Global RegTech spend is expected to exceed $204bn by 2026, which will account for 50% of all regulatory compliance spend for the first time.
This finding comes from a new study by Juniper Research. It claims the spend will grow from $68bn in 2022, representing a growth of more than 200% over the next four years.
This report also identified the integration of RegTech services with BaaS models as a key to realising this future market growth.
The ‘Regtech: Emerging Trends, Regulatory Impact & Market Forecasts 2022-2026’ predicts that BaaS models, which include outsourcing RegTech services like digital onboarding, will be crucial to accelerate AI-based automation for document verification and KYC processes.
Its report states that AI-powered onboarding enables financial institutions to benefit from real-time progress reporting and automation, which cane reduce compliance costs and improve customer experiences.
The research claims 26% of digital onboarding processes in banking will leverage AI by 2026, compared to just 8% in 2022.
Additionally, the study claims RegTech will legerage BaaS models to expand the use of AI in banking for tasks such as fraud detection and mitigation.
Research author Harshada Thok said, “Whilst the current benefits of AI are clear to RegTech vendors, the immediate focus must be on ensuring the algorithms are fed the most relevant data to maximise their efficiency in verifying digital identities and future use cases. In turn, this will provide a differentiation point for RegTech vendors in an increasingly competitive market.”
Outside of banking, Juniper Research claims RegTech has strong opportunities within the digital healthcare and online gambling sectors and regulations grow in these markets.
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