How can the RegTech sector sustain its long-term growth potential?

It is expected there is going to be substantial growth in the RegTech market over the next few years. Recent research found the sector is forecast to grow at a CAGR of 12% to 15.5% from 2025 to 2030. Looking ahead, how can the industry push forward this growth?

According to Holly Sais Philippi, CEO of Alessa, it is clear the industry is an exciting phase of transformation.

She said, “As someone who is deeply invested in this space, I cannot help but think about what it will take to keep that momentum going. How do we make sure we are not only riding this wave but also building a sector that can weather the challenges that our industry faces today and tomorrow?”

Providing the first answer to her question, Philippi believes it is key to drive innovation with purpose.

“Meaningful innovation is the foundation of long-term growth,” she said. “As compliance challenges evolve, the solutions we provide must keep pace. It is not just about having advanced tools—it’s about creating practical, scalable solutions that solve real-world problems. Innovation needs to address the complexities of regulatory compliance head-on, offering features like predictive insights, real-time reporting, and robust data security.

“Companies that develop flexible, adaptable solutions capable of meeting regional and industry-specific regulations, built on a solid foundation, will establish themselves as leaders in this space,” she added.

Another important step for RegTech’s, in the mind of Philippi, is to diversify and keep clients happy.

She stated, “While financial services remain a cornerstone for RegTech, industries like healthcare, energy, and insurance face their own unique compliance challenges. RegTech is perfectly positioned to help, providing scalable solutions that can address these sector-specific needs while tapping into the learnings from financial institutions that have been paving this path for some time now.”

Through expanding into these markets, the Alessa CEO believes firms not only drive innovation tailored to broader compliance landscapes but tap into trends that affect all sectors – allowing the industry to learn.

At the same time RegTechs are internally focused on innovation, Philippi emphasised that the sector cannot overlook the importance of nurturing existing client relationships.

“Consistent support, proactive communication, and product improvements go a long way in building loyalty—and loyal clients are key to success. Happy clients often become advocates, and partners in innovation and strengthen the overall reputation of FinTechs in the market. This creates a virtuous cycle that fosters both stability and growth,” she said.

There is also a strong belief from Philippi that efficiency and trust go hand in hand. Operational agility – whether through automation, lean structures or streamlined processes – should be the key outcome for clients adopting RegTech solutions.

“But trust is what truly sets successful companies apart,” she remarked. “Cybersecurity, data integrity, and a solid solution are more than technical considerations; they are foundational to maintaining confidence with clients, partners, and regulators. When trust is strong, it becomes the cornerstone for client/technology partnerships.”

A vital step for shaping the future of RegTech, Philippi believes, is through resilience and leadership.

She said, “The RegTech sector has incredible potential, but sustaining growth requires intention and adaptability. Preparing for uncertainty is just as critical as seizing new opportunities. Scenario planning, financial risk assessments, and operational agility ensure resilience in the face of market volatility. At the same time, engaging in thought leadership and fostering public/private partnerships strengthens the entire ecosystem.”

Philippi remarked that by positioning itself as trusted advisors, Alessa not only supports its clients but also helps shape the regulatory landscape in a way that it claims will benefit everyone.

She ended, “Growth like this does not happen by chance—it is built on a commitment to purposeful innovation, market diversification, trust, and delivering value. With the right approach, I am confident RegTech will continue to thrive as an indispensable partner in navigating the complex regulatory environments of tomorrow.”

Ongoing innovation

Venky Yerrapotu, CEO of 4Crisk.ai, stressed that RegTech has been evolving over the last few decades, and with the advent of AI, the segment promises to bring even greater growth, as it becomes more effective in revolutionising and accelerating the work of legal, compliance, risk and policy professionals.

He said, “Businesses spend up to 10% of revenues staying compliant and keeping pace with regulations and standards, with 55% of the spend on human capital. This is not sustainable, with 225 regulatory changes announced daily. In addition, businesses are changing products, services and jurisdictions in which they conduct business. Current manual processes are neither efficient nor effective and come at the cost of business resilience.”

Yerrapotu emphasised that regulatory, risk and compliance processes receive critical input from constantly evolving regulatory, business and external risk environments.

“These inputs are typically unstructured content and require significant human capital to discover, analyze, and flow to processes and stakeholders to aid in decision-making. It is extremely difficult for humans to keep pace with alerts and analyze the content for applicability. It is a manual and time-consuming activity with a high likelihood of errors. This has resulted in a rising cost of compliance, amid a talent crunch, and regulatory penalties,” he said.

To meet these challenges head on, AI platforms, AI agents and AI co-pilots are rapidly emerging to support the needs of regulatory, risk and compliance professionals.

He stated, “At 4CRisk.ai we’ve been focused on AI for regulatory intelligence, which is real the next wave of Regtech. Unlike other AI tools that rely on generic language models in the public domain, 4CRisk’s new generation of AI technologies uses specialized, smaller, secure language models trained explicitly for the risk and compliance domain to automate manual and effort-intensive tasks of risk, regulatory, and compliance professionals.”

Some of the ways in which AI Agents from the business fuel the growth of RegTech, Yerrapotu remarked, include amongst other things, regulatory research that enables compliance professionals to seamlessly search across authorities sources, such as regulators, laws and standards, to secure insights required to build rule books applicable to their organisations.

Meanwhile, Compliance Map enables compliance professionals to assess the design efficacy of their compliance program by comparing their external obligations to their internal control environment. It does this by matching rulebooks to applicable governance artifacts completing these tasks up to 50 times faster than a human alone, Yerrapotu claims.

Ask ARIA Copilot, also offers an AI Agent to provide immediate, relevant answers to first and second-line complex queries. ARIA analyses an organization’s documents to answer day-to-day business questions.

He finished, “Supported by specialized language models trained on a curated corpus of regulatory, risk, and compliance data from public domain authority sources, AI can prevent IP infringement, reduce data bias, and minimize the carbon footprint.

AI is designed to crunch data and provide an ‘Always on Analyst’, delivering efficiency and superior accuracy to results – up to 50 times faster than manual methods through exceptional accuracy, precision, and meticulous language interpretation to identify gaps and potential risks. Supported by Trustworthy AI and Zero-Trust Security principles in data security, protection, auditability and privacy, the Regtech sector will be fuelled by new Regulatory Intelligence technologies and enjoy significant growth.”

Focus on innovation

Kate Horgan, head of business development US at Zeidler Group, exclaimed that the RegTech market is on a ‘remarkable growth trajectory’, but in order to sustain this momentum, firms need to focus on innovation, customer relationships and adaptability.

Horgan also stressed how Zeidler is approaching this challenge and how the industry as a whole can ensure long-term success.

She said, “Firstly, embrace the latest technology. At Zeidler Group, we have made significant investments in AI advancements, particularly in Large Language Models (LLMs) and Natural Language Processing (NLP), to develop innovative LegalTech and RegTech solutions that help our clients stay ahead of regulatory complexity.

“Our dedicated resources in research and development include a state-of-the-art software engineering hub based in Mumbai and an innovation lab based in Phoenix. We regularly host internal hackathons, where our engineering, legal, and regulatory teams collaborate to stay at the forefront of technological and regulatory advancements,” she said.

She continued, “With our proprietary digital platform, Zeidler Swift, we provide modular yet scalable solutions for the funds industry, enabling clients to select the services they need now while allowing room for growth as they scale their operations. This flexibility ensures that our solutions adapt to evolving client requirements and regulatory landscapes.”

Horgan also emphasised that the RegTech industry exists to solve real problems for real people at the end of the day.

She explained, “For us, that means staying close to our clients—listening to their concerns, understanding their pain points, and building solutions that genuinely make their lives easier. Building genuine partnerships with our clients and industry collaborators enables us to enhance our capabilities while fostering seamless integration with other technologies and platforms.

“Of course, it’s not just about what we’re doing at Zeidler Group. The RegTech sector as a whole has a bright future ahead, but it needs to work together to overcome challenges and seize opportunities. By focusing on innovation, building strong relationships, and staying adaptable, we can create a forward-thinking, resilient industry that empowers clients to thrive—even in the face of regulatory complexity,”

Proactive compliance

According to RelyComply, the growing cost of compliance may be one caveat to new innovations’ success. The firm said that financial firms will be naturally tight on budgets in any regulatory climate and stringent rules make tech spending harder to justify.

The company stated, “However, as long long as regulations must be met head-on, RegTech adoption should blossom to make that process easier. There’s a strange symbiotic relationship between vendors, criminals, regulatory watchdogs, and government bodies, where each sparks challenges and opportunities to fuel innovation and growth. That’s especially true today when reacting to burgeoning threats from digital assets, AI, data privacy, and cybersecurity,”

RelyComply remarked that the upside of a more necessary proactive compliance culture is RegTech’s ‘highly competitive’ market to develop solutions faster, from region to region and to meet cross-border issues.

“Customers also expect cutting-edge digital finance experiences, and banks, PSPs, and fintechs must increasingly provide technology that’s not only automated but fully compliant with laws—such as the EU’s Instant Payments Regulation – and cost-effective in improving workflows and business outcomes. Addressing these hurdles is where RegTechs will continually meet supply and demand,” stressed the business.

It continued, “So long as government bodies, financial firms, technology providers, and regulators cooperatively champion solutions that can quickly reach time-to-market and provide clear value in meeting strict compliance requirements, this sets into motion a so-called ‘learning cycle’ between parties all jointly responsible for driving RegTech. More funding efforts mean more sandbox environments to assess new RegTechs’ advantages, allowing more significant services to hit the shelves and contributing to a thriving sector and economy, too.”

Agile and responsive

In a high-stakes digital age, being able to remain nimble and agile is more critical than ever – as trends change rapidly, firms must be able to pivot when necessary.

Tony Frawley, CRO at ViClarity, believes that the RegTech sector’s long-term growth potential hinges on its ability to remain agile and responsive to an ever-evolving regulatory landscape.

He stated, “As regulations grow more complex and enforcement becomes stricter, RegTech firms must continue investing in advanced technologies to deliver innovative, scalable solutions. I think fostering partnerships with regulators and industry stakeholders will further enhance credibility, ensuring solutions align with compliance requirements while demonstrating a proactive approach to regulatory shifts.”

As users gradually become more tech-savvy, the prioritisation of UI/UX will be essential to deliver an intuitive and seamless user experience, he added.

“Lastly, I see the ability to integrate with clients’ existing tech ecosystems as imperative, ensuring a holistic and integrated approach to compliance and operational efficiency,” Frawley remarked.

Another individual in the RegTech sector who foresees the need for increased agility is Michael Thirer, legal, governance and regulatory affairs director at Muinmos – stating that as regulation turns to ‘agile regulation’, RegTechs need to become ‘agile RegTechs’.

He continued, “Studies have shown, quite consistently, that RegTechs grow when regulatory requirements grow, or when enforcement increases. In this sense, RegTechs have nothing to worry about in the coming years. There are several fields of financial and finance-related regulation which are evolving quite fast in the past years and will continue to evolve in the coming years – virtual assets regulation, AI regulation, digital resilience and more.

“But it’s not just the fields of regulation; it’s also the type of regulation which is changing. The “hot trend” right now is “Agile Regulation”, and especially “Outcome-focused Regulation”, which is a type of regulation which puts an emphasis on the results of the process rather than provides a prescribed modus operandi.”

Thirer explains that in this type of regulation, financial institutions on the one hand can shape their own compliance processes, thus giving them much welcomed flexibility. On the other hand, this also means they need to demonstrate their processes are compliant.

“For RegTechs, this means they need to shape their solutions accordingly. Meaning, in a way that gives financial institutions the ability to (a) shape their processes; (b) demonstrate they are working; and (c) change them quickly in case of need. This means more configurable SaaS solutions, less bespoke solutions that require months long requirement capture phases and implementation times,” said Thirer.

Anthony Quinn, CEO of Arctic Intelligence, stressed that in sub-sectors like business-wide financial crime risk assessments, meanwhile, there has been underinvestment by regulated entities who more often than not are relying on Excel to manage financial crime risks which is ‘asking for trouble’ – and is not staying responsive to market needs.

He stated, “The way we think about sustained growth is simple really, it’s about applying deep thought and innovation to our solutions, providing domain expert content, leveraging advanced technologies and understanding the current and future needs and objectives of our clients and partners and having a laser focus on delivering best-in-class business wide financial crime risk assessment platforms “.

“Over the last decade it has not been an easy ride either and so grinding it out, working side by side with our clients to deliver value is nothing new.  We believe that only by having a relentless commitment to innovation, addressing evolving compliance challenges and working tirelessly to deliver value to our clients and partners is what we hope will make Arctic stand out from our competitors regardless of the economic conditions”.

Continued innovation 

Meanwhile, RegTech firm Ascent highlighted that it sees 2025 as a year of tremendous growth, innovation and opportunity for RegTech.

The firm outlined, “Financial services firms will continue to be challenged by rapidly evolving regulations, a need to automate manual processes, and the ability to more proactively mitigate reputational and financial damage caused by non-compliance. RegTech solution providers must continue to innovate, adding new features and capabilities that make it faster and easier for firms to manage risk and compliance.”

“AI will continue to play a major role in product innovation, as it is perfectly suited to address customer compliance challenges. We also see a major opportunity for RegTech vendor collaboration, where integrations of complimentary solutions like change management automation and GRC platforms can create significant new capabilities and incremental value for customers,” the firm concluded.