According to recent figures from Fortune Business Insights, the global regulatory technology (regtech) market is projected to grow from $15.80 billion (€14.7 billion) in 2024 to $85.92 billion (€80 billion) by 2032, with North America expected to hold the biggest market share. As the complexity of compliance regulations rapidly increases, adoption of advanced technologies is enabling organisations to deal with the workload by automating tasks, monitoring transactions and dates, analysing potential threats, and securely verifying identities.
Julie Kennedy, partner in financial services, risk and regulation at PwC Ireland, says adopting regtech can give businesses a competitive edge.
“The regulatory landscape in Ireland includes a combination of European and domestic law, regulation and guidance. In order to secure their customer interests, companies must assess their compliance with regulation, taking into account their strategic change initiatives, their customers’ expectations and also the evolving regulatory landscape,” she says.
Whether it is through utilising advanced technologies such as artificial intelligence (AI), blockchain or biometrics, Irish regtech companies are holding their own in terms of leveraging innovative tech to address the regulatory landscape, mitigating the regulatory burden and allowing businesses to focus more on their core business activities.
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Kennedy says regtech solutions are improving on legacy compliance methods all the time: “Regtech can interrogate companies’ data to identify risks specific to their business through defining acceptable parameters, and tailoring rule sets to identify trends and anomalies automatically can then be reviewed by companies’ employees. The use of regtech can reduce the manual review required by companies, freeing up capacity for higher value work to drive business and customer value.”
Paradoxically, technology can help businesses be more human, whether it’s by reducing compliance-focused touchpoints with customers or reducing the repetitive workloads of employees, allowing them more time for creative work and critical thinking.
The activities of successful Irish regtech companies span all facets of compliance, regulatory reporting and data management, risk management and reporting – and not just recently. Dermot Desmond founded Daon in 1999 – a lifetime ago in technology terms. Daon’s biometric authentication technology, which reduces the risk of fraud by automating identity verification processes, has been granted more than 285 patents for the processes and algorithms driving its platforms and applications.
Another Irish success story, Corlytics, founded in 2013, uses advanced analytics to aggregate regulatory data and help organisations understand and prioritise it in order to ensure timely and accurate reporting. Following on from the acquisition of Clausematch last year, the company recently announced the purchase of a digital regtech platform from Deloitte UK, taking on the 17 employees associated with it.
Corlytics chief executive John Byrne says the regtech market is growing and evolving fast and he intends to “continue to seek opportunities for sustainable expansion and consolidation” within it.
For new Irish regtech start-ups hoping to emulate the success of those more established companies, the Central Bank of Ireland’s (CBI) innovation sandbox, expected to start in Q4 of this year, will select initiatives consistent with public policy objectives and provide regulatory advice and support to inform their early-stage development. Such sandboxes provide controlled environments – safe spaces – in which to test innovative products, services, business models and delivery mechanisms.
Louise Kelly, executive with the Financial Services Ireland team at Ibec, says she is heartened to see the CBI engaging with start-ups in the fintech and regtech space.
“The forthcoming CBI innovation sandbox will provide a fantastic opportunity for firms to work on innovative ideas with regulatory advice and support,” she says.
Regulatory sandboxes are a growing global trend, since the first was formed in 2014 under the UK Financial Conduct Authority’s Project Innovate initiative. The European Blockchain Regulatory Sandbox launched last February, supporting 20 projects annually until 2026. Among their advantages is that regulators benefit from having early visibility on initiatives, enabling them to see what works, or not, as the case may be.
CBI deputy governor for financial regulation Sharon Donnery says the bank’s proposals to deliver an innovation sandbox programme are part of a broader strategy to transform its approach to regulation and supervision.
“They will help foster innovation in financial services, supporting better outcomes consistent with our public policy objectives,” she says. “And they will help firms to build safeguards into their early-stage development, embedding a regulatory culture to ensure they are properly prepared for the responsibilities that come as regulated firms.”