Spending on regulation technology globally will surge from $33billion in 2020 to $130bn by 2025, as banks increasingly look to Artificial Intelligence (AI) solutions for onboarding and to meet Know Your Customer (KYC) requirements, a report has predicted.
The rise will be fuelled by a 79% increase in digital onboarding, with 330 million new bank accounts opened digitally in 2025, according to findings by Juniper Research.
The report also predicts almost 18% of digital onboarding will use AI systems in 2025, compared to under 4% in 2020.
“The introduction of AI in areas like identity document verification means that businesses can finally move from their still largely manual processes to a fully digital model of KYC,” it said.
“This will provide significant cost savings of over $460 million in banking onboarding alone, and will also provide a significantly improved user experience.”
The report, titled Regtech: Market Opportunities, Challenges & Forecasts 2021-2025, also said banks globally are spending more than $287billion per year on compliance and regulation and businesses. It said: “What businesses must decide is the most effective way to complete these requirements, which is increasingly becoming an argument of which technological solutions to deploy.”
The report argues: “Regtech vendors must make AI a core part of their solutions, whilst still leveraging human intelligence to keep their decisions fully explainable. AI’s capabilities in automating manual tasks will allow businesses to begin to improve their levels of spending on regulatory compliance.”
The report is based on forecasts comprising 12,000 data points and in-depth analysis of 18 key regtech vendors.
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