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The importance of RegTech in the FinTech space

This article discusses:

  • The evolution of regulatory technology
  • Why are regulations necessary?
  • How did Brexit affect the RegTech industry in the UK?
  • What does a career in RegTech offer?

In today’s rapidly evolving financial market, it’s vital for companies to be compliant with ever-changing legislation. Failure to do so might result in serious consequences such as substantial fines, reputational damage, and even criminal charges.

RegTech, or regulatory technology, has evolved significantly in recent years. Gone are the days of manual compliance processes with RegTech solutions now offering automated and streamlined solutions to meet the demands of financial regulations. This not only helps companies stay compliant but also reduces the cost and time associated with manual compliance processes.

According to recent data, total fines for breaking regulations halved from 2021 (£567,765,219.95 in fines) to 2022 (£215,834,156 in fines). This reduction in fines can be attributed to several factors, including the increased adoption of RegTech solutions by financial institutions, a more collaborative approach to regulation, and increased awareness of the importance of compliance.


Why are regulations important?

Firstly, regulations provide a framework for fair and transparent operations in the financial sector. They ensure that all financial institutions operate on a level playing field and that consumers are protected from unethical and illegal practices.

Secondly, regulations help to maintain stability and security in the financial sector. By setting standards for financial institutions and imposing penalties for non-compliance, regulators can help to prevent financial crises and protect the economy as a whole.

Thirdly, regulations are essential for consumer protection. They ensure that consumers are treated fairly, that their rights are protected, and that they are not exposed to undue risk. For example, regulations such as the EU’s General Data Protection Regulation (GDPR) and the Payment Services Directive (PSD2) help to protect consumers’ personal data and financial information.

Finally, regulations promote innovation in the financial sector. By setting standards and creating a level playing field, regulators can encourage competition and innovation, leading to better products and services for consumers.


How did Brexit affect the RegTech industry in the UK?

Brexit had a significant impact on the RegTech industry in the UK. Before Brexit, the UK was part of the European Union (EU), and financial institutions were subject to EU-wide regulations. With Brexit, the UK had to create its own regulatory framework. This created new challenges for financial institutions, as they now had to comply with two separate regulatory regimes.

The increased regulatory complexity led to a significant demand for RegTech solutions that could help financial institutions comply with both EU and UK regulations. RegTech firms in the UK, as well as those in the EU, saw a significant increase in business as financial institutions sought to navigate the complex regulatory landscape.

New opportunities for RegTech emerged after Brexit, the was free to create its own regulatory framework, which could be more innovative and flexible. This created a favourable environment for RegTech firms to develop new solutions and compete globally.

What does a career in RegTech offer?

The demand for professionals with expertise in RegTech is growing rapidly. A career in RegTech not only offers the opportunity to work with cutting-edge technology, but it also offers the satisfaction of knowing you are making a positive impact on the financial sector. The high demand for RegTech professionals has created many opportunities for growth and advancement.

RegTech professionals play a critical role in ensuring that businesses comply with regulations and protect consumers. This can be a rewarding experience for those who take pride in their work and want to make a positive impact on the financial sector.

If you are interested in working with cutting-edge technology, this space is an innovative field that is constantly evolving. Professionals in this area have the opportunity to work with the latest technology which will shape the future of the industry. 

RegTech companies are constantly developing new solutions to meet the evolving needs of financial institutions and regulators. This creates a dynamic and exciting work environment for individuals who enjoy problem-solving and staying on top of the latest technological advancements.

As financial institutions become increasingly dependent on RegTech solutions, the industry will continue to grow and the demand for RegTech professionals is set to increase. I would emphasise to FinTech companies that investing in RegTech is not just about avoiding penalties and fines, but it’s also about improving the overall efficiency and competitiveness of the business.

With the right solutions, a business can stay ahead of the regulatory curve and remain compliant, while also improving its bottom line. As the financial sector continues to evolve and become more complex, the importance of regulations and regulatory compliance will only continue to increase, making RegTech a critical part of the financial landscape.

Rich, UK, Director

For more information and advice on the RegTech space, contact Rich Lesser at [email protected] or alternatively, you can view our live roles here


RegTech solutions ensure accuracy and reliability in automating compliance processes through a combination of advanced technologies such as artificial intelligence (AI), machine learning (ML), natural language processing (NLP), and big data analytics. These technologies enable RegTech platforms to analyse vast amounts of regulatory data, interpret complex regulatory requirements, and identify potential compliance issues with high precision. Additionally, RegTech solutions often incorporate features such as real-time monitoring, automated reporting, and predictive analytics, enhancing compliance processes’ effectiveness and efficiency. By leveraging these capabilities, RegTech firms can help financial institutions maintain compliance with regulations and mitigate the risks associated with regulatory non-compliance.

Brexit has necessitated adjustments in the RegTech industry’s offerings and strategies to address the complexities of navigating dual regulatory regimes in the UK and the EU. Financial institutions operating in both jurisdictions face challenges in complying with divergent regulatory requirements and maintaining consistency across their compliance processes. As a result, RegTech firms have focused on developing solutions that can adapt to regulatory changes in both the UK and the EU, providing flexibility and scalability to meet the evolving needs of their clients. Additionally, RegTech firms have enhanced their regulatory intelligence capabilities to ensure comprehensive coverage of regulations in both regions and facilitate seamless compliance management. Brexit has spurred innovation in the RegTech industry, driving the development of solutions that can effectively address the regulatory challenges posed by geopolitical shifts and regulatory divergence.

The future direction of the RegTech industry is characterised by emerging trends, regulatory priorities, and technological advancements shaping the demand for RegTech professionals and solutions. Key trends include the increasing focus on risk-based regulation, the rise of cross-border regulatory initiatives, and the growing adoption of RegTech solutions by non-financial sectors such as healthcare, energy, and telecommunications. Regulatory priorities are shifting towards cybersecurity, data privacy, and sustainable finance, driving demand for RegTech solutions to address these emerging risks and compliance challenges. Technological advancements such as blockchain, cloud computing, and distributed ledger technology (DLT) are also reshaping the RegTech landscape, enabling innovative approaches to compliance monitoring, data management, and identity verification. RegTech will play a pivotal role in helping organisations adapt to regulatory changes, manage compliance risks, and drive operational efficiency as the financial sector continues to evolve.

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