An Overview of RegTech in Financial Services

Executive Summary

In this report Opimas lays out the overall landscape for RegTech in the financial services industry.  The seven segments included cover: Bank Regulatory Reporting, Fund Reporting, Regulatory Risk Calculations, Know Your Customer (KYC)/Anti-Money Laundering (AML), Trade Surveillance, Communications Surveillance, and Trade and Transaction Reporting.

Overall, financial institutions globally spend about US$26 billion per year on these compliance activities, including US$11 billion on related technology or RegTech. This figure is growing rapidly at about 14% annually.

The largest segments for RegTech spending include Communications Surveillance and Anti-Money Laundering, each of which exceed US$2.5 billion annually.

The level of fines levied by regulators in 2021 reached its lowest level in a decade, at only about US$5 billion. However, 2022 has seen a big increase so far, and Opimas estimates that year-on-year, we will see more than a doubling to reach US$13 billion. A number of these fines recently have focused on Communications Surveillance violations.

The number of regulations continues to grow and there is a particular emphasis on ESG-related reporting currently. Also, regulators globally are emphasizing more granular transaction- or position-level information, rather than completing and submitting reports in template form. Regulators are also placing a greater emphasis on data quality and data lineage within RegTech.

The strong growth in spending on RegTech will continue for the foreseeable future, even though the pace at which new regulations are introduced may wax and wane.


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