New reports forecast that the global Regulation Technology (RegTech) market size is to experience significant growth, surging from 2021’s level of USD $7.6 billion to $19.5 billion by 2026.
Financial institutions can use RegTech solutions to automate AML efforts, streamline and automate KYC data collecting procedures, identify and analyse key rules and related changes over time, and more.
RegTech solutions are not limited to a single type or category; they may be found in a variety of application areas, including risk and compliance management, identity management, regulatory reporting, fraud management, and regulatory intelligence. These solutions help businesses to comply with rules and compliance requirements in real-time, improve customer experience, manage risk, and make appropriate suggestions.
Regulatory intelligence is the process of continuously monitoring and tracking various regulations and compliances. RegTech providers offer several tools for identifying and interpreting regulatory changes by providing a real-time catalogue of various regulatory requirements.
RegTech solutions process targeted information and data from multiple sources, analyse data and generate an output that outlines the risks and opportunities for formulating the most appropriate regulatory strategy.
The adoption of RegTech solutions by financial institutions enables easy management of the changing regulatory environments and minimises the risks related to non-compliance. The providers of RegTech solution are incorporating AI and ML to automate the tracking of global regulatory data.
Organisations with over 1,000 employees are categorised as large enterprises. The adoption of RegTech solutions across large enterprises is higher as compared to SMEs, owing to the need to comply with comparatively larger regulatory requirements, and this trend is expected to continue during the forecast period.
Unlike SMEs, large enterprises have a large scale of business operations that are geographically dispersed. Large enterprises, mostly publicly traded companies, adopt regulatory programmes due to various regulations by their respective governments. Regulatory programmes enable the proficient functioning of compliance processes with cost cuttings, thereby driving technology innovation and enabling highly agile business structures.
Thus, the adoption of national and international regulatory programs related to data protection, identity management, and others has become highly imperative across large enterprises.
By Region, Asia Pacific is set to grow at the highest CAGR during the forecast period. The Asia Pacific is home to many developing economies, and many countries in this region are adopting new technologies to comply with procedures for increasing the efficiency of financial systems.
The key countries include Australia, Japan, Singapore, India, China, and New Zealand. The region is expected to witness the fast-paced adoption of RegTech software. Asia Pacific estimated to be the fastest-growing RegTech market owing to the rise in the adoption of new technologies, high investments for digital transformation, the rapid expansion of domestic enterprises, extensive development of infrastructures, and increasing GDP of various countries.
Experts say that the more rapidly growing economies, such as those of China, Japan, Singapore, and India, are increasingly turning to FinTech across multiple business processes to provide effective, future-proofed solutions.