A report by Enterprise Ireland has found the effects of the Covid-19 pandemic has sped-up the demand for the adoption of RegTech solutions in the Asia Pacific (APAC) region.
The report – titled The State of Regtech in APAC – was compiled by trade and innovation agency Enterprise Ireland.
According to IT Brief, the report highlighted that regulatory technology in Asia Pacific is facing a difficult challenge of bridging the divide between developed and developing economies in the region.
The global RegTech market is forecasted to grow by almost $10bn between 2020 and 2025, from $6.3bn to $16bn – a rate of over 20% per year. Furthermore, the APAC region is expected to see the highest growth rate during this time.
The report detailed that the need for governance and accountability, the emergence of new market participants as well as security concerns arising from disruptive technologies such as distributed ledger technology and AI, provide ‘regulatory impetus’ for the adoption of RegTech.
The report outlined key regional highlights in APAC, including that Covid-19 accelerated the transition to digitisation of financial services, most notably in the regulation, compliance and risk sectors.
It also found that the project cost of AML compliance across regions such as the Philippines, Singapore, Malaysia and Indonesia combined is approximated to reach $6.09bn annually – with over half of it in Singapore.
The progress in RegTech solutions in developed APAC countries is also starting to pick up speed and is driven by regulators’ need for increased oversight and a tighter regulatory environment.
The report also suggested that the rise of digital banks, P2P lending, digital assets and remote onboarding offer an opportunity for RegTechs to fill the gap for specialised solutions.
However, the research did alternatively find that long sales cycles challenge RegTech adoption in developed regions, while regulatory inertia and lack of proper regulatory process can hinder adoption.
Enterprise Ireland financial services and fintech lead for Asia Pacific Mo Harvey remarked that Covid-19 had compelled the financial services sector to see the value of digitalisation as a necessity.
She said, “It has become a way for organisations to improve their services in response to changing business and consumer needs. The need for regtech solutions also expands far beyond the financial services sector which is why this sector is growing so rapidly.
“This report is a compendium for anyone in the regulatory, risk or compliance functions of any company in the region, as well as for regtech companies which are looking to scale and expand into Asia Pacific.”
Harvey added that she believed Asia Pacific continues to be a ‘strategic’ region, and that Enterprise Ireland shares the commitment to supporting the development of a vibrant global RegTech segment and contributing to the global RegTech ecosystem.
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