As an editorial director at Banyan Hill Publishing, Jeff Yastine puts out a monthly newsletter called Total Wealth Insider. His goal is to apprise his readers of investment opportunities that others have missed. His goal is to help his readers lead a better and more prosperous life. He has been a professional investor and financial journalist for many years and was once nominated for an Emmy award. More info about Jeff Yastine at tumblr.com
Jeff Yastine recently wrote an article about government regulation and how to make money through investing in companies that specialize in helping other businesses deal with it. He says that when government regulation of an industry occurs it causes a number of changes at companies. Big companies will hire compliance officers and staff a dedicated compliance department, for example. These compliance officers will spend a lot of time studying sometimes very complex rules so that no violations of the regulations take place.
It costs businesses a lot of money to comply with new regulations. Globally financial institutions alone spend over $65 billion a year complying with regulations. As additional regulations are passed in different countries it’s possible this will rise to $118 billion a year by 2020, he says.
— Jeff Yastine (@Jeff_Y_Guru) November 16, 2017
There are now a number of technology startups who are dedicated to helping companies comply with regulations in a more cost-effective way. This new type of technology is called Regtech. By developing sophisticated programs to deal with regulations the amount of human capital needed is reduced which saves a lot of money. Jeff Yastine says that these companies are something that investors should be taking a very close look at because they represent an opportunity to make quite a bit of a return.
Jeff Yastine says that there are roughly 100 companies in the Regtech industry. Most are still privately held but there are a few that have held an IPO. The regtech companies mainly have insurers and banks as clients for now but this technology could expand to other sectors in the coming years.
One example of cost savings that Jeff Yastine points to is a study that was conducted by American Banker. He said that banks currently need to confirm the identities of new customers, costing them over $11 million a year. By using Regtech companies that number can be reduced to $300,000. As Regtech takes over more and more regulation compliance they are going to be very profitable due to these cost savings for their clients.