How technological advancements are shaping RegTech’s next chapter
Whilst the origins of the RegTech sector are to be found in the challenges posed to the financial sector post-2008 financial crisis, the future of the RegTech sector is being built today. With new technologies and regulatory requirements leading to innovation and disruption in equal measure, the RegTech sector is facing an inflection point.
The RegTech sector – based on who you ask – has not even reached its 20th birthday yet, and is still in its developmental years. As the sector matures, the businesses who occupy the market continue to redefine the industry with new offerings to tackle unmet needs.
Stacey English, director of regulatory intelligence at Theta Lake, believes the RegTech sector of the future will be driven by a combination of technological advancements, changing business communications and evolving regulatory expectations.
She explained, “As communications technology evolves, the compliance infrastructure must evolve to meet it. 58% of firms already report dissatisfaction with their archiving and recording solutions which are typically split across voice and text based communications with little integration and limited coverage for modern communications.”
In the mind of English, complexity will be a defining force shaping the market, as organisations continue to grapple with a rapidly-growing web of digital interactions that extend far beyond traditional email and file-based communications.
“From video meetings to chat platforms, as well as rich media like GIFs, emojis, attachments, and reactions, compliance teams are already facing the challenge of capturing, archiving, and supervising an ever-expanding array of communication channels,” she said.
According to Theta Lake’s survey of over 500 financial services firms, 85% already use over 4 communications tools and nearly half expect that to grow, with workstream and project management tools, enterprise social collaboration tools and digital whiteboards expected to be used more in the coming year alone. As the workplace becomes even more digitally meshed, regtech solutions will need to be able to unify this expanding scope of communications platforms, channels, and modes.
In addition, Gartner’s 2025 Magic Quadrant for Digital Communications Governance and Archiving Solutions predicts that by 2028, 80% of digital communications governance and archiving customers will consolidate the supervision of text-and audio/video-based content to a common solution, which is a major increase from fewer than 20% in 2024.
English said, “This new segment addresses the need for comprehensive capture, archiving, data retention, surveillance, supervision, behavioural analytics, auditing, and e-discovery across Unified Communications and Collaboration platforms.”
Digital capabilities
RelyComply, a South African RegTech firm, emphasised that trends in RegTech can so often come down to the digital capabilities that are made available.
They said, “They spring up and evolve lightning-fast to simplify understanding compliance, and implementing accurate tools helps drive processes to keep the world safe. But it’s a misnomer that digital trends mean we can leave the machine to handle the business of AML or KYC: criminal strategies are human constructions, legislation is, too, and the collective adoption of better compliance controls through RegTech.”
Such quickly-introduced technology trends do pose challenges, RelyComply claims, these include regulators acting to protect customers identities, maintain data privacy, close grey-area loopholes for crypto usage, battle generative ‘fake’ information and democratise actionable, ethical use of AI.
The firm said, “The good news is that regional and global regulators are attacking the issues and embracing RegTech usage – from machine learning to cloud computing – to solve significant hurdles.”
In the view of RelyComply, the key is for companies to leverage RegTech to its maximum ability for optimised, cost-effective risk management that aligns with their compliance strategy.
The firm continued, “We do see today’s proliferation of helpful tech providers (at lower costs), sophisticated computing power and considerable drives in automation and data processing; it’s all these areas that will hopefully see RegTech adoption more widespread, where shared learning about predictive AI, real-time monitoring or blockchain KYC (as some examples) can help standardise regulation.”
With this considered, RelyComply believes the complexity of regulation may be making global compliance hard currently. The future, the firm claims, will be a more fundamental compliance culture involving more than a few banks’ compliance officers or a few governments.
“Every executive at government bodies, law enforcement, financial institutions, and RegTech providers must work together to use the data we have to hand. Advanced platforms can better help appeal to pressing regulatory efforts, where sharing successful tools and strategies can gradually build stronger defences against the threats we’re all attempting to subdue today,” the firm finished.
Sitting at the intersection
As commonly known, RegTech sits at the intersection of both regulation and technology. Because of this, trends and developments in both of these fields affect it.
Michael Thirer, legal, governance and regulatory affairs director at Muinmos, highlighted that in technology, the two biggest relevant developents in recent years were blockchain and GenAI.
He remarked, “In many ways, one can be the solution to the other. For example, we might see individual identity tokens used by people to verify their identity as they move back and forth between meta-verses and different cyber environments. But of course, it’s extremely hard to predict technological trends a decade ahead these days with the pace of recent changes.
“In regulation, the most interesting development we at Muinmos see in recent years, when it comes to the impact on RegTechs, is Agile Regulation. Agile Regulation, as we wrote here, is a concept that includes several types of regulatory strategies, and primarily Outcome-focused Regulation (OFR). OFR, as its name suggests, focuses on the desirable outcome of a certain regulated process, rather than prescribing the measures required in order to comply. As such, it sets the regulated entity in a position of a de-facto co-regulator, in-charge of designing, implementing and constantly testing its own procedures.”
In many ways, Thirer details, this is the opposite of regulation. “Regulation is supposed to tell you what you need to do to comply with the law. This new approach (which is in many ways a counter-reaction to the quick pace of developments in crypto and AI) will usually only provide guidance, good and bad practices, and similar.”
This, the Muinmos director explains, may profoundly shape RegTechs, as RegTechs will now be required to be a lot more flexible and data-driven, even more than today.
Giant compliance shifts
With the RegTech sector virtually still in its teen years, the industry is just getting started. According to Baran Ozkan, CEO of Flagright, in the next decade, the industry will see massive shifts in how compliance works.
He said, “They will be driven by a few factors – for example, real-time compliance will be the standard. The days of batch-processing and delayed risk assessments are fading fast. Regulators will expect instant risk detection, which means RegTech solutions will need to integrate real-time monitoring, AI-driven automation, and instant decision-making.
“In addition, AI and machine learning will take over manual reviews. Right now, compliance teams still spend hours investigating alerts. AI is already reducing false positives, but in the next decade, it’ll fully automate risk assessments, flagging only the highest-risk cases for human review.”
Ozkan also stressed that global standardisation will be key – as cross-border transactions skyrocket, but compliance laws are still fragmented. “Expect international regulatory frameworks to push for more standardized compliance tech that works across multiple jurisdictions,” he said.
Lastly, crypto and decentralized finance will push the boundaries. ”With digital assets become more mainstream, traditional AML/KYC models won’t cut it. RegTech will need to adapt to new fraud patterns, decentralized finance risks, and crypto-specific regulatory needs,” Ozkan concluded.
Disruptive technological innovations
Meanwhile, 4CRisk.ai believes tech innovations like AI, ML and NLP are transforming stand-alone specialized RegTech applications like KYC or AML, into broader platforms that can automate tasks like data collection, analysis, and translation, improving efficiency and accuracy across all compliance, policy and risk functions.
The firm said, “We are already seeing Regulatory Intelligence emerge, going beyond traditional RegTech in several important ways ensure compliance, and moving beyond Financial Services where RegTech has its main foothold. Machine Learning (ML): algorithms, for example, can identify patterns and trends in regulatory data, enabling proactive risk management and decision-making.
“We’re also seeing Natural Language Processing (NLP) help analyse unstructured regulatory texts, extracting key information and insights. Regulatory Intelligence extends the definition of RegTech with the systematic process of collecting, analysing, and disseminating information about regulatory requirements, policies, and guidelines relevant to a specific industry or organization. It is much broader and involves monitoring, interpreting, and predicting changes in the regulatory landscape to ensure compliance and gain a competitive advantage. Distinctively, Regulatory Intelligence leverages Artificial Intelligence to support these transformations.”
Over the next five years, 4CRisk.ai expects RegTech to evolve with the regulatory intelligence to become tailored to specific industries, such as healthcare/pharmaceuticals, telecom, retail, energy, and technology, each with its unique regulatory complexities.
“Rather than a focus singularly on regulatory affairs and government relations/legal, RegTech will expand to serves IT, security/cyber, audit, compliance, research and development and quality assurance with AI-driven intelligence,” the firm finished.
Hard to judge
While some RegTech market participants believe they have a good idea of how the RegTech sector will evolve a decade into the future – Fraser Mitchell, chief product officer at SmartSearch, believes that the constant evolution of technology, new threats emerging and new regulation being brought in to tackle both, its hard to judge what will drive the RegTech sector in 2035.
He said, “In the immediate future, what we do know is that 73% of businesses lack confidence in their ability to stay compliant with regulation, with almost a third (30%) expecting things to worsen in the next year.
“These figures are alarming and highlight how more work must be done by the RegTech sector to show businesses how a digital-first strategy can help them reduce the time, resource, cost and overall burden of compliance. This is especially pertinent given the impact that trends such as artificial intelligence (AI), privacy vs transparency, cryptocurrencies, and growing corporate liability for fraud are set to have in the next few years,” said Mitchell.
Greater demand
Sean Devine, account executive at ViClarity, believes that looking ahead, the RegTech sector will continue its evolution as regulatory complexity increases and firms demand more efficient compliance solutions.
“Traditional methods won’t be enough – technology will need to help businesses stay ahead of risks, not just react to them,” he said.
Devine continued, “AI and automation will become essential, shifting compliance from a reactive process to proactive risk management. Firms will rely on real-time monitoring and predictive tools to identify potential issues before they arise. At the same time, regulators are beginning to embrace technology, which could lead to more digitized and efficient compliance processes.
“Compliance will also become more embedded in everyday business operations, integrating seamlessly with transaction monitoring, fraud prevention, and onboarding. Instead of being a standalone function, it will be part of real-time decision-making,” said Devine.
As the market becomes ever more saturated, Devine believes that businesses need more than just another compliance tool. They will want solutions that are best-in-breed, integrate easily, evolve with their needs and provide meaningful insights. Those providers that can’t deliver real value will struggle to stay relevant, he believes.
Devine finished, “The next decade won’t just be about regulatory change – it will be about building operational resilience. The companies that succeed will be those that use technology to drive smarter, faster decisions, making compliance an enabler of growth rather than just a regulatory obligation.”
The end of Excel spreadsheets?
Anthony Quinn, founder and CEO of Arctic Intelligence, explained that the firm was a decade in to building the ‘most configurable and sophisticated financial crime risk assessment platform available globally’ and is always working on new innovations to expand and grow its platforms capabilities.
He stated, “Our team is deeply invested in the future of the RegTech sector and looking five or ten years ahead, we foresee a landscape where excel based business risk assessments are a distant memory and I genuinely believe we will look back in time and wonder how on earth financial crime risk teams conducted these assessments for decades on convoluted excel spreadsheets that were not fit for purpose for large sophisticated businesses.”
Quinn continued, “The level of RegTech adoption in the business wide risk assessment space is still very far from being mainstream and every single day we come across large financial institutions and consultants using excel when there are so many more advanced solutions available and I believe if in even 5 years time businesses have not shifted to a purpose built platform for this purpose, we will have failed ourselves as the benefits are undeniable and with constant innovation the gap is widening fast”.
Human and AI collaboration
The next decade will be a pivotal decade for the RegTech sector – and according to Sebastian Hetzler, co-CEO of IMTF, RegTech over the next ten years will be defined by a closer collaboration between humans and AI.
He said, “This will evolve into intelligent systems that act as true co-pilots for compliance professionals. The future of RegTech lies in enhancing human expertise through AI-powered assistants that support real-time decision-making, rather than replacing human judgment.
“The sector’s growth will be driven by man-machine interaction, where AI augments human capabilities with advanced analytics, natural language processing, and intuitive compliance chatbots. Challenges will center around ensuring transparency, explainability, and keeping humans in the loop—making AI a trusted partner in navigating increasingly complex regulatory landscapes,” Hetzler concluded.
