financial sector attracting significant attention. The review also points to a company’s responses’ flexibility and complexity as variables mediating the relationship between regulation and innovation performance. These variables remain underexplored as empirical objects of analysis on a company level in the financial sector. By applying a case study research strategy, 100 launched financial service innovations’ performance is compared with qualitative data assessing flexibility and complexity in the project work, leading to the launch of these products into the marketplace by a major Danish financial company. Finally, these data are quantitatively tested with a multinomial logit model. The results contribute to the differing views on how regulations influence innovation by showing links between high flexibility and low complexity in firm response for improved innovation performance. Increased complexity, in turn, impedes performance. Hence, specific innovation efforts from management are critical for striking the right balance between flexibility and complexity to achieve success in connection with regulatory changes.

Purpose
The conflict between the burden from regulations and the desire to introduce new offerings to the market is a concern for both researchers and business managers alike. Over the last 10 years significant increases in resources required to comply with regulations have been observed. The use of technology solutions to manage complex regulations (a.k.a. “Regtech”) is emerging as a potential solution to the compliance demand. This paper poses the question, “Which support do current Regtech solutions offer?”.
Design/methodology/approach
This study analyzed a global set of 550 providers to understand what support Regtech solutions provide.
Findings
The analysis shows how regulatory compliance work is supported as well as specific examples of firms providing support and which regulations are covered. Results highlight that the main focus in the current Regtech industry is on supporting internal and operations tasks rather than external and analytical activities.
Practical implications
Recommendations to business managers are to combine regulatory support with a clear strategic vision, carefully plan integration scenarios, and to look for the support of broader regulatory management rather than individual functions or specific regulations.
Social implications
If RegTech providers, financial services firms, regulators, and researchers look towards a future where the balance of proactive regulatory management and efficient compliance is achieved, there are substantial benefits for customers of the industry. The result will be increased transparency and quality in all industries.
Originality/value
The result from this study is one of the first specific illustrations of the nature of “RegTech,” which can serve as a basis for further research into aspects of technology and capabilities.

When an industry is disrupted, the predominant view is that new entrants benefit at the expense of incumbents, who are pictured as slow-moving, inert, and incapable to change. Based on a longitudinal multiple case study with data over a 15-year period, we challenge this view. By studying the action responses of three incumbent firms and three new entrants to a major regulatory change in the life insurance industry, we find that both incumbents and new entrants can succeed if complementary assets are correctly managed. In particular, firms need to acquire and refine certain key assets needed for exploiting new business opportunities and, subsequently, need to enhance the value of their complementary assets by transforming them from generic to specialized and on to co-specialized stages. These findings have theoretical implications for the literature on strategy and innovation management. In addition, we outline important managerial implications to transform complementary assets to stages with higher value.

Historically, businesses have treated regulations as a necessary evil, and thereby managed them by reactive and siloed approaches towards minimum compliance. In this article, an approach for “future regulatory management” is presented. From an overview of how regulations have evolved over time, an analytical framework is applied to outline the capabilities required for managing regulatory change in the future. In addition, we offer five design principles that will give firms a chance to innovate with regulatory change rather than just continue to fight with compliance requirements. Instead of being viewed as “the perpetual ogre, the bad guy who is against good things”[Levitt (1968)], you could be the company that customers turn to as a role model.

Throughout history, regulations have been of central concern to business managers, and they remain at the centre of attention in many industries today. Regulatory changes are seen as difficult to handle, and firms often seek to avoid or minimize their impact. Examples of such practices exist today in the automobile, health care and financial services industries. However, a more positive approach views regulations and regulatory change as opportunities and not only as obligations, since the changes associated with them influence the structure of industries and relationships between actors. This study, based on an intensive study of six Swedish life insurance companies, investigates what firms do to manage the impact of new requirements from regulatory change, which actions they take to implement new requirements and what separates firms that succeed in the market after a regulatory change from others. The historical case study covers the 17 years following Sweden’s enactment in 1990 of a law authorizing fund-based life insurance policies—a regulatory change that revolutionized the industry. The actions of six major firms during this time period are comprehensively presented and analysed, based on interviews with the companies’ top-level executives and a thorough review of published research and company and industry documents. Drawing from insights in prior theoretical research, the case studies focus in particular on the firms’ integration of existing and new products, processes and technology and their use of internal or external providers. The analysis reveals that the two firms that were most successful in managing the regulatory change were highly proactive in using external providers as well as integrating new and existing products, processes and technology after the regulatory change. These firms displayed strong capability to manage interfaces both within the organization and with external entities. Based on the findings, the study makes recommendations for business managers on how best to manage regulatory change, as well as for regulators.