Spending on regulation technology will reach $76.3 billion in 2022 from $10.6 billion in 2017, growing by an average of 48 percent per annum over the next five years, according to Juniper Research.
Regulation tech spending, as a percentage of regulatory spending, will increase from 4.8 percent in 2017 to 34.4 percent by 2022.
Regulation tech vendors can capitalise on banks seeking efficiency in meeting regulatory compliance requirements. Financial institutions such as Citi have as many as 30,000 compliance staff. 3 bank compliance departments could fill London’s Wembley Stadium. Automation has huge potential to reduce this.
“This level of staffing means that 50 percent reduction could save a single large bank $1.2 billion per annum, based on average wages. AI automation of KYC (Know Your Customer) checks will reduce time required by 90 percent, generating time savings of 5.4 million hours annually by 2022.
Regulation tech investment will be dominated by established technology players, such as Cisco and IBM, as demonstrated by their acquisitions of CloudLock and Promontory respectively.
Existing tech vendors of financial services software, such as Oracle and SAP, will look to enhance their offerings with regulation tech features and possibly acquisitions.
Consultancy firms such as Deloitte and KPMG will have a key role and may look to partner with regulation tech vendors.