IdentityMind Global named as RegTech companies to look out for in 2016
Dealing with regulations and compliance has always been a costly and far-from-hassle-free experience for companies, especially for young startups in the financial services industry. Regulatory documents are 100+ page pamphlets requiring special skill and experience to comprehend and deal with. An example of skyrocketing expense that compliance requires is a $2.2 billion spent by London-based HSBC on regulation and compliance in the first nine months of 2015, up 33% YoY. Financial institutions’ expenses on compliance have increased as a percentage of total expenditure over time. Globally, ~$80 billion is spent on governance, risk and compliance, and the market is only expected to grow, reaching $120 billion in the next five years. If compliance seems expensive, non-compliance will just knock out the common sense. Financial institutions in the US alone have paid more than $160 billion in fines for non-compliance. The main point is, the financial services industry is in a need for more cost-effective solutions in regulatory and compliance matter without the need to sacrifice the quality. The modification of FinTech has emerged in recent years to address the need and brought bright entrepreneurs into RegTech – a set of companies and solutions that address regulatory challenges across industries, including financial services, through innovative technology. The industry is poised to succeed as the global demand for regulatory, compliance and governance software is expected to reach $118.7 billion by 2020. It is expected that close to 55% of the spending will occur in the consulting and business services. North America is expected to overtake Europe and APAC when it comes to spending in regulatory software over the next five years. At present, close to 35% of the software spending happens in APAC. Investments in regulatory software can lead to an ROI of 600% plus with a payback period of fewer than three years; yet, most financial services firms have not subscribed well to RegTech solutions.