Key trends in RegTech 2023

7 Key trends in RegTech

Here, I share some of the most important trends I have observed in our industry over the last year. My insights are based on numerous conversations with industry thought leaders and insights from  industry conferences that have taken place during the year.

1. Increasing appetite for AI, particularly Gen AI

The power and the opportunities created by recent advances in computer science are vast. 
Most large institutions and RegTechs are actively exploring potential use cases, with a great deal of investment going into talent, building dedicated teams and centres of excellence, as well as formulating strategies.
Of course, for most, this has been the case for many years and, at TAINA, we have been using AI in our Platform in production as a standard.
The new element here is the interest and investment created by Gen AI in particular, and we have seen significant new investment across this space as a result.

2. Implementation remains very cautious 

Given the possible risks, and despite this increased interest and investment, the implementation of Gen AI in production within regulated financial institutions continues to be approached cautiously.
Gen AI has the capability to create responses that appear correct and meaningful on the surface but that are, in fact, inaccurate or meaningless. This could create unintended consequences, with potential risks exceeding any likely savings.
Whilst institutions recognise that piloting is easy, scaling in production is always harder. This is especially true of Gen AI.
Certain use cases emerge as the most likely candidates for production—typically concentrating around CX and security.
At TAINA, we will continue to work actively in this area as we observe computer science evolving alongside our clients’ needs and indeed, in some areas, we have decided against using Gen AI. 
In particular, whilst there are clear potential cost savings to be achieved by utilising AI for our customers, our customer-centric philosophy nonetheless means that we prioritise human contact, listening and building human relationships at all levels within our client organisations.

3. Increased focus on FinCrime in light of the macro political environment

With the tragic events continuing in Ukraine, sanctions breach risks faced by financial institutions are uppermost in our minds at TAINA. As a result, we retain a keen focus on identifying and preventing potential sanctions breaches.

4. Continuing evolution of compliance manager skillsets

This is a developing trend. At TAINA, we anticipate that the compliance managers of the future will be trained in the selection and implementation of RegTech solutions, leveraging their relationships with technology vendors to evolve solutions in line with their institutions’ changing needs.

5. Increasing sophistication in RegTech selection approach by financial institutions 

With build vs buy dilemmas increasingly becoming a thing of the past for the most advanced financial institutions, attention is shifting towards selecting the right solution. Financial institutions are becoming increasingly sophisticated in selecting their vendors, which gives them confidence to make these decisions faster. 

Similarly, financial institutions that have in-house Innovation Labs are often able to provide capabilities to test solutions very fast in their sandboxes, empowering these institutions to make swifter decisions. 

6. Costs pressures result in prioritising Plug and Play, light to deploy and maintain solutions 

With cost pressures intensifying, financial institutions are prioritising Plug and Play implementations, at least—wherever possible—as the first step.

At TAINA, we have created new offerings that meet this specific need.

7. Success stories of institutions working closely with RegTechs, creating a new culture for our industry

It has been rewarding to witness some of the largest financial institutions sharing positive experiences of investing time in young RegTech providers. Jointly, they have been able to create perfect solutions for the evolving needs of institutions, and a high ROI for them.
These new developments are shaping a stronger collaborative culture for our industry, and there is a sense that we are travelling together in the same direction. 

My hypothesis is that trends 1 and 7 combined are capable of transforming our industry. Utilising cutting edge technology and agile processes in close partnership with expertise and experience will lead to a huge positive difference across the board.