The RegTech market size was valued at around US$ 8.3 billion in 2021 and is expected to grow at a robust CAGR of 21.7% over the forecast period 2022-2028. RegTech (Regulatory Technology) is still a relatively new field, however, it is developing rapidly. It will assist companies in the short term with automating the more tedious compliance procedures and lowering operational risks related to fulfilling compliance and reporting obligations.
RegTech uses blockchain, AI, natural language processing, machine learning (ML), and cloud computing to standardize compliance processes, find abnormalities, and fix technical problems with digital payment networks. It offers improved operating speeds, agility, integration, and analytics capabilities and aids in the digitalization of manual reports and compliance processes. RegTech is therefore heavily utilized in many banking and financial services, including transaction monitoring, anti-money laundering (AML) screening, client credit rating, trade data tracking, fraud prevention, and risk analysis.
The factors driving the growth of the RegTech market include increasing incidences of cybercrimes resulting in financial and data loss, favorable government policies and initiatives, integration of AI and IoT, digitization, and growth of the BFSI sector. However, market growth is expected to get hampered by factors such as high software maintenance costs, data privacy issues, third-party risk, and legacy systems.
The AML and fraud management application is dominating the RegTech market due to an increase in financial crimes
The majority of businesses consider that they must demonstrate customer due diligence (CDD) to mitigate risks of money laundering and financial crimes. These industries have historically been the main forces behind the adoption of RegTech due to its high stakes and data-intensive nature. Offerings focused on non-financial regulation, including labor law or competition, are much less popular. Vendors with nonfinancial clients are clearly more likely to have an offering focused on privacy and data protection or fraud detection than those who are only focused on the financial services industry. AML and CDD offerings also seem to be reasonably in demand among non-financial sectors.
It has become increasingly important to preserve transparency in financial rules and to enhance Know Your Customer (KYC) and Anti Money Laundering (AML) efforts by applying regulatory technologies thus acting as major propellers for market growth. Additionally, as government rules and policies change, there is an increasing need in the market for major improvements to reported data quality across numerous regimes and countries, which is boosting the growth of the RegTech market.
The UK leads the Europe market due to the rise in GDPR issues
One of the factors is the established regulatory framework in many developed regions like North America and Europe. In Europe, it is anticipated that in the next few years, the growth of the adoption of RegTech in the MiFID II legislation of the European Parliament will increase dramatically. The world’s major financial service centers are in the UK and the US thus providing significant market growth opportunities. The RegTech market is globally dominated by Europe and North America.
In the last few years, agencies in the US have undertaken numerous initiatives which have facilitated market growth. For instance, to identify indicators of broker-dealer wrongdoing, the US Financial Industry Regulatory Authority (FINRA), employs powerful AI and enormous amounts of data. However, due to the emergence of various RegTech companies, the market is flourishing in the developing nations. In the Asia Pacific, fintech solutions are being implemented across various corporate processes in fast-growing economies like China, Japan, Singapore, and India in order to offer practical answers thus impacting the market growth positively.
Market Structure and Competitive Landscape
Some of the prominent players that contribute significantly to the global RegTech market growth include Deloitte Touche Tohmatsu Limited, Thomson Reuters, PricewaterhouseCoopers, Ascent Technologies Inc., Broadridge Financial Solutions Inc., Wolters Kluwer NV, IBM Corporation, Accuity, MetricStream, and Trulioo among others.
These players adopt various strategies in order to reinforce their market share and gain a competitive edge over other competitors in the market. Partnerships and collaborations, mergers & acquisitions, and product launches are some of the strategies followed by industry players. Some of the key developments in the global RegTech market include,
- In January 2022, Trulioo announced its partnership with PassFort, a leading provider of software-as-a-service regulatory technology solutions. By working together, PassFort and Trulioo will give regulated businesses a way to digitally transform Know Your Customer (KYC) and Know Your Business (KYB) processes, regardless of where in the world the business is located or where its clients are located.
- In December 2021, MetricStream announced greater insight into third- and fourth-party risks, intuitive risk assessments, expanded compliance risk management tools, and new native capabilities for advanced cyber risk quantification and simulation to quantify cyber risk in monetary terms.
- In June 2021, Ascent, an AI-based solution that automatically creates a customer’s regulatory requirements and updates them as legislation changes announced its partnership with Resolver Inc. to provide customers with the regulatory obligation. Through this collaboration, Resolver’s compliance management solution will be used to streamline and remove any uncertainty on which duties are essential to an organization.
Key Market Segmentation
RationalStat has segmented the global RegTech market on the basis of deployment mode, organization size, application, end user, and region.
- By Component
- By Deployment Mode
- By Organization Size
- Large Enterprises
- Small & Medium Enterprises (SMEs)
- By Application
- Risk & Compliance Management
- Identity Management
- Regulatory Reporting
- Anti-money Laundering (AML) and Fraud Management
- Regulatory Intelligence
- By End User
- Banking, Financial Services and Insurance (BFSI)
- IT & Telecom
- Energy & Utilities
- Others (Government & Public Sector)
- By Region
- North America
- Latin America
- Rest of Latin America
- Western Europe
- Rest of Western Europe
- Eastern Europe
- Rest of Eastern Europe
- Asia Pacific
- South Korea
- ASEAN (Indonesia, Vietnam, Malaysia, etc.)
- Rest of Asia Pacific
- Middle East & Africa
- South Africa
- Rest of the Middle East & Africa
- North America
RationalStat has developed a state-of-the-art research methodology to crunch numbers and provide the best possible real-time insights to clients. We combine a varied range of industry experience, data analytics, and experts’ viewpoint to create a research methodology for market sizing and forecasting.
RationalStat combines a mix of secondary sources as well as primary research to assess the market size and develop a forecast. Key steps involved in accurately deriving the market numbers are:
- Defining the problem by understanding the type of market and data required by the client.
- Data gathering and collection through relevant paid databases, publicly available sources, company reports, annual reports, surveys, and interviews.
- Formulating a hypothesis to create market numbers, forecast, influencing factors, and their relevance.
- Evaluating and analyzing the data by referring to data sources utilized and leveraged.
- Validating, interpreting, and finalizing the data by combining the details gathered from primary and secondary sources with the help of experienced analysts.
- Annual reports, company filings, investor presentations, product catalogs and company documents
- Industry and market-related documents available in the public domain
- Paid database including Bloomberg, Factiva, S&P Capital IQ, FactSet, Refinitiv Eikon, ICIS, EUWID, Thomson Reuters, among others
- Whitepapers, research papers, and industry blogs.
Why Buy this Report?
The report is intended for RegTech providers, legal firms, financial institutions, government organizations, educational organizations, regulatory agencies, and market research firms, among others. The report provides an in-depth analysis of market size, consumption pattern, ongoing market trends and challenges, and future market opportunities. The report will serve as a source for a 360-degree analysis of the market thoroughly delivering insights to clients to find the right answers to their business questions.
Frequently Asked Questions (FAQs)
Global RegTech Market is expected to grow at a CAGR of approximately 21.7% during the forecast period 2022-2028.
Western Europe holds a prominent share of the market.
The global market for RegTech was US$ 8.3 Billion in 2021.
The rising number of fraudulent activities and ongoing technological innovations are expected to drive the growth of the global RegTech market.
Major companies operating in the Global RegTech market are Deloitte Touche Tohmatsu Limited, Thomson Reuters, PricewaterhouseCoopers, Ascent Technologies Inc., Broadridge Financial Solutions Inc., Wolters Kluwer NV, IBM Corporation, Accuity, MetricStream, and Trulioo among others.