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Friday, April 02, 2021

Regtech Solutions will Transform Regulatory Compliance

The emerging concept of regulatory technology (Regtech) has taken on new importance within the financial services ecosystem and beyond. During the COVID-19 pandemic, regulatory compliance has become more complicated. Today, Regtech is a highly dynamic and rapidly evolving market. 

Regtech solutions will also become important within commercial areas other than financial services, as more regulated vertical industries seek to ease their government oversight compliance burdens.

Meanwhile, digital onboarding and how to 'onboard remotely' in a safe, user-friendly way that respects Know Your Customer (KYC) regulations has become of critical importance during the global pandemic.

Global Regtech Market Development

According to the latest worldwide market study by Juniper Research, spending on Regtech systems that enable banks and other heavily regulated sectors to meet their ongoing compliance requirements will exceed $130 billion in 2025 -- that's up from $33 billion in 2020.

Juniper analysts found that this 290 percent market growth is being fueled by greater use of artificial intelligence (AI) to automate manual tasks and the transition to digital onboarding, which have emerged as critical capabilities in the wake of the global COVID-19 pandemic.

The Juniper research findings recommend that Regtech vendors make AI a core part of their overall solutions, while still leveraging traditional human intelligence to keep their decisions fully explainable.

Furthermore, the application of AI capabilities in automating manual tasks will allow more businesses to begin to improve their levels of spending on regulatory compliance technologies.


According to the Juniper market assessment, nearly 330 million new bank accounts will be opened via digital onboarding solutions in 2025 -- up from 184 million accounts in 2020.

Ultimately, consumers across the globe will continue to use digital onboarding in ever-greater numbers, and Regtech vendors must design long-term strategies that support this ongoing effort.

"Digital onboarding has been accelerated by lockdown measures, but ultimately, it is an acceleration of existing trends towards greater digital engagement. Businesses should rebuild their KYC and onboarding processes from the ground up to take advantage of these new capabilities, or they will lose ground to digitally native competitors," said Nick Maynard, lead analyst at Juniper Research.

The comprehensive research also found that almost 18 percent of global financial service provider's digital onboarding in 2025 will use AI systems, compared to just under 4 percent in 2020.

Outlook for Regtech Applications Growth

The global market study identified that the introduction of AI in areas such as identity document verification means that businesses can finally move from their still largely manual processes to a fully digital model of KYC. 

This transition will provide significant cost savings of over $460 million in banking onboarding alone, and will also provide a significantly improved financial service customer user experience.

I believe that AI technology will be increasingly central to the digital onboarding process -- whether this is in automatically verifying identities using 'selfie onboarding' or building and checking digital identities against KYC data.