Vendors
日本語

As Regtech Heats Up, Financial Firms Seek to Navigate the Ecosystem

Create a vendor selection project & run comparison reports
Click to express your interest in this report
Indication of coverage against your requirements
A subscription is required to activate this feature. Contact us for more info.
Celent have reviewed this profile and believe it to be accurate.
29 June 2021
Neil Katkov

Although not always a front-of-mind topic for business line heads, risk management is critical to safeguarding the financial and operational stability of a financial institution and for supporting corporate growth objectives. Risk management is also a significant area in terms of operations and technology. Celent estimates that technology spending by financial institutions on risk management will exceed US$80 billion globally this year. Financial risk accounts for the lion's share (about two-thirds) of this by dint of its analytic, technological, and operational complexity. Operational risk and financial crime compliance are a smaller but still significant share of the pie.

The specialized technology that supports risk management functions has traditionally been supplied by internal development teams as well as by external software developers and systems integrators. These two traditional sources of technology are now being joined by a third: regtech startups, which already comprise a vast and rapidly changing landscape.

Regtech, the new wave in risk management technology, is typically provided by startups that have been bankrolled with venture capital and private equity. VC support frees startups from the need to turn profits and gives them the firepower to quickly develop and bring advanced technology to market.

At the same time, traditional vendors are feeling the heat and working to develop (or acquire) their own regtech capabilities.

Regtech solutions focus AI, software robotics, and other next-generation capabilities on intractable pain points in risk management and compliance. As such, risk departments at financial institutions have sat up and taken notice. Compliance regtechs have attracted the most attention from FIs, with some regtech vendors in this space amassing dozens and even hundreds of clients. But regtechs are also tackling slower-moving areas like operational risk and reg reporting.

Where Are the Opportunities in Regtech?



As the regtech universe heats up—and regtechs ramp up their capabilities and rack up their success stories—financial institutions are increasingly interested in leveraging advanced technology in their risk operations. Trouble is, FIs are also increasingly challenged to navigate the hundreds of startups in the everchanging regtech ecosystem.

For more than five years Celent has explored the use and promise of AI and digital technologies for risk and compliance. As FIs seek tech vendors that can offer advanced solutions for risk management, we will continue to provide guidance to the regtech ecosystem through Celent research as well as our online VendorMatch directory.

Comments

Insight details

Insight Format
Blogs
Geographic Focus
Asia-Pacific, EMEA, LATAM, North America