A-Team Insight Blogs

Share article

The global RegTech industry generated an estimated $5 billion in revenue last year, as regulatory changes and technological advancements drove a surge of new startups in the past five years – according to a new Global RegTech Industry Benchmarking Report released this week by the Cambridge Centre for Alternative Finance (CCAF).

Sponsored by EY Japan (with field research supported by the International RegTech Association and the Australia-based RegTech Association), the study found that as of 2018, RegTech firms employed an estimated 44,000 people globally, having raised about $9.7 billion in external funding to date. About 60% of all RegTech vendors in the CCAF research sample were founded between 2014 and 2018, while 82% had their first funding round during this period.

Unsurprisingly, the report found that the industry is already highly international, with fewer than one-third of RegTech vendors active in just one market and over a third present in five or more jurisdictions. Nearly two-thirds of vendors had a physical presence or significant market share in the UK, and nearly half have the same in the US.  There is also significant activity in Australia, Canada, Singapore, Hong Kong, Japan, Luxembourg, Switzerland, Ireland, Germany and France.

At the core of the industry lie a few key technologies – including the cloud, natural language processing, machine learning, and big data analytics. Notably, the survey also found that data demands drive innovation – with RegTech solutions most strongly in demand from firms that have to report large volumes of data to standard formats for supervisory purposes, or those that face substantial fines or criminal sanctions as a result of non-compliance with specific regulations.

Profiling is the largest segment of the market by funds raised to date, followed by due diligence and dynamic compliance. The largest share of turnover was claimed by firms in the reporting and dashboards and risk analytics segment.

However, challenges still face the industry – including long sales cycles, complex IT planning within client institutions, difficulties in establishing trust, and high levels of competition – which have left some vendors struggling to gain traction.

A handful of larger vendors have so far dominated most funding and commercial activity; but half of those surveyed in the report had raised less than $1.6 million; while over a quarter had received no formal external funding. A solution to this could be a move towards partnerships, co-creation with clients and collaboration with other start-ups, suggested CCAF.

“The findings point to a rapidly growing and technology-enabled global industry serving an increasingly diversified customer base, yet still working to establish trust and credibility as it matures,” says Bryan Zhang, CCAF Executive Director.

“A variety of key players, including regulated companies, regulators, technology start-ups, and research institutions, can contribute to each other and mutually benefit, and further drive innovation in the entire society,” adds Keiko Ogawa, Partner and Regtech Leader at EY Japan.

Leave a comment

Your email address will not be published. Required fields are marked *

*

Related content

WEBINAR

Recorded Webinar: Client onboarding – how developments in tech and automation can help optimise entity data management and improve KYC

Financial services providers spend billions of dollars a year on Know Your Customer (KYC), client onboarding and due diligence. Yet even with vast investment, these processes rarely run smoothly. They also fall short of delivering a good client experience and fail to cut down on financial crime. At the heart of the problem–and solution–is data....

BLOG

The Model Muddle

By Richard Moss, Product Manager, AxiomSL. Many financial institutions (FIs) find themselves wondering how they became mired in a credit model muddle that is dragging down their profitability. They want to know how they can get out of this swamp. Traditionally, FIs heavily relied on economic capital models to support business decision-making. Then, with the...

GUIDE

Regulatory Data Handbook 2019/2020 – Seventh Edition

Welcome to A-Team Group’s best read handbook, the Regulatory Data Handbook, which is now in its seventh edition and continues to grow in terms of the number of regulations covered, the detail of each regulation and the impact that all the rules and regulations will have on data and data management at your institution. This...