Since the 2008 financial crisis, banks have been plagued by waves of new regulations that essentially became moving targets subject to continuous modification and endless reinterpretations. To effectively handle compliance, control and risk management, banks had to retain armies of new staff and external consultants, something that cost them nearly US$100 billion last year—a number that’s been growing 15% to 25% annually over the past four years.
That’s changing as banks increase investment in regulatory technology, or RegTech. By 2018, spending on RegTech will exceed US$80 billion; by 2020, it jumps to more than US$100 billion, according to Opimas managing director Medy Agami. Of that, data management, risk management tools, and regulatory reporting and compliance tools will account for more than 90% of spending on RegTech.
At the same time, a reduction in the overall level of regulation, coupled with automation of many of the compliance tasks that remain, will lead to significant savings in ongoing operational costs, including a sharp decline in spending on talent and consulting.
To read the full report, How RegTech is Changing the Banking Landscape, please click here.