Summary
Authored by Grant Thornton, this report provides key insights into the regulatory technology (RegTech) landscape in the UK financial services sector. Based on a survey of 119 risk and compliance professionals, it analyzes trends, challenges, and the adoption of RegTech solutions aimed at addressing evolving regulatory obligations. The report serves as a guide for financial institutions seeking to enhance compliance through innovative technology solutions.
Key Take Aways
- Increased Regulatory Obligations: 77% of respondents anticipate more regulatory obligations in 2024, indicating heightened complexity in the regulatory landscape.
- Key Adoption Drivers: Cost, ease of use, and operational effectiveness are the top considerations when acquiring RegTech solutions.
- Training Needs: Although 71% of respondents believe their employees are adequately trained to manage regulatory changes, continuous improvement in training remains a focus.
- Cross-Department Collaboration: Only 16% of respondents rate departmental collaboration as very good, with 86% identifying communication gaps that need to be addressed.
- Sector Representation: The Capital Markets sector leads in RegTech adoption, reflecting its significant contribution to the UK economy.
- Top RegTech Priorities: Financial crime (AML/KYB/KYC), governance risk and compliance, ESG, and regulatory reporting solutions are the primary areas for investment.
- Adoption Challenges: Regulatory interpretation, impact assessment, and reporting remain key challenges for organizations.
- Technology Integration: Firms face pressure to improve system interoperability and seamless integration for RegTech solutions.
- Organizational Readiness: While 94% of organizations feel somewhat prepared for regulatory changes, only 8% consider themselves fully ready, indicating room for growth in compliance infrastructure.
- Strategic Collaboration: There is a growing need for organizations to engage with external partners and leverage best practices to enhance compliance efforts.
Innovation
- AI and Cloud Solutions: RegTech solutions with AI and cloud capabilities are gaining traction, with 25% of respondents favoring these technologies for addressing multiple regulatory challenges.
- Trial and Research Initiatives: Organizations prioritize the ability to test new solutions and access up-to-date research and innovation to stay competitive in compliance efforts.
- Cross-Sector Insights: By focusing on diverse needs across banking, capital markets, and insurance, RegTech providers are better positioned to deliver tailored, effective solutions.
Key Statistics
- 77% anticipate increased regulatory obligations in 2024.
- 54% prioritize cost, ease of use, and operational effectiveness when selecting RegTech solutions.
- 10% plan to invest in financial crime solutions in the next 12 months.
- 45% of respondents rate the regulatory environment as moderately complex, with 31% describing it as very complex.
- 57% rate employee training for adopting new regulations as adequate (4 or 5 out of 5).
- Only 16% view cross-department collaboration as very good, with significant potential for improvement.
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