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RegTech, the new fintech that benefits from regulations

FinTech is booming due to the increasing opportunities it offers to financial institutions. But within this category, it is RegTech that panics the meters. UK is home to most of the FinTechs with an average turnover of €23 billion this year. RegTech, the sub-category of FinTech, facilitates the use of new technologies to comply with current or future regulatory requirements.

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FinTech is booming due to the increasing opportunities it offers financial institutions. However, within this category, it is RegTech (or Regulatory Technology) that is rising the fastest. Called the “new fintech”, it meets the needs of organizations to strengthen their regulatory obligations.

FinTech (Finance and Technology Contracting) helps organizations improve their customer proposals while increasing the efficiency of their operations.

This category includes:

  • Fintech BtoCs: “neo banks”, payment applications, asset management tools;
  • BtoB: corporate financial services;
  • Fintech BtoBtoC: participatory financing platforms, crowdlending, crowdequity (capital financing);
  • Insurtech: comparator, collaborative insurance;
  • Regtech: companies that offer technological solutions to improve compliance processes.
RegTech
Called the “new fintech”, regtech meets the needs of organizations to strengthen their regulatory obligations (Source)

There are still few studies on these activities other than fundraising summaries

For information, Ledger is the French FinTech specialized in cryptomime security, which carried out the largest round of funding in 2018: $61 million.

By 2018, Sia Partners-AEC Fintech had studied 80 European Regtech companies. More than a third (34.6%) specialized in identity management and control (based on AI-based solutions) and more than a quarter (27%) focused on regulatory reporting management.

This study also indicated that 47% of these RegTechs were based in the United Kingdom. Recent studies, including that of CDCA (Charles David Churchill Associates), on the evolution of fintech and regtech in the British market, are therefore interesting to present.

The United Kingdom is home to most of the fintechs with an average turnover of $23 billion this year. It was also in the United Kingdom that fintechs raised the most financing, ahead of the United States and China with around $16 billion. And the investments will continue.

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However, the future is difficult to imagine precisely

The study found that fintech’s regulation, relative to large financial institutions, is a problem for regulators.

And with the arrival of many heavy goods vehicles in this seducer, such as Apple, the future of fintech regulation is still very uncertain. “Apple’s bold entry into the fintech space may require additional regulatory measures to better protect user data and display more explicit terms and services” warns CDCA.

A study conducted by Industry Sandbox Consultation showed that the best financial institutions have increased their use of fintech services, particularly in the area of business development.

RegTech solutions
The RegTech market will reach $12.3 billion by 2023. (Source)

The next step should be RegTech’s strong growth

This sub-category of fintech facilitates the use of new technologies to comply with current or future regulatory requirements.

RegTech’s tools can help companies monitor their suppliers and manage their relationships with them by helping, for example, to keep detailed records of their interactions.

A KPMG study indicates that by 2020, regtech will account for up to 34% of all regulatory spending.

It is therefore not surprising that regtech’s growth figures are so high. This market is expected to reach $12.3 billion by 2023. The compound annual growth rate (CAGR) is expected to be 23.5% until 2023.

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(Featured Image by Free-Photos)

First published in itsocial, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Anthony Donaghue writes about science and technology. Keeping abreast of the latest tech developments in various sectors, he has a keen interest on startups, especially inside and outside of Silicon Valley. From time to time, he also covers agritech and biotech, as well as consumer electronics, IT, AI, and fintech, among others. He has also written about IPOs, cannabis, and investing.