Today's new digital banking world requires digital innovation and regulatory technology to ensure competitiveness and robust compliance. Global thought leaders and industry experts understand this.
FREMONT, CA: This year, global thought leaders in the regulatory compliance industry gathered at numerous global regulatory technology (regtech) summits to discuss industry developments, insights, and 2023 projections. On the horizon are several trends that will play a significant role in technological advancement and innovation to streamline and simplify the regulatory compliance process.
The following are some accelerating and emerging trends that will influence the regtech industry in 2023.
Expect a rise in the use of regtech solutions: As tax authorities become more aggressive in their enforcement, macro trends will likely increase the demand for regtech solutions. Financial institutions face increasing cost pressure, and customers are becoming more discerning regarding their interactions. This indicates that the adoption of regtech across the financial industry will continue.
Plan for a phased deployment to facilitate the gradual adoption of the cloud: As a clear strategic move toward the cloud in all types of institutions, regtech’s must support all forms of deployment—on-premises, private cloud, and pure SaaS—because some traditional institutions are not yet cloud-ready. Regtechs must support phased deployment for regulatory services, beginning on-premises and migrating to the cloud when the traditional financial institution client is ready.
Expect greater adoption of plug-and-play solutions than highly customized ones: In prior years, conventional financial institutions anticipated substantial customizations. However, it is acknowledged that this long-held expectation can impose a significant financial burden on institutions. Regarding regulatory compliance, sticking with widely accepted industry technology can be safer. Otherwise, it may be subject to greater regulatory scrutiny.
Watch for an increasing shift from an internal development to vendor collaboration: Building systems are typically more time-consuming and expensive than organization projects, as evidenced by previous observations. In addition, internal builds may have a greater risk than industry solutions developed by companies specializing in regtech, as they frequently have a deeper understanding of regulations.
Nonetheless, onboarding and contracting remain difficult and time-consuming. Consequently, if you decide to purchase a solution, you should ensure that your provider is adaptable, can respond rapidly to ongoing and developing regulatory changes in real time, and can present solutions tailored to your needs.
Recognize that financial institutions are looking for strategic partners, not just vendors: Financial institutions are interested in investing in regtech providers who are more than just vendors. They seek genuine partners who comprehend and address their financial and strategic goals. In addition, they choose partners with a precise strategic alignment. Expect this trend to persist through 2023.
