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Market Overview

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The U.S. RegTech market experienced significant growth and was valued at USD 2.55 billion in 2022. It is expected to reach USD 8.21 billion by 2028, with a compound annual growth rate of 21.54% during the forecast period. RegTech, which utilizes modern technologies such as big data and artificial intelligence, addresses regulatory challenges primarily in the financial services sector. It is a subset of FinTech that focuses on leveraging technologies to meet regulatory requirements more effectively and efficiently than traditional approaches.

While RegTech initially concentrated on the financial sector, it is now expanding into other regulated industries. Compliance, reporting, and regulatory monitoring are the main areas of focus for RegTech firms in the financial sector. These companies assist in predicting potential risk areas and provide systematic analysis of data. By utilizing analytics tools developed by RegTech firms, both financial and non-financial organizations can effectively comply with regulations while saving time and resources.

The rise in fraudulent activities, particularly money laundering, has been a driving force behind the growth of the U.S. RegTech market. The increasing prevalence of digital fraud attacks in financial service organizations, which have risen by 109% in the U.S., necessitates the adoption of RegTech frameworks to help manage complex regulatory compliance requirements and mitigate risks.

Artificial intelligence (AI) has gained popularity and is being increasingly used across various industries due to the vast amount of data generated daily, which is challenging to handle manually. AI technology offers new opportunities and advantages with the potential for significant economic and societal impact. Recent advancements in big data, computing power, data storage, and the digital economy have facilitated the rapid implementation of AI in finance and other sectors. Competitive pressures in the financial industry have accelerated the adoption of AI, leading to transformative changes in client interfaces, efficiency, cost savings, risk management, compliance, and forecasting accuracy.

However, the RegTech ecosystem faces the challenge of cyber threats. While automated compliance provided by RegTech reduces operational risks and enables more thorough checks for internal fraud and anti-money laundering, it also presents cybersecurity risks. Common risks include sabotage, data breaches, and data or identity theft, both from internal and external sources, including state-sponsored attacks. Even technologies previously considered secure, such as biometric authentication, have become potential targets. The use of malicious techniques, including deep fakes and machine learning, poses additional challenges to the growth of the U.S. RegTech market.

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Market Segmentation

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The market is segmented based on various factors, including component, organization size, deployment type, vertical, and application.

Segmentation by Component
Solutions
Services

Segmentation by Organization Size
Large Enterprises
Small and Medium Enterprises

Segmentation by Deployment Type
Cloud-based
On-premises

Segmentation by Vertical
Banking
Insurance
Non-financial

Segmentation by Application
Risk and Compliance Management
Identity Management
Regulatory Reporting
AML and Fraud Management
Regulatory Intelligence

The U.S. RegTech market can be divided into two components: solutions and services. The solutions segment, which focuses on maintaining compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations, contributed the highest revenue in 2022. These solutions are primarily AI-driven applications that utilize machine learning technology. They serve various purposes such as fraud prevention, risk management, KYC technology, and regulatory change discovery.

Among different organization sizes, large enterprises held the largest share of the U.S. RegTech market, accounting for over 63% in 2022. Particularly in the financial services industry, RegTech is becoming increasingly crucial as it helps meet the rising demand for regulatory compliance while improving operational efficiency. Large enterprises invest in RegTech solutions to enhance compliance, operational efficiency, and customer experience while reducing costs. Their adoption of RegTech is driven by their specific regulatory and business requirements, with significant contributions coming from the financial services, healthcare, insurance sectors, and others.

Cloud-based RegTech solutions offer several advantages, including faster deployment, limited capital and operational expenditure, pay-as-you-grow models, integration APIs, unlimited storage, scalability, redundant infrastructure, and reduced reliance on internal IT support teams. As a result, the cloud-based segment is the leading revenue contributor in the U.S. RegTech market. Cloud-based RegTech services are particularly suitable for organizations migrating their IT applications and business processes to the cloud. Vendors in the U.S. RegTech market compete fiercely in terms of pricing and customer support, with multiple local and global providers catering to end-users since the inception of cloud-based RegTech services.

In terms of verticals, the U.S. RegTech market is divided into banking, insurance, and non-financial sectors. In 2022, the banking segment accounted for over 52% of the market revenue. RegTech solutions have had a significant impact on the banking industry, providing security, cost-effectiveness, and operational efficiency. By utilizing advancements in AI, data mining, machine learning, blockchain, and automation, RegTech assists banks in managing risks, optimizing processes, and solving compliance-related challenges.

The risk and compliance management application segment is projected to be the largest in the U.S. RegTech market. With innovative techniques and capabilities, RegTech helps organizations enhance their reporting, regulatory governance, compliance, and risk management. It simplifies regulatory compliance, accelerates digital optimization, and facilitates business growth, ultimately improving risk management efforts.

The U.S. RegTech market is experiencing rapid expansion due to the increasing need for organizations worldwide to comply with a wide range of new and existing regulations. This has led to significant investments in RegTech both in the U.S. and globally. Organizations are turning to RegTech startups’ technology to streamline compliance, data management, reporting, risk management, and more. As the RegTech market matures, cosmopolitan cities such as New York, San Francisco, Palo Alto, Boston, and Seattle have emerged as leading global hubs for deal activity. This dominance by U.S. cities is expected given the strong fintech innovation ecosystems established in San Francisco and New York.

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Competitive Landscape

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The U.S. RegTech market is characterized by the presence of numerous players. This has resulted in increased competition, compelling vendors to continuously innovate their offerings and provide a unique value proposition in order to remain competitive. Companies are required to invest substantial amounts of money in research and development (R&D) to introduce new technologies and enhance their product offerings. Key players in the U.S. RegTech market include Ascent, Chainalysis, Broadridge, Deloitte, and IBM. Additionally, there are other notable players operating in the market such as ACTICO, Clausematch, ComplyAdvantage, Fenergo, Onfido, and PaymentWorks. While established players currently dominate the industry, new entrants have significant growth opportunities available to them.

Key companies profiled in this report include Ascent, Chainalysis, Broadridge, Deloitte, IBM, ACTICO, Clausematch, ComplyAdvantage, Fenergo, Onfido, PaymentWorks, Jumio, Acuant, MetricStream, NICE, PwC, Thomson Reuters, Wolters Kluwer, Ceptinel, Hummingbird, CyberGRX, Exiger, FixNix, Feedzai, Sensa, DataVisor, TruNarrative, Alessa, Tessian, Corlytics.

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Key Questions Answered

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How large is the U.S. Regulatory Technology (RegTech) market?
The size of the U.S. RegTech market reached USD 2.55 billion in 2022 and is projected to reach USD 8.21 billion by 2028.

What is the growth rate of the U.S. RegTech market?
The U.S. RegTech market is expected to grow at a compound annual growth rate (CAGR) of 21.54% from 2022 to 2028.

What are the significant trends impacting the U.S. RegTech industry?
The adoption of artificial intelligence (AI) and other new technologies in the RegTech industry, as well as the application of RegTech solutions in non-financial institutions, are notable trends influencing the U.S. RegTech industry.

What segments make up the U.S. RegTech market?
The U.S. RegTech industry report includes segments based on components (solutions and services), organization size (large enterprises and small and medium enterprises), deployment type (cloud-based and on-premises), verticals (banking, insurance, and non-financial sectors), and applications (risk and compliance management, identity management, regulatory reporting, anti-money laundering (AML) and fraud management, and regulatory intelligence).

Who are the main players in the U.S. RegTech market?
The key players in the U.S. RegTech market include Ascent, Chainalysis, Broadridge, Deloitte, and IBM.