By ET Bureau - March 22, 2021 2 Mins Read
A new study from Juniper Research has found that spending on Regtech, systems that enable banks and other heavily regulated sectors to meet their compliance burdens, will exceed $130 billion in 2025, from $33 billion in 2020.
The report found that this 290% growth is being fuelled by greater use of AI to automate highly manual tasks and the transition to digital onboarding, which have emerged as critical capabilities in the wake of the pandemic.
The research recommends that Regtech vendors make AI a core part of their solutions, whilst still leveraging human intelligence to keep their decisions fully explainable. AI’s capabilities in automating manual tasks will allow businesses to begin to improve their levels of spending on regulatory compliance.
Digital Onboarding in Banking Growing Rapidly
The new research, Regtech: Market Opportunities, Challenges & Forecasts 2021-2025 Market Research, found that nearly 330 million new bank accounts will be opened via digital onboarding in 2025, from 184 million in 2020. Ultimately, consumers will continue to use digital onboarding in ever-greater numbers and, as such, vendors must design long-term strategies that support this.
Research author Nick Maynard explains: ‘Digital onboarding has been accelerated by lockdown measures, but ultimately, it is an acceleration of existing trends towards greater digital engagement. Businesses should rebuild their KYC and onboarding processes from the ground up to take advantage of these new capabilities, or they will lose ground to digitally native competitors.’
AI Gaining Ground in Digital Onboarding
The research also found that almost 18% of banking digital onboarding in 2025 globally will use AI systems, compared to under 4% in 2020. The report identified that the introduction of AI in areas like identity document verification means that businesses can finally move from their still largely manual processes to a fully digital model of KYC.
This will provide significant cost savings of over $460 million in banking onboarding alone, and will also provide a significantly improved user experience.
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