Regtech to pass $204B, make up half of all regulatory compliance spend by 2026

Juniper Research forecasts spending of $68 billion on regulatory compliance in 2022 will grow more than 200 percent by 2026 to surpass $204 billion.

The agency’s latest report, Regtech: Emerging Trends, Regulatory Impact & Market Forecasts 2022‑2026, predicts that by 2026 regtech will grow to make up more than 50 percent of all regulatory compliance for the first time, in part due to the integration of regtech with Banking-as-a-Service (BaaS).

The growth will boost the outsourcing of digital onboarding, AI-based online documentation verification and KYC, according to the research.

By 2026, 26 percent of digital onboarding processes in the banking market will use AI systems, up from 8 percent in 2022. AI will also see more applications in increasingly sophisticated use cases such as fraud detection and mitigation.

The next big opportunity for regtech will be healthcare and online gambling, according to the forecast. The need for user verification in these sectors as well as currency exchanges as new regulations come into effect around the world will bring new growth to the regtech sector.

Remote onboarding technologies continue to be rapidly adopted by businesses in regulated industries, with a pair of examples coming from South Asia.

Cryptocurrency use rockets in Philippines, seen as option for financial inclusion via AI

The use of AI in cryptocurrency use is seen as an accelerator for financial inclusion in the Philippines, according to Michael Calma, the new Philippines country manager for Advance.AI in an interview with The Manila Times.

While the Bangko Sentral ng Pilipinas (BSP) is promoting more formal methods of financial inclusion with a Digital Transformation Roadmap to increase digital payments and loans and the MOSIP-based PhilID biometric digital identity scheme pushing the opening of bank accounts, cryptocurrency transaction numbers rose 362 percent in the first half of 2021. The gain in popularity is something of a concern for consumer protection.

“Crypto is gaining popularity in the Philippines, with the Philippines having the third-highest rate of cryptocurrency use across 74 countries. This is not surprising, given few requirements on capital/bank accounts and the promise of quick gains,” Calma told The Manila Times.

“Crypto also offers access to financial services for the 48 percent of the adult population that is unbanked/underbanked and allows them to have an ownership stake in the ecosystem.”

Calma said one of the reasons there are so many unbanked or underbanked are the traditional ways of assessing credit profiles. AI could allow greater use of smartphones to open both bank and crypto trading accounts using biometrics, liveness detection. Accessing data about the phone such as smartphone type, data package and e-commerce transactions could create an alternative method of credit scoring.

Advance.ai raised $200 million last year to expand its selfie biometrics and compliance checks to new markets.

Commercial Bank of Ceylon adopts remote e-KYC for Flash accounts

Sri Lankans can now open, activate and use bank accounts at the Commercial Bank of Ceylon without ever visiting branch thanks to new video calls for remote onboarding, reports Island.lk.

Onboarding requires document scanning and then a bank officer calls the applicant via video call to undergo verification and meet the necessary regulatory requirements.

Holders of ‘Flash’ digital bank accounts will then be able to link other bank accounts to then transfer money between them as well as use tools for utility expenses, budgeting, investments and e-commerce.

The app also calculates the carbon footprint of transactions and works directly with the LANKA QR code system for mobile payments.

Article Topics

Advance.AI  |  AI  |  AML  |  biometrics  |  digital identity  |  document verification  |  fraud prevention  |  identity verification  |  Juniper Research  |  KYC  |  onboarding  |  regulation