In 2023, the regulatory technology (RegTech) sector faced challenges and embraced new opportunities. Some key trends that stood out include:
- Recordkeeping: Financial firms struggled to meet their recordkeeping obligations in 2023, leading to an increased demand for RegTech solutions.
- Regulatory Challenges: Financial institutions and RegTech firms collaborated on solutions to navigate new regulations, particularly those related to sustainable finance or climate risk reporting.
- Industry Growth and Consolidation: The RegTech market saw growth and consolidation, with clients looking for automation solutions that perform end-to-end tasks.
- Partnerships: There has been a surge in partnerships between RegTech companies and financial institutions, as well as between RegTech firms and large consultancy firms.
Recordkeeping was a major issue for financial firms in 2023. Unmonitored communications channels and a lack of effective compliance tools resulted in hefty fines and a surge in firms turning to technology providers like Theta Lake to solve their recordkeeping problems.
On the regulatory front, the evolving global landscape introduced new complexities. RegTech companies responded by creating adaptable solutions capable of addressing diverse regulatory frameworks in different jurisdictions. Partnerships between banks and RegTech companies helped to develop solutions that navigated new regulations efficiently.
Regulators have also been driving the need for larger, more comprehensive solutions that offer automation from start to finish. Many firms are turning to RegTech to reduce dependency on staff and put more emphasis on governance at the board level.
In terms of industry growth, RegTech is experiencing a phase of consolidation, with larger integrated solutions being favored over point solutions. At the same time, firms are creating strategic partnerships with RegTechs and adapting their offerings to remain competitive.
Lastly, the public sector is also weaving its way into the sector through growing public-private partnerships. These partnerships bring together the capabilities of both sectors to more effectively tackle regulatory challenges.
Moving into 2024, the need for effective RegTech solutions will only become more critical as firms continue to grapple with evolving regulations, emerging risks, and the drive for efficiency.
