Despite the booming growth of the RegTech sector in recent years, barriers still remain, particularly in the area of third-party adoption.
A key question surrounding this is what exactly are the barriers that stand in the way for vendors and financial institutions. The Global State of RegTech 2026 report – which was co-authored by RegTech Analyst and Parker & Lawrence Research – recently quizzed both vendors and financial institutions to gather viewpoints on what they themselves see as the roadblocks in the way of adoption.
This is the second discussion point pulled from the report, with the first one focused on the emerging fault-lines surrounding RegTech investment priorities of vendors and institutions. One of the most surprising findings from this was that a whopping 91% of vendors see AI and automation will see the greatest level of investment, compared to only 44% of institutions.
In an industry that is growing as strong as the RegTech space, the most important thing for many firms is being able to identify potentially sticky areas that could cause problems for adoption of their technology later down the line. A big barrier across any sector, especially in those that rely on technology, is not having the platforms that meet the need of the moment they exist in.
One particular area where there was similar and strong agreement by both vendors and institutions was on legacy system integration, with 52% of institutions suggesting this and 58% of vendors putting it forward. This isn’t a surprise, as any institution or vendor who is likely to leverage RegTech to boost their operations will have to rely on platforms that are compatible with RegTech solutions.
Other areas of agreement included lack of clear ROI/business case and change management/skills gaps, with the former getting 42% backing from institutions and vendors coming to 38%. On the latter, 43% of vendors backed this and 34% of institutions.
Both of these areas could be seen as mostly outside the critical other areas of debate, as across any industry being able to demonstrate clear return on investment is 101 for any private sector business. Skills are another area that must develop in line with technological innovation, so the mutual agreement comes as little shock.
However, there were some areas of strong diversion. For example, lack of budget was viewed by vendors as a much bigger barrier to adoption, with almost half (47%) of vendors picking this. Only 17% of institutions chose this. Fragmented internal ownership was another fault-line, with 50% of vendors suggesting this compared to only 22% for institutions.
Other areas of big difference were internal data quality and availability, with institutions viewing this as a big barrier at 47% compared to only 23% of vendors. The high cost of RegTech solutions was perceived by 40% of institutions as a key barrier, whilst this number only came to 13% for vendors.
Vendor fragmentation and overlap were also seen as key barriers, with 30% of financial institutions perceiving this and 40% of vendors viewing this.
What this means
The strongest message from the findings is that vendors and financial institutions are often diagnosing different problems. Vendors tend to believe adoption is being slowed by organisational hurdles such as fragmented ownership, constrained budgets and the difficulty of securing internal buy-in.
Financial institutions, meanwhile, are more focused on operational realities. Poor data quality, the cost of deploying new technology and the challenge of integrating with existing infrastructure are seen as more immediate obstacles than simply finding budget.
This suggests many RegTech providers are selling into organisations whose priorities are shaped less by willingness to invest and more by the practical complexity of implementation.
For those who want to be successful in adopting the strongest RegTech platforms going forward, being able to contemplate the biggest barriers and overcoming them will be critical.
Download the full Global State of RegTech 2026 report here.
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