Rapid Launches and Advent of Innovative Technologies Paves the Way for Growth of Regtech Industry

It has been only a decade for regulatory technology aka RegTech industry and it has evolved so drastically. According to Allied Market Research, the global RegTech market is anticipated to reach $28.33 billion by 2027, thanks to increase in investment and rapid growth in the Fintech sector.

In layman’s terms, RegTech was created to address regulatory challenges in financial services by levering innovative technologies. RegTech, an extended branch of FinTech, helps in completing complex tasks of financial services while complying with regulatory guidelines. No matter how quickly the Fintech world changes, no business can invest in it unless it adheres to regulatory compliance.

Rapid Launch of Novel Technological Solutions

The increase in the threat of cybercrimes and changes in the regulatory landscape drive the demand for RegTech. Thus, several market players have launched new services and platforms for business players and maintain their foothold in the market. For instance, Kompany, an Austrian RegTech firm recently launched its novel solution that focuses on anti-money laundering compliance. The solution is developed to make discovery of ultimate beneficial ownership (UBO) easier.

On the other hand, DueDil, a London-based RegTech company recently announced a partnership program to address the need for financial services and insurance firms to understand the SME customer base. The recent pandemic has made business-aware regarding market volatility and the possibility of a global recession. Thus, it has become vital to change existing books of business and mitigate risks effectively. Such rapid launches of novel RegTech solutions are the prime reason behind the steadfast growth of the market.

Future of RegTech Industry

The RegTech market has a promising potential in the emerging economies for RegTech is still untapped. In addition, several financial systems and digital platforms demand advanced RegTech solutions. What’s more, cutting-edge services such as blockchain and cryptocurrency RegTech are expected to help next-generation business platforms to increase transparency and legitimacy.

As mitigating risks for the institution has become instrumental, harnessing artificial intelligence (AI) is becoming more and more popular. AI can carefully analyze the colossal amount of financial data and recognize patterns and raise alarm in case of suspicious transactions, preventing financial frauds before it could cripple the pockets of investors.

 Moreover, know your customers (KYC) routines along with biometric such as facial recognition technologies have gained importance over the last couple of years. They are bound to play a major as the Internet of Things (IoT) enters the RegTech industry. As the IoT devices introduce more and more devices, thereby making the digital system more vulnerable than ever. Thus, the use of AI to recognize customer behavior could work wonders.

Along with AI, the RegTech industry is expected to incorporate analytics driven by big data. Big data can help create actionable results more quickly and analyze everything from insider-trading to terrorist-related transactions. In the financial world, analyzing the domino effect is most crucial to spot risks. It is obvious that a paper-based financial system cannot match the benefits of digital systems and current reality. Therefore, the demand for RegTech would increase and it soon will become a norm to support the ever-expanding Fintech industry.

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