2022 Trends in Asia and Around the World: The RegTech Growth Corridor

CIO Review APAC | Monday, August 01, 2022

Regtech has thrived and witnessed a growth in the demand for its solutions, creation of jobs, and significant new capital streaming into the company. The pandemic produced various economic shocks throughout the world

FREMONT, CA: While the pandemic caused numerous economic shocks all around the world, regtech has prospered and witnessed an increase in the demand for its solutions, creation of jobs, and considerable new capital flow. Additionally, as RegTech broadens its mandate to include other regulated industries in addition to traditional financial services, there has been a change in how the government views the sector.

The RegTech Association (RTA), which was established in Australia, the third-largest RegTech hub in the world, has 150 member organisations and a growing global reach. It anticipates that the following themes will carry over into 2022.

1. Conduct Risk, AML/CTF, and Sanctions RegTech will focus on three main risk categories in the financial services industry:

2. Institutions will prefer to buy solutions rather than develop them.

3. There will be an increasing demand for best-in-class RegTech vendors to address each risk category.

4. Shortening the sales cycle and decreasing time to value while increasing market trust on both the supply and demand sides;

5. The ratio of founders to institutions pitching to win will increase.

6. Inflows of institutions including corporate venture capital and professional capital have increased.

7. An increase in demand from RegTech's non-traditional sectors Telco, Energy.

8. Workforce management tools and other fresh software will be added to the RegTech family.

Overall, favourable investment conditions, growing recognition of new market segments as RegTech customers, shortening of sales cycles, increased education, development of a common language by established RegTech taxonomies like RTA's, and access to a vendor directory will all help and enable quicker commercial outcomes.

RegTech is frequently "born international," and for good reason. Regulated companies operate in a global setting, and while local regulations may differ, best practices around the world frequently coincide, especially among Tier 1 financial institutions. This is the case in the realm of financial crime compliance (FCC), where the Financial Action Task Force has a guiding influence. In 2022, there are a few crucial Asian locations that will also affect the rest of the world.

The "trade-off" between customer experience and compliance remains challenging. To ensure the success of their risk-based strategy and resulting policies while leveraging technology to improve customers' experiences, financial institutions must adopt cross-functional approaches to technology adoption.

The environment of sanctions is changing, and FIs operating globally must be ready with risk assessments and their risk operations must adapt and respond quickly as new requirements become obvious. Current sanctions against China and the developing scenario between Russia and Ukraine are two examples.

Financial institutions all across the world and even within FIs have different levels of maturity when it comes to perpetual KYC (pKYC) and event-based KYC. The issues facing retailers and consumers with ID+V are varied and distinct from the complicated corporate KYC environment, which calls for a more complex architecture and linked internal and external systems.

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