Juniper Research says the growth of regtech will be driven by a “dramatic rise” in the automation of resource-intensive tasks, such as those involved in KYC (Know Your Customer) checks and increasing use of AI in transaction monitoring.
According to the research report - Regtech: Cost Savings, Technological Impact & Vendor Analysis 2019-2024 - AI is ideally suited to regulatory space, as it can dynamically reduce false positive and false negative rates; leading to significant time, resource and ultimately cost savings for compliance monitoring processes.
Juniper says with no anticipated “relaxation of regulatory rigour” over the forecast period - and the ever-increasing spectre of financial penalties for non-compliance - global regulatory compliance spending will increase from just under US$278 billion to more than US$316 billion over the next 5 years.
According to Juniper the combined cost savings for KYC (Know Your Customer) checks for banking and property sales will near US$1 billion by 2024 - a growth of 690%.
“The impetus for this will be efficiency savings, as well as the enhanced user experience that can be implemented in customer onboarding. This will reduce user frustration by improving response times; increasing overall user satisfaction,” Juniper notes.
“As the financial systems of developing regions become more advanced, so will their needs for regtech solutions. These regions will have increased regtech spending in the longer term.”
The Juniper Research report recommends that organisations invest in the cost-saving potential of AI and cautions that although AI has vast potential, its use must be in line with overall business objectives or deployments will invariably fail to meet expectations.