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Regulatory change, pressure on cost management and growth, and increased investment in technology and data are dominating the financial services industry.
Our annual regtech survey shows how financial services firms are leveraging compliance solutions to manage regulatory requirements in 2024. Martin Trotter outlines the key themes and core lessons to improve internal processes.
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The UK continues to lead the way in the regtech market. With a supportive regulatory environment and a well-established financial services sector, the opportunity to be at the forefront of innovation is clear.
To succeed in this market, though, firms need to understand how they can incorporate innovation and collaboration with regulatory and other firms alike to deliver effective solutions. It's clear that firms are primarily seeking to leverage the latest technologies and best practices in regulatory compliance to enhance their operations, which shapes how they plan to operate moving forward.
Regtech 2024 annual survey
Our regtech survey aims to shed light on the UK regtech ecosystem and map out the critical themes across the industry. In turn, we highlight the most common pain points and opportunities for firms.
The survey of 119 industry professionals and stakeholders within regulation and compliance provides a deeper look into the state of regtech in the market – and how to strengthen and develop solutions moving forward.
One of key takeaways this year was the significance of collaboration. Collaboration between regtech buyers, advisers, and regtech companies themselves is critical to enhance operations. Better communication allows firms to stay up to date with the latest developments in regtech and the benefits that new technologies can bring to compliance.
86% believe that communication between departments and stakeholders could be improved
Collaboration ultimately enables firms to gain a deeper understanding of the unique compliance needs. Engaging with stakeholders and regulators alike allows firms to obtain valuable feedback, insight and guidance to help them devolve and refine their solutions, ensuring they meet regulatory requirements and that they remain secure long-term.
Regtech providers who focus on these areas will be in high demand. To fully embrace innovation firms must understand how they can work with other parties to improve their own processes.
Developing the right team
To achieve end-to-end oversight of regulation, firms must establish a team dedicated to regulatory change, and incorporating regtech. Effective hiring and training processes will be needed to develop a team with the right skills to navigate complex regulatory issues, as well as having an understanding of the tools that can be used for compliance.
Our survey found that investing in training tools around regulatory compliance was a priority to create a skilled team. It's important that firms review their training programmes to ensure they build a culture of compliance in line with evolving regulatory requirements.
71% believe that their employees are adequately trained, meaning that almost a third still believe there's room for improvement
Effective training supports employees at all levels to understand their roles and responsibilities more deeply, allowing them to foster accountability and ownership of their compliance efforts. Embedding these processes will help firms position themselves to adapt to regulatory changes quickly and effectively, minimising risks and creating long-term solution.
With a strong team in place, firms can ensure they are driving sustainable growth and meeting best practice without concern.
Building robust technological frameworks
Investing in the right technology is critical to the development of regtech solutions that help organisations meet fast-evolving demands. By investing in technology, firms can harness the capabilities of automation, data analytics, AI, and blockchain to streamline their compliance processes.
Such technological insight can also ensure that firms develop capable operational models. They need systems that are agile and quick to respond to change. Having the right technological capabilities will ensure that firms have strong oversight of regulatory change and can maximise opportunities. They must assess the potential impact of regulatory change on business operations and have a plan in place to embed these processes further.
Firms should focus on developing solutions that are cost-effective, offer broad regulatory coverage and encouraging buyers to invest more in regtech solutions.
Only 32% of respondents viewed their organisation as adopting technology to meet regulatory requirements
This highlights a clear need for firms to assess their current processes to ensure they are prepared for regulatory changes long term.
In turn, firms can automate their compliance tasks, such as data collection, validation and reporting, to reduce manual efforts and minimise errors. This approach is critical to drive innovation and adapt to regulatory changes, so it's important to assess processes and explore how to embrace more advanced technologies to stay ahead of the curve.
Ability to transform
The role of regtech in the future is essential, and with 77% of firms anticipating more regulation obligations than in previous years. This offers more engagement, sharing of best practice, and learning and development opportunities enables all parties to contribute, understand and benefit from regtech solutions. The benefits of transformation will only be realised, however, by embedding regtech into the culture and embracing this changing landscape.
Overall, the future looks promising for regtech in the UK, with significant opportunities for growth and innovation in the years to come. In turn, firms can more easily navigate regulatory challenges and adapt quickly. This will allow them to achieve sustainable regulatory compliance and to develop a skilled and informed team to operate in an increasingly complex landscape.
