A wave of innovation, built on a cloud-based technology, is fundamentally transforming financial institutions that are spending enormous sums of money complying with ever-increasing international regulations. The RegTech era is creating huge opportunities for first movers according to TABB Groups report Financial Markets: Embracing RegTech
Some of the largest financial institutions are spending more than $1 billion per year on increasing regulatory compliance and controls, and the average firm dedicates between ten and fifteen percent of its staff to compliance area, TABB Group found. Between 2009 and 2014, regulators published more than 50,000 documents – compared to about 10,000 in the previous five-year period. This incentivizes firms to look to cloud-focused, enterprise-wide approaches based on the latest financial technology (FinTech) innovations to solve their compliance challenges, as well as reduce costs and create competitive advantage.
It is an exciting time for regulatory compliance as a virtuous circle of RegTech, cloud and the financial services market helps transform compliance from a cost to profit center, said Monica Summerville, TABB Groups London-based senior analyst who authored the report with TABB Group FinTech Research Head Terry Roche and Senior Analyst Dayle Scher in New York.
We also found opportunities for industry collaboration on non-differentiating activities and compliance standardization, Summerville said. The growing number of regulatory sandboxes and cross-regional alliances by regulators and supervisors offers the potential for first mover advantage in identifying opportunities to address industry wide issues
The relatively new market segment, dubbed RegTech, utilizes a FinTech-based approach to meet regulatory, risk management and surveillance requirements. This segment is growing quickly, with solutions offered by both incumbent and start-up vendors, the latter having received significant venture capital (VC) investment in the last four years. The TABB Group report details the current market and technology drivers behind the embrace of RegTech by the financial industry, discusses benefits of a RegTech approach, and reviews the state of todays RegTech ecosystem. The research presents both use cases and case studies for RegTech within the securities and capital markets segment of financial services.
The comprehensive report is now available for download by TABB Financial Markets: Embracing RegTech
