RegTech in Finance Market: Information by Organization Size (Small & Medium, Large), Application (Account Verification, General Compliance, Risk Analysis), and Region — Forecast till 2029

Mar 20, 2020   Global Statistics Representing RegTech in Finance Market Scenario RegTech is a blend of regulatory technology for addressing compliance and regulatory challenges faced by financial institutions through the means of technology. PegTech providers help customers ensure risk management protocols, meet compliance standards, control activities that mitigate risks, and curb compliance costs. Industry Analysis The global financial crisis of 2008 significantly directed the focus of policy makers towa...
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Global Statistics Representing RegTech in Finance Market Scenario

RegTech is a blend of regulatory technology for addressing compliance and regulatory challenges faced by financial institutions through the means of technology. PegTech providers help customers ensure risk management protocols, meet compliance standards, control activities that mitigate risks, and curb compliance costs.

Industry Analysis

The global financial crisis of 2008 significantly directed the focus of policy makers towards rectifying the damage done to the financial systems by enacting financial reforms at both national and international levels. These reforms involved the creation of regulatory bodies that would focus on stability in the financial sector as well as the introduction of technologies to increase the effectiveness and efficiency of regulatory compliance and supervision. A case in point here was the establishment of the Financial Stability Board in 2009; the body focuses on coordinating the work of standard-setting bodies and national financial authorities at a global level. Similarly, when talking about the introduction of technologies, the development of RegTech solutions is considered to be an ideal solution to curb the consequences of the financial crisis.

As the next step in response to the crisis, regulatory bodies gave a historic mandate of re-regulating financial markets at a global level. Boston Consulting Global’s Global Risk 2017: Staying the Course in Banking report observed that regulatory changes in financial service increased threefold from 2011 to 2018, averaging 200 changes per day. These changes have been creating challenges for financial institutions operating at a small level on account of the growing compliance costs. According to the Federal Reserve Bank of St. Louis, compliance costs account for approx. of 8.7% of the non-interest expenses of the banks that hold assets less than USD 100 million. However, when compared with large banks with operating assets ranging between USD 1 billion and USD 10 billion, these regulatory and compliance costs constitute only 2.9% of the non-interest expenses.

The figure below is a graphic representation of the percentage share of expenses incurred by banks scaling from a minimum of less than USD 100 million operating assets to USD 10 billion.

Mean-Compliance-Expences

Banks are thus currently focused on curbing compliance costs and addressing the regulatory requirements of effective and efficient operations by means of introducing technologies such as cloud computing, robotic process automation, and artificial intelligence, summing up the idea of implementing RegTech.

The below graph indicates emerging technologies in the RegTech market by financial institutions at a global level and their respective applications in percentage.

respective-applications-in-percentage

When considering technologies such as cloud computing, robotic process automation, and artificial intelligence, several questions remain unanswered, such as how they impact the RegTech market, what are the drivers, and where they find applications. To understand this, we could take an example of the role of artificial intelligence (AI) in the RegTech market.

According to our study, currently, AI is considered as one of the prominently implemented technologies in the compliance sector, as AI helps gain efficiency in operations and streamlines processes, improves data management, and helps control costs. The below graph clearly depicts the major areas of applications of AI in the financial sector.

applications-of-AI-in-the-financial-sector

The prominent application of emerging technologies such as AI in the above-mentioned areas will help financial institutions address regulatory compliance challenges and maintain the required standards of operations.

Segmental Insights

RegTech finds applications in both large and small and medium-sized banks. The key areas they cater to include account verification, general compliance, data capture and integration, monitoring, risk analysis, regulatory analysis and training, and reporting.

The below chart portrays the percentage of each application studied under the parameter of major areas of interests of the financial institutions for deploying RegTech in their operations.

deploying-RegTech-in-their-operations

According to the chart, identity verification holds an approx. of 28% of the RegTech market by application, marking it as the largest shareholder. The increasing number of challenges faced by financial institutions over authenticating and identifying their customers at a global scale largely impart to the segment’s sizable share of the pie. In this scenario, RegTech authenticates the customer’s identity by answering the basic questions — Who are they? Where are they from? And what is their occupational background? Additionally, the deployment of RegTech can further help maintain the data for any future concerns over transactions. Several finance-based companies are deploying RegTech in their operations for these applications. For instance, PSI-Pay, a financial service company based in the U.K. offers payment solutions across the globe. The company is authorized by the Financial Conduct Authority (FCA) to issue electronic money in Europe as well as offer MasterCard services. Thus, it is vital for the company to verify customers’ identity and also conduct regular checks on customers who have political backgrounds. The deployment of RegTech has enabled the company to improve its verification process and, ultimately, enhance its operational efficiency and maximize income.

Regional Insights

RegTech is gaining roots around the world. In our study, we have segmented the global market into North America, Europe, Asia-Pacific, Latin America, the Middle East, and Africa. Over the years, RegTech technology has been perceived to grow in different versions, namely 1.0, 2.0, and 3.0. These versions differ regionally due to IT infrastructure and associated parameters.

RegTech-Development

The RegTech market holds a significant share in Europe, primarily due to two major factors, namely strong banking and financial sector and associated regulatory reforms. The below graph depicts regions with significant shares in the RegTech market.

significant-shares-in-the-RegTech-market

European banks are studied to be operating in a highly complex and competitive scenario with the implementation of regulations such as the Revised Markets in Financial Instruments Directive (MiFID II), Revised Payments Services Directive (PSD2), and the General Data Protection Regulation (GDPR), among others. These regulations tend to direct financial institutions towards regulatory compliance by means of adopting technologies such as RegTech.

Europe is a prominent market for RegTech; however, regions such as Asia-Pacific and the Middle East have the potential to grow and offer opportunities to the RegTech market during the forecast period, 2020–2029.  Countries such as Japan, China, South Korea, Hong Kong, and New Zealand are some of the opportunistic markets for RegTech to grow as they are re-organizing their financial systems by introducing associated reforms and projects.

Key Players

The RegTech market has several players, ranging from start-ups to well-established firms. However, the companies involved are not observed to be scaling at the required pace currently, as they are yet to develop themselves to address the various levels of compliance concerns faced by the different operating segments of financial institutions. The strong drafting and implementation of regulations focused on meeting reporting requirements globally will offer these companies, especially start-ups, an opportunity to perform and serve these demands. For instance, in 2018, the European Union (EU) regulations MiFID II and PSD2 came into effect with massive reporting requirements, as several global financial institutions significantly face concerns regarding the reporting and management of regulatory compliance. Such reforms bring in an array of opportunities for RegTech start-ups and establish players to outperform, as they would direct several financial institutions with low technical and legal knowledge and staff towards them.

The companies operating in RegTech (Finance) market are studied under two segments, namely established/key players and start-ups.

Established/Key Players: Abside Smart Financial Technologies, Accuity, Actico, Alto Advisory, Broadridge, Compendor, Compliance Solutions Strategies (CSS), Deloitte, Eastnets, Fenergo, IBM, Infrasoft Technologies, Lombard Risk, London Stock Exchange Group (LSEG), Metricstream, Nasdaq Bwise, Nice Actimize, PWC, Rimes Technologies, Sai Global, Sysnet Global Solutions, and Wolters Kluwer.

Start-Ups: Datarama, AUTHUDA, Kompany, Finform, RegDelta, Seal, QUMRAM, AiDa, and CHAINALYSIS.

Key Findings

  • The RegTech market is expanding its footprint at an international level by means of hiring skilled staff in firms and gaining funding. For instance, global RegTech firms raised at approx. funding of USD 9.7 billion in 2018
  • Technologies other than artificial intelligence (AI) such as natural language processing and machine learning are all set to emerge significantly during the forecast period, 2020–2029
  • Collaborations between regulators, RegTech players, and end-user firms through new modes of partnerships foster the implementation of RegTech

RegTech in Finance Market Segmentation

By Organization Size

  • Small & Medium (SME)
  • Large

By Application

  • Account verification
  • General compliance
  • Monitoring
  • Risk analysis
  • Regulatory analysis and training
  • Data capture and integration
  • Reporting

By Region

  • North America
  • Europe
  • Asia Pacific
  • South America
  • Middle East & Africa

Frequently Asked Questions (FAQs)

Accuity, Actico, Alto Advisory, Broadridge, Compendor, Deloitte, Eastnets, Fenergo, IBM, Infrasoft Technologies, Lombard Risk, Metricstream, Nasdaq Bwise, Nice Actimize, PWC, Rimes Technologies are the top players in RegTech in Finance Market.
Identity Verification Segment is expected to be the leading segment in RegTech in Finance Market during the forecast period.
Europe is expected to hold the highest market share in RegTech in Finance Market.
We will send you an email with login credentials to access the report. You will also be able to download the pdf.
Basically choose Pay by Purchase Order when you are checking out. We will connect with you via email to set up your order.
Call us, email us, or chat with us! We encourage your questions and feedback. We have a research concierge team available at all times and included in every purchase.

Global Statistics Representing RegTech in Finance Market Scenario

RegTech is a blend of regulatory technology for addressing compliance and regulatory challenges faced by financial institutions through the means of technology. PegTech providers help customers ensure risk management protocols, meet compliance standards, control activities that mitigate risks, and curb compliance costs.

Industry Analysis

The global financial crisis of 2008 significantly directed the focus of policy makers towards rectifying the damage done to the financial systems by enacting financial reforms at both national and international levels. These reforms involved the creation of regulatory bodies that would focus on stability in the financial sector as well as the introduction of technologies to increase the effectiveness and efficiency of regulatory compliance and supervision. A case in point here was the establishment of the Financial Stability Board in 2009; the body focuses on coordinating the work of standard-setting bodies and national financial authorities at a global level. Similarly, when talking about the introduction of technologies, the development of RegTech solutions is considered to be an ideal solution to curb the consequences of the financial crisis.

As the next step in response to the crisis, regulatory bodies gave a historic mandate of re-regulating financial markets at a global level. Boston Consulting Global’s Global Risk 2017: Staying the Course in Banking report observed that regulatory changes in financial service increased threefold from 2011 to 2018, averaging 200 changes per day. These changes have been creating challenges for financial institutions operating at a small level on account of the growing compliance costs. According to the Federal Reserve Bank of St. Louis, compliance costs account for approx. of 8.7% of the non-interest expenses of the banks that hold assets less than USD 100 million. However, when compared with large banks with operating assets ranging between USD 1 billion and USD 10 billion, these regulatory and compliance costs constitute only 2.9% of the non-interest expenses.

The figure below is a graphic representation of the percentage share of expenses incurred by banks scaling from a minimum of less than USD 100 million operating assets to USD 10 billion.

Mean-Compliance-Expences

Banks are thus currently focused on curbing compliance costs and addressing the regulatory requirements of effective and efficient operations by means of introducing technologies such as cloud computing, robotic process automation, and artificial intelligence, summing up the idea of implementing RegTech.

The below graph indicates emerging technologies in the RegTech market by financial institutions at a global level and their respective applications in percentage.

respective-applications-in-percentage

When considering technologies such as cloud computing, robotic process automation, and artificial intelligence, several questions remain unanswered, such as how they impact the RegTech market, what are the drivers, and where they find applications. To understand this, we could take an example of the role of artificial intelligence (AI) in the RegTech market.

According to our study, currently, AI is considered as one of the prominently implemented technologies in the compliance sector, as AI helps gain efficiency in operations and streamlines processes, improves data management, and helps control costs. The below graph clearly depicts the major areas of applications of AI in the financial sector.

applications-of-AI-in-the-financial-sector

The prominent application of emerging technologies such as AI in the above-mentioned areas will help financial institutions address regulatory compliance challenges and maintain the required standards of operations.

Segmental Insights

RegTech finds applications in both large and small and medium-sized banks. The key areas they cater to include account verification, general compliance, data capture and integration, monitoring, risk analysis, regulatory analysis and training, and reporting.

The below chart portrays the percentage of each application studied under the parameter of major areas of interests of the financial institutions for deploying RegTech in their operations.

deploying-RegTech-in-their-operations

According to the chart, identity verification holds an approx. of 28% of the RegTech market by application, marking it as the largest shareholder. The increasing number of challenges faced by financial institutions over authenticating and identifying their customers at a global scale largely impart to the segment’s sizable share of the pie. In this scenario, RegTech authenticates the customer’s identity by answering the basic questions — Who are they? Where are they from? And what is their occupational background? Additionally, the deployment of RegTech can further help maintain the data for any future concerns over transactions. Several finance-based companies are deploying RegTech in their operations for these applications. For instance, PSI-Pay, a financial service company based in the U.K. offers payment solutions across the globe. The company is authorized by the Financial Conduct Authority (FCA) to issue electronic money in Europe as well as offer MasterCard services. Thus, it is vital for the company to verify customers’ identity and also conduct regular checks on customers who have political backgrounds. The deployment of RegTech has enabled the company to improve its verification process and, ultimately, enhance its operational efficiency and maximize income.

Regional Insights

RegTech is gaining roots around the world. In our study, we have segmented the global market into North America, Europe, Asia-Pacific, Latin America, the Middle East, and Africa. Over the years, RegTech technology has been perceived to grow in different versions, namely 1.0, 2.0, and 3.0. These versions differ regionally due to IT infrastructure and associated parameters.

RegTech-Development

The RegTech market holds a significant share in Europe, primarily due to two major factors, namely strong banking and financial sector and associated regulatory reforms. The below graph depicts regions with significant shares in the RegTech market.

significant-shares-in-the-RegTech-market

European banks are studied to be operating in a highly complex and competitive scenario with the implementation of regulations such as the Revised Markets in Financial Instruments Directive (MiFID II), Revised Payments Services Directive (PSD2), and the General Data Protection Regulation (GDPR), among others. These regulations tend to direct financial institutions towards regulatory compliance by means of adopting technologies such as RegTech.

Europe is a prominent market for RegTech; however, regions such as Asia-Pacific and the Middle East have the potential to grow and offer opportunities to the RegTech market during the forecast period, 2020–2029.  Countries such as Japan, China, South Korea, Hong Kong, and New Zealand are some of the opportunistic markets for RegTech to grow as they are re-organizing their financial systems by introducing associated reforms and projects.

Key Players

The RegTech market has several players, ranging from start-ups to well-established firms. However, the companies involved are not observed to be scaling at the required pace currently, as they are yet to develop themselves to address the various levels of compliance concerns faced by the different operating segments of financial institutions. The strong drafting and implementation of regulations focused on meeting reporting requirements globally will offer these companies, especially start-ups, an opportunity to perform and serve these demands. For instance, in 2018, the European Union (EU) regulations MiFID II and PSD2 came into effect with massive reporting requirements, as several global financial institutions significantly face concerns regarding the reporting and management of regulatory compliance. Such reforms bring in an array of opportunities for RegTech start-ups and establish players to outperform, as they would direct several financial institutions with low technical and legal knowledge and staff towards them.

The companies operating in RegTech (Finance) market are studied under two segments, namely established/key players and start-ups.

Established/Key Players: Abside Smart Financial Technologies, Accuity, Actico, Alto Advisory, Broadridge, Compendor, Compliance Solutions Strategies (CSS), Deloitte, Eastnets, Fenergo, IBM, Infrasoft Technologies, Lombard Risk, London Stock Exchange Group (LSEG), Metricstream, Nasdaq Bwise, Nice Actimize, PWC, Rimes Technologies, Sai Global, Sysnet Global Solutions, and Wolters Kluwer.

Start-Ups: Datarama, AUTHUDA, Kompany, Finform, RegDelta, Seal, QUMRAM, AiDa, and CHAINALYSIS.

Key Findings

  • The RegTech market is expanding its footprint at an international level by means of hiring skilled staff in firms and gaining funding. For instance, global RegTech firms raised at approx. funding of USD 9.7 billion in 2018
  • Technologies other than artificial intelligence (AI) such as natural language processing and machine learning are all set to emerge significantly during the forecast period, 2020–2029
  • Collaborations between regulators, RegTech players, and end-user firms through new modes of partnerships foster the implementation of RegTech

RegTech in Finance Market Segmentation

By Organization Size

  • Small & Medium (SME)
  • Large

By Application

  • Account verification
  • General compliance
  • Monitoring
  • Risk analysis
  • Regulatory analysis and training
  • Data capture and integration
  • Reporting

By Region

  • North America
  • Europe
  • Asia Pacific
  • South America
  • Middle East & Africa

Frequently Asked Questions (FAQs)

Accuity, Actico, Alto Advisory, Broadridge, Compendor, Deloitte, Eastnets, Fenergo, IBM, Infrasoft Technologies, Lombard Risk, Metricstream, Nasdaq Bwise, Nice Actimize, PWC, Rimes Technologies are the top players in RegTech in Finance Market.
Identity Verification Segment is expected to be the leading segment in RegTech in Finance Market during the forecast period.
Europe is expected to hold the highest market share in RegTech in Finance Market.
We will send you an email with login credentials to access the report. You will also be able to download the pdf.
Basically choose Pay by Purchase Order when you are checking out. We will connect with you via email to set up your order.
Call us, email us, or chat with us! We encourage your questions and feedback. We have a research concierge team available at all times and included in every purchase.