An overwhelming majority (85%) of financial services professionals predict that demand for RegTech solutions will continue to grow until at least 2020, as the wave of new regulation a decade after the financial crisis shows no sign of abating.
Over 500 respondents in the asset management, corporate, capital markets and private wealth sectors took part in a recent survey by Intertrust, a Netherlands-based provider of global trust and administration services, to identify the impact of RegTech on mounting regulatory and compliance obligations. And the results were worrying. Over 40% of companies reported concerns over a skill shortage in RegTech and compliance, with most organisations are turning to external organisations for assistance.
Private equity professionals predict the highest levels of demand for RegTech solutions with 97% expecting to see a continued rise: followed by those operating in the capital markets (92%) and corporate services (86%) sectors.
“Following the recent onslaught of real game changing tax and regulatory regimes such as GDPR, MIFID II and DAC 6, firms have become increasingly reliant on RegTech solutions. RegTech has evolved from being considered a very niche concept reserved for those big enough to support the investment to becoming a mainstream solution for every financial institution, no matter the size or budget,” says Intertrust CEO Stephanie Miller. “This development is mostly driven by the availability of third party providers providing cost effective expert solutions allowing access to the best RegTech without requiring the capital investment.”
The growing awareness of RegTech is resulting in greater investment –in January 2019 a follow-up survey found that over half (55%) of corporates have increased the size of their compliance teams in response to the mounting regulatory pressures that have emerged over the last five years, while 38% said they had invested in new technology solutions and 87% predict that their demand for RegTech solutions will increase in the next two years.
In addition to regulatory compliance, Intertrust has identified several ways that corporates are already adopting innovative technology to modernise their core business operations. A leading driver is the acquisition of off-the-shelf products, cited by 63% of corporates; followed by hiring technology experts (50%); investing in research and development into proprietary technology solutions (33%); and undergoing M&A / JV activity to acquire new solutions (20%).
“Disruptive technology is playing an increasingly significant role in the development of corporates across all sectors for both compliance and day-to-day business operations,” comments Jan Willem van Drimmelen, Global Head of Corporate Services at Intertrust Group. “This presents a number of challenges for corporates that must decide how best to adapt to a changing environment.”