- Increasing demand for RegTech, owing to looming regulatory burden is one of the significant factors influencing the market growth
- Market Size – USD 5.32 billion in 2019, Market Growth - CAGR of 19.5%, Market Trends – Increased funding for RegTech in developing countries
NEW YORK, June 15, 2020 /PRNewswire/ -- The global RegTech market is expected to reach USD 21.73 Billion by 2027, according to a new report by Reports and Data. RegTech is beneficial in helping financial institutions in the management of regulatory processes within the financial industry through technology. Various challenges faced by financial institutions in risk management and RegTech, by way of digitization and automation, delivers an economical solution to resolve such challenges and comply with the regulatory standards. It assists financial institutions in the collection of data and automatic generation of reports in accordance with the format and schedule mandated by numerous regulatory bodies. Moreover, it reinforces the regulatory and supervisory capability of the regulators by making effective use of data in a unified format to supervise the rapid developments in the sector.
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Increasing demand for RegTech, owing to looming regulatory burden, is a vital factor in driving the market growth. According to the study, the cost of compliance across all banks from 2014 to 2016 averaged approximately 7.0% of their noninterest expenses. This regulatory burden was much larger for smaller banks with assets below USD 100.0 million, and the cost of compliance averaged about 10.0%. In contrast, expenses for banks with assets of USD 1.00 billion to USD 10.0 billion averaged a little above 5.0%.
Additionally, increased funding for RegTech is an instrumental factor in boosting market demand As the FinTech industry of India get regulated with newer laws, the funding into the RegTech startup witnessing an increase. The private funding into the RegTech industry in India surged by more than five times at USD 43.5 million in 2019 as compared to USD 7.3 million in 2018. A few of the top-funded Indian RegTech startups include CrediWatch, Simility, Fintellix, and Digio, among others. Besides, investments in Fintech firms and startups worldwide increased more two-fold to USD 15.00 billion in 2017, whereas in 2018, it was USD 31.00 billion, which in turn, is driving the growth of the market.
However, varying regulations across the globe may create hindrances in the growth of the market in the upcoming years.
The deployment of information technology in financial institutions to cater to tighter regulatory standards is poised to continue to grow in the current year. Even though, owing to the uncertainty about COVID-19, the adaption rate is very much unclear. Financial institutions may have to struggle while emphasizing on the immediate effect of the pandemic. While several firms have ascertained significant limitations to their existing processes, owing to a combination of lesser staff and staff forced work from home, the sales life cycle gets longer due to reduced business activities i.e., even though there is a stronger traction for RegTech solutions, the purchase, and implementation of such technology are much longer processes for a majority of the firms.
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Further key findings from the report suggest
- By organization size, large enterprises contributed to a major market share in 2019. As the challenges faced by financial firms are anticipated to continue to get more complex, such organizations must have a long-standing, technology-driven platform to comply with regulatory compliance and end-to-end governance.
- By the deployment model, cloud-based deployment is likely to witness a faster growth rate of 22.3% in the forecast period. RegTech firms deploy cloud computing to deliver their solutions using a SaaS (software as a service) deployment model. These SaaS solutions help enterprises to comply with regulatory standards. Cloud computing decreases the cost for hardware and software, enabling data-storage more economical for RegTech companies.
- By application, risk & compliance management contributed to the largest market share in 2019 and is likely to grow at a rate of 19.4% in the forecast period. It helps in detecting the present state of compliance and forthcoming regulations. Also, it helps in mitigating regulatory risk, simplifying the governance, assessment of risk exposure, and anticipation of future threats.
- North America dominated the market in 2019 and is likely to grow at a rate of 18.7% in the forecast period. The market dominance of the region is attributed to an increase in fraudulent activities, increasing awareness about RegTech, and framing stringent regulatory policies, among others
- Key participants include Deloitte, ACTICO, IBM Corporation, Broadridge Financial Solutions, PWC, McAfee, London Stock Exchange Group, Thompson Reuters, Jumio, and NICE Actimize, among others.
- In October 2019, Confinale signed an agreement with RegTech firm ACTICO to implemented ACTICO's Compliance Suite for several banks in Germany and overseas. The partnership is a successful approach to applying bank compliance projects with high speed, quality, and security.
For the purpose of this report, Reports and Data have segmented the global RegTech market on the basis of organization size, deployment model, application, and region:
Organization Size Outlook (Revenue, USD Million; 2017-2027)
- Small & Medium-Sized Enterprises
- Large Enterprises
Deployment Model Outlook (Revenue, USD Million; 2017-2027)
- On-Premise Deployment
- Cloud-Based Deployment
Application Outlook (Revenue, USD Million; 2017-2027)
- Risk & Compliance Management
- Identity Management
- Regulatory Reporting
- Fraud Management
- Regulatory Intelligence
Regional Outlook (Revenue, USD Million; 2017-2027)
- North America
- Asia Pacific
- Latin America
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