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What's the Future for European Regtech Vendors?
Europe leads the way when it comes to tech-related regulations, and regtech firms are having a field day as business organizations make a beeline for advanced solutions that make compliance simpler.
FREMONT, CA: Regulating technology has become essential in the face of the extensive advancements that have taken place in the last few years. The European region has done well to come up with regulatory policies that govern the use of advanced technologies. These regulations are crucial but often become taxing for the businesses. To help address regulatory compliance complexities, regulatory technology firms have mushroomed across Europe. Leveraging technology, the regtech firms design compliance solutions that offer business organizations comprehensive abilities to comply better with the strict guidelines. Non-compliance results in the brand image taking a hit, and several penalties that result in financial losses. Regtech companies in Europe have been able to cater to a host of industries, including financial ones, helping them overcome challenges related to compliance. Regtech, in Europe, is expected to see rapid growth in the coming years. This article discusses the way forward for the regtech companies and vendors looking to consolidate their positions in the European, as well as the global markets.
European lawmakers have acknowledged that the digital revolution has changed the regulatory requirements drastically. The necessity of creating policies that guard against the violation of privacy and ensure the protection of customer interest is apparent because of the rising number of security breaches that have made it to the news in recent times. Along with that, standardizing the use of technology is also crucial from the economic point of view. These factors have pushed Europe into active policy-making. As a result, regtech companies have also found enormous opportunities for growth in the European market. Today, regtech companies offer solutions that are backed by advanced technologies like artificial intelligence, machine learning, and data analytics. Features like audit management, reporting, and operational assessments make the regulatory solutions highly valuable.
The advanced technologies are going to see further evolution that will result in even more refined regulatory solutions. As the nature of risks in the digital ecosystems show no signs of stagnation, and the sophistication of technology continues expanding, one can expect regulatory frameworks to evolve as well. Thus, regtech companies will need to craft solutions with enough foresight. Taking into consideration the probable advances in technology and business models across industries help create solutions that are dynamic and long-term. Be it banks or insurance companies, as digitalization progresses, their demands from regtech solutions are bound to transform. Thus, regtech vendors have to be prepared with flexible, scalable solutions.
The regulatory solutions provided by European regtechs are grouped into categories like identity management, risk management, regulatory reporting, and compliance management. Development in automation has been impactful for regtech firms since regtech automation makes compliance stronger and reduces the associated costs. The use of artificial intelligence and machine learning to power cognitive ability that helps monitor and enforces regulatory norms have revolutionized compliance. Be it AML or KYC, banks are turning to intelligent, automated, cloud-based solutions. One of the more recent trends that will see rapid growth in the future is that of blockchain in regtech. Distributed ledger technology has a significant amount of potential in improving regtech offerings. Some regtech firms in Europe are already using blockchain as a tool for the secure sharing of data. Sensitive customer information needs to be shared across departments and firms, and blockchain offers one of the most reliable routes of sharing data with zero compromises in security. Similarly, blockchain-based applications can be used by businesses to report to regulatory bodies with transparency and convenience.
According to the market forecasts shared by various market research firms, regtech companies in Europe can expect growing demands for compliance solutions, resulting in high profits and expanding opportunities. In helping businesses prove the legality of operation and technology adoption, regtechs will need to consistently enhance risk identification and reduce false-positive rates.
See Also: Top Regtech Companies