RegTech Market Size Worth $42.73 Billion, Globally, by 2031 – Exclusive Report by The Insight Partners

The RegTech Market size was valued at US$ 7.55 billion in 2023 and is expected to reach US$ 42.73 billion by 2031 to record a CAGR of 24.2% from 2023 to 2031.

NEW YORK, Oct. 22, 2024 /PRNewswire/ — According to a new comprehensive report from The Insight Partners, the global RegTech market is observing significant growth. RegTech solutions offer a wide range of functionalities, including risk assessment, monitoring, reporting, and documentation. These technologies enable businesses to automate compliance processes, identify potential risks, and ensure that necessary controls are in place to mitigate those risks. By employing data analytics, RegTech platforms can analyze vast data volumes and provide real-time insights, allowing businesses to stay updated regarding changes in the regulatory landscape and make informed decisions. Thus, the RegTech market is expected to grow during the forecast period.

Global RegTech Market experiences growth due to digitization of business operations. Browse Detailed Insights: https://www.theinsightpartners.com/reports/regtech-market

The report runs an in-depth analysis of market trends, key players, and future opportunities. An increasing occurrence of fraudulent activities such as money laundering and phishing propels the revenue growth of the global RegTech market.

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Overview of Report Findings:

1. Market Growth: The global RegTech market size was valued at US$ 7.55 billion in 2023 and is projected to reach US$ 42.73 billion by 2030; it is expected to register a CAGR of 24.2% during 2023-2031.
2. Consequences of Fraudulent Activities in Financial Operations: RegTech tools can identify suspicious transactions, detect patterns of fraudulent behavior, and provide timely alerts to financial institutions. RegTech tools, such as advanced transaction monitoring systems, help financial institutions identify money laundering attempts by analyzing transaction data and detecting irregularities or patterns that may indicate fraudulent behavior. Further, the integration of technologies such as machine learning and artificial intelligence enables RegTech solutions to process large volumes of data and identify suspicious activities in real-time.
3. Digitization of Business Operations: Efficient and automated regulatory compliance solutions are becoming crucial for businesses with the increasing reliance on digital platforms and processes. RegTech solutions help them streamline compliance processes and ensure adherence to regulatory requirements. According to The Insight Partner’s analysis, more than 90% of organizations are engaged in making efforts to embrace digitalization; 85% of executives in top companies’ state that digitization is a key priority of their businesses. Additionally, more than 88% of all businesses have plans to implement a digital-first company strategy. RegTech solutions enable businesses to reduce manual efforts and minimize human errors.
4. Moreover, the adoption of RegTech solutions provides improved traceability and improves auditing of compliance activities. Their robust documentation and reporting capabilities make it easier for businesses to demonstrate compliance with regulatory authorities. Thus, the ongoing digitization of business operations propels the growth of the global RegTech market.
   
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5. Low Entry Barriers for SaaS-based Solutions: RegTech firms employ cloud technology and software-as-a-service (SaaS) capability to assist businesses in complying with laws more efficiently and affordably. RegTech solutions enable businesses to maintain a more consistent approach to data quality from the onboarding stage through continuous customer monitoring. Streamlining know-your-customer (KYC) checks and eliminating the manual processes of customer record verification can help improve compliance with anti-money laundering rules. The popularity of the SaaS model in RegTech and other industries can be attributed to its accessibility and low human intervention needs. These technologies offer new opportunities for RegTech companies to develop advanced solutions that address evolving regulatory challenges. Thus, the low entry barriers for SaaS-based RegTech solutions offer potential opportunities for the growth of the market.
6. Geographical Insights: In 2023, North America led the market with a substantial revenue share, followed by Asia Pacific and Europe. Asia Pacific is expected to register the highest CAGR during the forecast period.

Market Segmentation:

• Based on the component, the market is segmented into solutions and services. The solutions segment held the largest RegTech market share in 2023.
• Based on deployment, the market is segmented into on-premise and cloud. The cloud segment held the largest RegTech market share in 2023.
• Based on enterprise size, the market is segmented into SMEs and large enterprises. The large enterprises segment held the largest share in the RegTech market in 2023.

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• Based on application, the market is segmented into risk and compliance management, AML and fraud management, and identity management. The risk and compliance management segment held the largest RegTech market share in 2023.
• Based on industry verticals, the market is segmented into banks, insurance, and others. The banks segment held the largest RegTech market share in 2023.
• The global RegTech market is segmented into five major regions: North America, Europe, APAC, the Middle East and Africa, and South and Central America.

Competitive Strategy and Development:

• Key Players: A few major companies operating in the global RegTech market growth include IBM Corporation; Deloitte; Thomson Reuters Corporation; PWC; Broadridge Financial Solutions, Inc.; MetricStream Inc.; Jumio; ACTICO GmbH; Acuity Group Limited; and Ascent Technologies.
• Trending Topics: Fintech and AI Powered System.

Global Headlines on RegTech:

• “Ascent Technologies, a leading provider of AI-enabled compliance automation solutions for financial services companies, announced it had acquired Waymark, a UK-based provider of horizon scanning and compliance management workflow solutions.”
• “Deloitte introduced KYX (combining Know Your Client with Know Your Cargo) by Deloitte, powered by Nexxiot. Deloitte, known for its comprehensive range of services, including audit, consulting, financial advisory, risk management, tax, and legal services, is joining forces with Nexxiot, known for its expertise in digitizing supply chain assets, such as shipping containers and railcars.”

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• “MetricStream, the global market leader in integrated risk management (IRM) and governance, risk, and compliance (GRC), announced its partnership with Kinetix, a financial technology company specializing in AI-powered technology solutions for banking and capital markets. This new partnership will provide compliance teams with automated, AI-powered identification, extraction, and review of regulatory obligations that specifically apply to their organizations.”
• “Broadridge Financial Solutions integrated FundApps’ regulatory compliance technology with its buy-side portfolio and order management solution to enhance the platform with automated compliance monitoring and reporting tools.”
• “EquiLend, a global securities finance technology firm, and Broadridge Financial Solutions, Inc., a leading global Fintech company, announced a collaboration to enable straight-through processing (STP) for equity securities finance transactions to the National Securities Clearance Corporation’s (NSCC) central counterparty (CCP). This partnership will leverage EquiLend’s liquidity sourcing options and integrate them with Broadridge’s buy-side portfolio and order management solution. The integration will allow clients to trade and automatically submit transactions through Broadridge’s SFT Submission Service, providing a seamless process without significant operational changes. This collaboration aims to provide clients with the benefits of central clearing, including capital cost reduction and risk mitigation, while simplifying their compliance with regulatory requirements.”
• “PWC Aarata LLC introduced a compliance advisory service utilizing RegTech in collaboration with CUBE, a RegTech firm. This partnership marks the third collaboration between CUBE and the broader PwC global network, having previously worked with PwC UK and PwC Switzerland. The joint effort of PwC Aarata and CUBE aims to introduce a service called Know Your Regulations (KYR) in Japan. This service enables clients to accurately determine the regulations applicable to their businesses across various countries and regions, facilitating a more efficient and thorough understanding of their compliance status.”

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The Europe RegTech market is segmented into the UK, Germany, France, Italy, Russia, and the Rest of Europe. The UK held a significant RegTech market share in Europe. The adoption of technology in regulatory and compliance efforts in the UK has led to the emergence of new risks, such as cyber threats, fraud, and financial crimes. Presently, there are 25–30% of UK firms which have shown their preparedness to establish processes that align with regulatory guidelines. As a result, RegTech companies are actively exploring creative approaches to implement these systems more effectively and efficiently. Furthermore, in September 2017, the Financial Conduct Authority (FCA) partnered with R3, RBS, and other major banks to develop a prototype application using distributed ledger technology (blockchain) for regulatory reporting of mortgage transactions. This innovative prototype enables the automatic generation of receipts upon mortgage bookings, streamlining the regulatory reporting process.

The UK stands out among nations for its comprehensive set of regulatory reforms, including the Markets in Financial Instruments Directive (MiFID), European Market Infrastructure Regulation (EMIR), BASEL III, and Payment Service Directive (PSD). These regulations have been implemented to enhance liquidity and transparency within the financial system. Considering the uncertainties surrounding Brexit, RegTech companies must adapt their solutions accordingly when implementing RegTech solutions for major financial services firms. This flexibility ensures that the potential impacts and variations resulting from Brexit are effectively addressed and incorporated.

Blockchain technology has gained massive traction in the financial industry due to its potential to reduce the time taken for interbank transactions and improve operational efficiency. Many financial firms view blockchain as a mechanism to make transactions faster, minimize error rates, and eliminate the need for reconciliation. Blockchain technology is particularly well-suited is the payments space. By leveraging blockchain, financial institutions can bring down multiday settlement cycles to real-time, enhancing transaction operations. This has the potential to improve companies’ capabilities for Anti-Money Laundering (AML), Know Your Customer (KYC), and regulatory compliance data.

The huge adoption of blockchain technology results in faster transactions and settlements, benefiting both financial institutions and their customers. By eliminating the need for intermediaries, such as clearinghouses and custodians, blockchain can streamline the process and reduce costs. This can help banks avoid labor-intensive procedures with their customers and currency exchanges. In addition to speed and efficiency, blockchain technology offers enhanced security and transparency. Transactions recorded on the blockchain network are approved by multiple computers and devices, reducing the potential for human error and ensuring accurate records. The decentralized and immutable nature of blockchain makes it tamper-proof, providing a secure platform for financial transactions. Hence, all the associated benefits are anticipated to offer lucrative opportunities for market growth.

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Conclusion:

AI and ML are robust technologies that are deemed necessary for the automation of business operations. These technologies are also capable of spotting industry trends and providing quick and accurate insights. AI-based systems have the potential to analyze massive amounts of data to detect trends and abnormalities, enabling regulated companies to prevent fraud. To remain relevant in an ever-changing environment, firms should constantly develop their rule-based parameters. AI-powered RegTech solutions may help regulated organizations efficiently acquire, process, and analyze data for regulatory reporting as financial transactions expand.

Further, Blockchain is a decentralized, distributed digital ledger that records transactions safely and transparently. Its appeal in the RegTech business stems from its capacity to confer transparency, immutability, and record security. Creating a tamper-proof audit trail for regulatory reporting involves accurate and verifiable information. Blockchain is spread throughout a network of systems, with each machine keeping a copy of the ledger. Blockchain technology eliminates the need for central control, allowing the authentication and recording of transactions without the involvement of a trusted third party, thereby supporting the decentralization, security, and transparency features of RegTech solutions. Thus, the expansion of AI, machine learning, and Blockchain applications is emerging as a significant global RegTech market trend.

The report from The Insight Partners, therefore, provides several stakeholders—including component providers, system technology integrators, system manufacturers, and others—with valuable insights into how to successfully navigate this evolving market landscape and unlock new opportunities.

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