Global revenues for regulatory technology (RegTech) are expected to rise to $7.2 billion by 2023, from $2.3 billion in 2018 – representing a compound annual growth rate (CAGR) of over 25 percent.
That’s according to a report published by Marketgrowthanalysis.com.
Compliance management, reporting, identity management, and risk management are among the disciplines included in the market breakdown, with compliance management solutions expected to grow at the highest rate over the next three years.
Such solutions help organisations in critical areas, such as anti-money-laundering (AML) and Know Your Customer (KYC) initiatives, along with meeting the requirements of regulations such as MiFID II, Basel III, PSD 2, Solvency II, and AIFMD.
Recent data protection regulations such as the EU’s GDPR and the California Consumer Protection Act (CCPA) in the US are also driving uptake of RegTech solutions, as organisations attempt to stave off severe financial penalties. This is particularly true for Europe, where fines can be as high as four percent of turnover for data protection breaches.
However, the Asia Pacific RegTech market is expected to grow at the highest CAGR to 2023, due to emerging financial hubs in Hong Kong, China, Singapore, and India.
While large enterprises are deploying the most RegTech solutions, SME deployments are expected to grow at a significantly higher CAGR to 2023 – partly due to widespread Software as a Service (SaaS) adoption reducing the complexities of manual risk assessment.
The emergence of technologies such as artificial intelligence (AI), machine learning (ML), and automation, is impacting market growth as organisations adopt RegTech for document verification, data insights, and risk reduction.