Regulatory Technology (RegTech) has evolved from simply being regarded as a subset of FinTech to being recognised as an independent concept that is applied to different needs across various sectors.
It could be argued that RegTech emerged due to these 3 main reasons:
1) The 2008 financial crisis, which brought about a new wave of regulations and financial institutions needed a way to streamline their processes while remaining compliant;
2) The need for new ways of dealing with regulatory challenges, which is a part of the broader technological advancements and digitisation strategies adopted by firms. New digital products and services require compliance processes to be digitised as well.
3) The need for firms to gain competitive advantage over their competitors.
The RegTech Evolution
Pre-2010
The early beginnings of RegTech were mainly in-house solutions that financial institutions developed to comply with regulatory requirements as well as minimise their manual processes. As regulations became more complex, it became imperative to shift towards more advanced solutions.
2010 – 2020
The aftermath of the financial crisis of 2008 brought about new compliance burdens for financial institutions, incentivising them to urgently adopt regulatory compliance solutions that offered automation and efficiency.
Post COVID-19 and the current regulatory landscape
The COVID-19 pandemic contributed to an acceleration in digital transformation for many industries, including the financial services. With the move to remote dealings and an increase in digital transactions such as online banking, online onboarding etc., quicker compliance checks have become even more necessary.
Many firms embraced advanced digital regulatory compliance tools to transform and automate their compliance operations while staying on top of regulatory updates. This widespread adoption of Regtech tools, coupled with other key reasons, highlights its continued relevance years after its first emergence within the financial industry.
Why RegTech is still relevant in 2025
Constantly evolving regulatory requirements
As the financial industry as well as customer wants and needs continue evolving, new risks are emerging, prompting regulators to introduce new rules to address these risks. As a result financial firms need to adapt accordingly, making compliance transformation a strategic priority and continue enhancing their systems to keep up with these changes.
Customer expectations
Financial services clients live in a fast paced world and expect efficient service. Firms are then expected to streamline transactions and must reduce the time spent on compliance checks. By adopting RegTech tools, firms can automate checks to enhance operational efficiency and meet client expectations while also minimising risk.
Globalisation and expansion
For financial firms with global expansion strategies, accessing and understanding regulations for different jurisdictions is a complex challenge. By integrating digital compliance tools such as Apiax’s Embedded Compliance framework, firms can instantly get access to jurisdiction-specific rules and reduce the complexity associated with global expansion.
Competitive advantage
Firms investing in RegTech are able to gain a competitive edge, as automation decreases compliance costs, enhances risk management, and allows for focusing strategic efforts on more complex tasks. In a regulated and competitive market, this can lead to an increase in agility, as well as a stronger reputation.
Cost savings
RegTech solutions automate repetitive compliance activities, resulting in cost savings by reducing the time and resources required.
The future of RegTech
The RegTech sector is poised for significant growth, especially with new developments in AI and machine learning promising even more advanced compliance solutions. The integration of AI-enabled compliance tools, such as Apiax’s AI policy assistant, is already making headway into facilitating more automation of complex regulatory processes.
The addition of automated and real-time compliance updates will further enhance financial firms’ ability to adapt quickly to new regulations, minimising manual processes and reducing compliance risks. These tools can provide regulatory changes in binary yes or no formats, flag risks, and manage cross-border compliance, making them valuable for global operations. Additionally, as ESG regulations grow, RegTech will also support organisations in these areas by tracking changes, automating reporting requirements, and ensuring adherence to evolving standards.
In a nutshell…
Since its inception, RegTech has become vital for firms navigating an ever-evolving regulatory landscape, allowing them to streamline operations, automate processes, and control compliance costs—all of which free resources for innovation and focus on more strategic activities. It also helps firms to meet client demands for faster, more secure, and efficient services, hence improving client satisfaction and enhancing their reputations.
In a globalised world, RegTech enables firms to easily manage complex, multi-jurisdictional regulations with ease, providing real-time updates for faster response to regulatory changes. Beyond meeting today’s needs, RegTech is a strategic asset that offers firms a solid foundation for sustainable, long-term growth, thus, ensuring its continued relevance in the years ahead.
Furthermore, it could be argued that RegTech is now more relevant than ever.