Regtech Industry Forecasted to Reach $99.28 Billion by 2033

The Brainy Insights estimates that the USD 12.92 billion in 2023 global Regtech market will reach USD 99.28 billion by 2033. With the help of Regtech Solutions, the financial sector has remained a primary focus. Yet, a new expanding trend is associated with the non-financial sphere, including healthcare and pharmaceuticals, energy and telecommunication industries. Increased regulatory demands in these industries also promise to provide opportunities for Regtech vendors to produce industry-specific solutions capable of addressing sector-specific compliance issues.

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In addition, there is an emerging trend in applying ESG - Environmental, Social, and Governance rules, which can be potentially interesting for Regtech providers to create tools related to ESG compliance. Today, it is not only the company's financial aspects that interest the regulators, investors and customers but also the sustainable business practices and corporate social responsibility. This aspect increases the need for Regtech solutions that will help the firm and other organizations monitor, evaluate, and report ESG performance accurately. Also, legal protection and Fintech and Regtech incubators started by regulatory authorities for their experimentation and collaboration provide opportunities for start-ups and innovators to test and ascertain the significance of the proposed Regtech solutions in testing ground scenarios. Engagement in the regulatory testing programs is crucial for the Regtech vendors because it allows them to develop products faster, get approval from the authorities, and get recognized and establish their presence in the market.

Key Insight of the global Regtech market

Asia Pacific is expected to witness the highest market growth over the forecast
period.

The Asia Pacific region is seeing tremendous growth, having colossal potential set by urbanization, higher disposable income, and the growing digital trend across industries. In turn, the growth of the business and its areas of activity increases the number and scope of regulations that must be obeyed; therefore, there is a significant need for Regtech products and services to simplify the associated compliance measures. Also, the region has some of the most progressive and maturing markets for financial services, such as India, Japan, Singapore, and Hong Kong. Conversely, the region's credentials in financial services and regulatory transformations to improve market transparency and safeguard investors were key drivers to getting Regtech solutions to meet compliance needs and avert financial distress. Importantly, Asian and Pacific regulators are working on the proposed regulation changes and increasing supervision to mitigate new risks, enhance market transparency, and advance sustainable growth. Regulatory compliance demands, including but not limited to AML, KYC and data protection regulations, are becoming increasingly stringent. Thus, Regtech needs to enhance compliance and minimize regulatory risks.

In 2023, the solution segment dominated the market with the largest share of 65.13% and revenue of 8.41 billion.

The component segment is split into solution and services. In 2023, the solution segment dominated the market with the largest share of 65.13% and revenue of 8.41 billion.

In 2023, the on-premises segment dominated the market with the largest share of 63.28% and revenue of 8.17 billion.

The deployment segment is classified into on-premises and cloud. In 2023, the on-premises segment dominated the market with the largest share of 63.28% and revenue of 8.17 billion.

In 2023, the risk & compliance management segment dominated the market with the largest share of 26.41% and revenue of 3.41 billion.

The application segment includes anti-money laundering & fraud management, identity management, risk & compliance management, regulatory reporting and regulatory intelligence. In 2023, the risk & compliance management segment dominated the market with the largest share of 26.41% and revenue of 3.41 billion.

In 2023, the large enterprises segment dominated the market with the largest share of 67.52% and revenue of 8.72 billion.

The enterprise size segment is divided into large enterprises and small & medium enterprises (SMEs). In 2023, the large enterprises segment dominated the market with the largest share of 67.52% and revenue of 8.72 billion.

In 2023, the banks segment dominated the market with the largest share of 27.14 and revenue of 3.51 billion.

The end user segment includes banks, energy and utilities, fintech firms, insurance companies, IT and telecom, public sector and others. In 2023, the banks segment dominated the market with the largest share of 27.14 and revenue of 3.51 billion.

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Advancement in market

In April 2023: Clausematch Inc. has launched its first partnership agreement and debuted as a partner with Várri Consultancy in the Middle East region. This strategic partnering aims to offer tailored industry GRC solutions that will address challenges in the region. The partnership seeks to help businesses faced with complex regulatory structures in the Middle East apply effective and tailored GRC strategies, with Clausematch's solutions matching up with Várri Consultancy's appetite for GRC solutions and knowledge.

Market Dynamics

Driver: Emergence of cloud computing.

Over the past decade, cloud adoption has witnessed a rapid increase and has continued to grow at an accelerated rate. One evolving trend that has emerged in this regard is in the context of what is known as regulatory technology or Regtech. These are cloud-based solutions that allow organizations to gain easy access to regulatory compliance tools and services across different areas. This aspect means the business can harness complex and advanced regulatory solutions quicker than required to buy complicated hardware and software. The scalable solutions provided by Regtech solutions are cloud-based, letting organizations integrate these solutions broadly without concern for their capability to meet increased demands as regulations change or the demands of their businesses evolve. Furthermore, the flexibility and mobility of cloud arrangements mean that the solutions can be run from anywhere, at any time, on any device. Cost-savings is another area that traditional Regtech solutions can claim as one of their main benefits when deployed in the cloud. Focusing on the pricing strategy, where clients pay only for the extent of their actual utilization of the services, the subscription services embedded in the cloud computing environment eliminate the capital-related costs connected with constructing and maintaining the appropriate in-house facilities. They can get credit for the usage of these resources, and this makes it much cheaper than the other options, probably due to other considerations like the fact that they are cheaper for SMEs or individuals with less capital. However, cloud solutions have transformed traditional compliance in organizations and provided a more efficient, affordable, and flexible solution in Regtech platforms implemented through cloud sources.

Restraint: High implementation costs.

While Regtech solutions have massive business potential, highlighting the extent of cost reduction over the long term feasible by streamlining processes, they also come with initial implementation costs that are not negligible. The cost associated with implementing Regtech solutions necessarily refers to the initial setup costs, which may include software and license costs, royalty, customization charges, and personnel training costs. However, there could be some costs, such as transferring data to the cloud or ensuring that the cloud solution meets the required legal requirements during its adoption. Through upfront costs, such organizations, even though they will benefit from various possibilities in the long term, may be unable to afford the Regtech solutions due to the costs involved. Also, for smaller organizations, considerable internal resources/employees or outsourcing could be required to implement and operate Regtech tools successfully. They may need to spend more time or money on external consultants or service providers for the external implementation, so now the initial implementation cost may increase.

Opportunity: Cross-industry collaboration.

Regtech vendors, financial institutions, regulatory bodies, and others have engendered a synergy that creates a platform for exchanging ideas and research to churn out harmonized benchmarks for effective and efficient compliance with regulations. Of course, by joining forces, Regtech vendors can gather useful information about the changing requirements and major pain points of financial institutions and other regulated companies. It helps them better understand the clients and allows them to design their solutions according to the pain areas related to compliance. Similarly, it serves financial institutions' interests when equipped with leading-edge Regtech solutions and solutions to help further fine-tune the processes involved in compliance to avert regulatory complexities, strengthen risk controls, and increase business performance. Here, other essential stakeholders are regulatory bodies, whose involvement is key due to their ability to offer advice, supervision, and regulatory sandboxes for enhancing the development and testing of new solutions within the regtech environment. Through interacting with the Regtech administrators and other key players in the market, the regulators can grasp new technologies and implement effective solutions to compliance problems with the regulation. It also leads to the variation of regulations and standards to suit the needs of consumers, thus improving the turnover of the regulatory system. In addition, cross-industry collaboration provides the opportunity for improved communication, whereby organizations can obtain the collective knowledge of their peers regarding best practices and what not to do. Thus, cooperation enhances ongoing work and contributes to developing shared best practices and compliance with accepted field guidelines. It also follows that frameworks adopted across sectors and geographical regions have the advantage of having a universally accepted language that stakeholders can use to innovate, plan and implement interventions.

Challenge: Integration with legacy systems.

Compatibility issues are more acute due to the inherent differences between traditional systems and contemporary Regtech tools. Being traditional non-cloud systems, legacy technologies may need to be improved in terms of APIs or data formats for seamless connection with cloud-based Regtech platforms or any other innovative technologies. Consequently, there may be an increased need for extra time horizons and efforts to integrate or modify old systems, which, in general, can become a challenging task. Furthermore, the degree of integration is very high due to customization issues, which must be addressed. Custom applications have a distinct design, database model and business processes that differ from those that the complex Regtech solutions can support purchased 'off-the-shelf.' Hence, it could be necessary to create specific connectors, extend correlations between the applications, or add interfaces as mid-tiers to fill the gap between conventional enterprise systems and innovative Regtech solutions. Thus, such customization requires special attention from professionals and can go on for a long time, raising the implementation expenses. Also, unemancipated systems are more complex, documented, and less known in future organizations than at the implementation time, thus adding challenges to integration. Thus, Regtech solutions may suffer from problems with the quality and consistency of the data used, as is the case with data extracted from legacy systems in organizations that may require assistance in locating and extracting required data to meet Regtech solutions' requirements and create and sustain a structured environment for emerging technologies.

Some of the major players operating in the global Regtech market are:

• Actico GmbH
• Acuant, Inc.
• Ascent
• Ayasdi AI LLC
• Broadridge Financial Solutions, Inc.
• ComplyAdvantage
• Chainalysis Inc.
• Deloitte
• FundApps
• Fenergo
• IBM
• IdentityMind
• Jumio Corporation
• London Stock Exchange Group plc
• MetricStream Inc.
• Nice Ltd.
• PwC
• Thomson Reuters
• Wolters Kluwer N.V.

Key Segments cover in the market:

By Component
• Solution
• Services
By Deployment
• On-Premises
• Cloud

By Application
• Anti-Money Laundering & Fraud Management
• Identity Management
• Risk & Compliance Management
• Regulatory Reporting
• Regulatory Intelligence

By Enterprise Size
• Large Enterprises
• Small & Medium Enterprises (SMEs)

By End User
• Banks
• Energy and Utilities
• FinTech Firms
• Insurance Companies
• IT and Telecom
• Public Sector
• Others

By Region

• North America (U.S., Canada, Mexico)
• Europe (Germany, France, the UK, Italy, Spain, Rest of Europe)
• Asia-Pacific (China, Japan, India, Rest of APAC)
• South America (Brazil and the Rest of South America)
• The Middle East and Africa (UAE, South Africa, Rest of MEA)

About the report:

The market is analyzed based on value (USD Billion). All the segments have been analyzed worldwide, regional, and country basis. The study includes the analysis of more than 30 countries for each part. The report analyses driving factors, opportunities, restraints, and challenges to gain critical market insight. The study includes Porter's five forces model, attractiveness analysis, Product analysis, supply, and demand analysis, competitor position grid analysis, distribution, and marketing channels analysis.

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