New research from the RegTech Association has revealed that the pandemic has turbocharged the speed of change within the financial service providers as they shift from a ‘build’ to a ‘buy’ approach to fast-track their digital transformation.
The health crisis has been a massive fillip for the emerging global industry, especially in Australia which now accounts for 60 percent of all regtechs surveyed by the Association.
The Association said it has seen signs of increased investment in regtechs in the last year, potentially putting Australia in line with global trends.
The report highlighted revenue growth and capital flows into the sector.
Despite the pandemic, more than two-thirds of regtech vendors achieved strong revenue growth of 10 percent or more in the last 12 months, according to the report.
Importantly, more capital is flowing into the sector with 15 percent more regtechs reporting investment from angels, venture capitalists, corporate venture, and private equity.
The time taken to deploy solutions has reduced significantly - in particular in financial services - to an average of 8.4 months. This is down from 13.7 months.
“Significantly, the time to value has decreased, giving institutions who have deployed, quicker access to tools, efficiency, and transparency that delivers superior regulatory compliance,” said RegTech Association head Deborah Young.
"In turn, this makes the sector a much more attractive option for venture capital investment due to the overall shortening of the sales cycle."
Time to value is a measurement of the time taken from the initial conversation with a potential buyer to full production deployment by the regtech provider.
“Over the past year, we have seen a number of the big four banks in Australia support us by engaging and running programs that show the potential for regtech not only across their own organisations but by sharing their experience with Australian and overseas organisations and companies.”
A key priority for Young is to encourage government departments to become buyers of regtech solutions.
“Armed with the strength of progress in financial services, we will continue to advocate for regtech throughout financial services providers and beyond that by engaging sectors like energy and telco providers.
"There is more work to be done by the emerging sector, including improving the time to value metric and increasing the amount of capital in-bound as well as continuing to agitate for improved procurement processes to help relieve the hurdles of having large institutional customers.”