According to a new study by Juniper Research, technology spending on regulation technology is set to account for 50% of businesses’ budgets with regards to compliance by 2026.

Juniper cites the increase in financial services being offered by non-banking entities as one of the main driving forces behind the increased adoption of RegTech.

According to their research, global spending on RegTech will increase from $68 billion in 2022 to reach $204 billion by 2026 – this is in line with the banking-as-a-service (BaaS) models incorporating RegTech as standard procedure.

Out with the banking sector, retailers and e-commerce firms are increasingly seeking to offer their customers financial products, with BaaS enabling this much more intuitively than in the past.

Juniper found that, currently, 8% of digital onboarding processes within the banking sector is currently handled by AI, with this number set to grow to 26% by 2022.

Juniper Research author Harshada Thok said: “While the current benefits of AI are clear to RegTech vendors, the immediate focus must be on ensuring the algorithms are fed the most relevant data to maximise their efficiency in verifying digital identities and future use cases. In turn, this will provide a differentiation point for RegTech vendors in an increasingly competitive market.”

Offering financial products is becoming an ever more attractive prospect for businesses across numerous industries as a means of increasing revenue while offering more choice to customers. However, banking technology and infrastructure is expensive and complex, meaning more and more are turning to financial institutions for banking-as-a-service.

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Although the finance sector dominates RegTech, demand from new customers of the technology will emerge. According to Juniper, the next growth areas in RegTech will be in the healthcare and gambling sectors.

“RegTech vendors must provide verification services in emerging areas where compliance is being disrupted, such as cryptocurrency exchanges, digital healthcare and online gambling,” said the research company.

“Impending changes to regulations in these markets will provide significant opportunities for RegTech vendors to broaden their focus beyond financial markets to capitalise on new addressable user bases.”

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