AI may dominate discussions around the future of compliance, but the latest findings from the Global State of RegTech 2026 report suggest that not everyone is investing in that future in the same way.
The Global State of RegTech 2026 report, which was co-authored by RegTech Analyst and Parker & Lawrence Research – dived deep into a number of key touchpoints within the RegTech sector, talking about ongoing trends and the future of the industry beyond 2026.
Despite AI and agentic technologies leading the tech agenda across the industry, a closer examination of investment priorities highlights a notable divergence between the expectations of vendors and those of financial institutions.
This gap is not necessarily a disagreement about whether AI is important or not, that argument has been mostly settled. Instead, it reflects the diverging views on what is required before its potential can be realised.
As a part of the report, vendors and institutions were quizzed on a number of key areas within the financial technology market, with the central question being where they expected the greatest level of investment within financial institution’s risk and compliance environments in 2026.
For vendors, expectations are heavy around AI and automation. The report detailed that a huge 91.67% of vendors believe this area will see the greatest level of investment, compared to only 44.33% of institutions.
Vendors are currently investing heavily in technologies they believe will define the next generation of compliance solutions, whilst responding to growing customer demand. On the other side, financial institutions – whilst still seeing AI as a priority – are grappling with the technological and operational foundations required to support more advanced deployments. This multi-pronged approach means that AI is important, but is a big fish amongst a pool of other big fish.
Other areas of significant disconnect lie in areas such as LLMs/Generative AI and API-based integration. On the former, vendors expect investment in this at a percentage of 51.67%, whilst institutions believe this at only a percentage of 35.33%. On the latter, 51.67% of vendors expect API-based integration to gather more investment, whilst only 33% of institutions do.
There are, however, areas where financial institution expectation outstrips vendor sentiment. For example, in advanced cryptography/PETs, 38.33% of institutions anticipate investment, whilst only 18.33% of vendors do.
Interestingly, modern data architecture is only viewed by 20% of vendors as a key investment area, compared to 36.67% of financial institutions. While AI attracts the headlines, the data foundations that support it are becoming an equally significant area of investment for financial institutions – and a possible blind-spot for vendors if they underestimate it.
An area that received considerable agreement in its investment potential was machine learning and predictive analytics. Here, 42% of institutions backed this, and 38.33% of vendors.
What this means
If there is one area that isn’t up for debate in today’s financial environment, it’s that the conversation no longer centers around whether firms should adopt RegTech. Instead, it is focusing on how firms can maximise value from these technologies effectively and appropriately.
The Global State of RegTech 2026 report found that 64% of organisations are now describing RegTech as a core part of their control environment in at least one regulatory domain.
AI investment expectation continues to rise in stock value amongst the industry and is reshaping the build vs buy decision. As the report details, the cost of internal prototyping is lowering through AI, despite specialist vendors still holding an advantage when it comes to production-grade delivery, governance and ongoing support.
The report is clear that AI projects sit at the top of 2026 tech agendas. Vendors, on the whole, have more concentrated priorities, reflecting their role in following where market momentum goes.
With these findings taken together, the trends arising from it point to a market that is entering a new and exciting phase of maturity. RegTech adoption is being powered by maturing, long-term digital transformation projects, with a competitive vendor landscape and ongoing AI breakthroughs.
Those who are the most successful may not be those building the most advanced AI capabilities alone, but those that understand the operational realities that face risk and compliance teams and help institutions bridge the gap between innovation and implementation.
Download the full Global State of RegTech 2026 report here.
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