Global regtech spend to exceed $204 billion by 2026: Juniper

Global regtech spend is set to grow from $68 billion in 2022 to $204 billion in 2026 according to new research by Juniper.

Regtech is a subset of fintech that encompasses technology facilitating regulatory requirements of the financial services ecosystem, according to authors of a recent whitepaper on the topic.

For the first time ever, regtech will account for more than half of all regulatory compliance spend, as it grows by 200 percent in the next four years.

In the last 10 years, a number of regulations have come into place including Anti-money laundering and MiFID II that have spurred the rise in regtech firms.

“Policy makers, regulators and shareholders wants to ensure the effectiveness of regulatory requirements. These increasing compliance-related cost pressures, coupled with low interest rates and a slow economy have affected the budgets,” the authors say.

Digital onboarding and AI

Digital onboarding has been named a crucial regtech area going forward, as AI embeds itself in the digital onboarding process.

In order to cope with scalability, time and cost savings, deliver superior user experience and continual improvement, businesses are advised to consider their digital onboarding transition, and outsource regtech services to accelerate AI-based automation.

“AI-powered onboarding enables financial institutions to benefit from real-time progress reporting and automation, which help meet rising client expectations and reduce compliance cost,” the authors write.

“AI offers the ability to refine its own performance over time; increasing approval rates while eliminating fraud. This process takes intensive training and customisation of rules-based systems under a non-AI model.”

According to the report, by 2026, 26 percent of digital onboarding processes in the banking market will use AI systems, growing from 8 percent this year.

“Regtech will leverage BaaS models to swiftly expand the use of AI in banking for more comprehensive tasks, such as fraud detection and mitigation.”