Financial Markets: Embracing RegTech

A wave of technology innovation, built on a cloud-based foundation, is fundamentally transforming enterprise workflow across industries, and financial markets participants are being swept up into the surge. At the same time, financial institutions are spending huge sums of money on complying with a growing set of regulations while struggling to meet the ever-growing data management and compute resourcing requirements these demand.

With the largest financial institutions spending over one billion dollars a year on regulatory compliance and controls, and the ‘average’ financial institution dedicating 10-15 percent of its staff to this area, the financial markets are turning to cloud-focused, enterprise-wide approaches based on the latest financial technology (FinTech) innovations, to not only solve their compliance challenges but reduce costs and create competitive advantage. The relatively new market segment, dubbed RegTech, utilizes a FinTech-based approach to meet regulatory, risk management and surveillance requirements. This segment is growing quickly, with solutions offered by both incumbent and start-up vendors, the latter receiving significant venture capital (VC) investment in the last four years.

Our research confirmed that RegTech solution providers are relying on cloud-based approaches to leverage the elasticity, scalability, higher security and innovation these provide.

This research note details the current market and technology drivers behind the embrace of RegTech by the financial markets industry, discusses benefits of a RegTech approach, and reviews the state of today’s RegTech ecosystem. The note also presents both use cases and case studies for RegTech within the securities and capital markets segment of financial services.