Covid-19 Catalyzes Rapid Growth of Regtech Industry in Asia-Pacific
The report, titled The state of Regtech in APAC, provides the most comprehensive and independent analysis available on regtech adoption in 10 key APAC markets of Australia, Mainland China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Business Ireland commissioned Kapronasia, one of Asia’s leading FinTech market research and consulting firms, to develop the report which identifies the latest opportunities and hurdles facing regtech players in each of these markets.
Launch of the report today, ireland Minister of State for Financial Services Sean fleming mentionned: “I salute this comprehensive regtech report from Enterprise Ireland. It captures the essence of what the Ireland for Finance Strategy seeks to realize and the unique value proposition that Ireland offers to companies Asia Pacific and across the world. As Minister in charge of international financial services, I wish to consolidate and accelerate our position as one of the main global sites for the development of fintech and regtech. I look forward to working with Enterprise Ireland companies and their partners in Asia because together, they deliver value and provide innovative responses to global compliance challenges. “
It has been predicted that the global regtech market will grow from 6.3 billion US dollars in 2020 at US $ 16.0 billion by 2025, a rate of over 20% per year, with APAC expected to have the highest growth rate during this period. The expected growth of the sector goes hand in hand with the booming fintech scene in the region, particularly in South East Asia who saw an estimate US $ 1 billion value of investments in 2019.
While APAC is home to some of the world’s major financial centers, the non-homogeneous region displays varying levels of market development. In developed economies like Hong
Kong, Singapore, Sydney and Tokyo, regtech adoption is driven by a sophisticated financial ecosystem and a complex regulatory environment. The need for governance and accountability, the emergence of new market players, and security concerns stemming from disruptive technologies such as artificial intelligence and distributed ledger technology are giving regulatory impetus to regtech adoption.
This contrasts with developing economies where regtech adoption is driven by the industry’s promise to help create financial inclusion. Adoption also depends on business cases and underfunded regulators in these markets. That said, the market interest in regtech solutions in these economies is not as strong as that of their developed counterparts. This can be attributed to regulatory inertia and a marked difference in fundamental behavior and attitudes towards regtechs.
Developing economies are expected to mature over time, however, while the technological ecosystems of both developed and developing economies will continue to evolve at an increasingly variable pace, given the different regulatory drivers for regtech adoption. This is particularly evident in the wake of the Covid-19 pandemic which has further reinforced the various national priorities and exacerbated the economic and technological divide in APAC.
“Covid-19 has forced the financial services industry to see the value of digitization as a necessity. It has become a way for organizations to improve their services in response to changing business and consumer needs. The need for regtech solutions also extends far beyond financial services, which is why this industry is growing so rapidly. This report is a compendium for anyone working in the regulatory, risk or compliance functions of any company in the region, as well as for regtech companies looking to grow and grow in Asia Pacific, ” Explain Mo Harvey, Head of Financial Services and FinTech at Enterprise Ireland (Asia Pacific).
“Asia Pacific continues to be a strategic region, not only for Ireland which houses many companies specializing in regtech but around the world. At Enterprise Ireland, we share a commitment to supporting the development of a vibrant global regtech segment and contributing to the global regtech ecosystem, and we hope this report will provide valuable insight into the complexity of the industry as we continue. to prepare many businesses for success and long term growth in the region, ”she added.
Brian tang, vso-president of the Fintech Association of that of Hong Kong Regtech Committee and co-organizer of the APAC RegTech network which brings together the Regtech committees of the fintech associations of Hong Kong, Singapore, Japan and Malaysia mentionned, “Regtech is a secret sauce that empowers financial institutions, fintechs, virtual asset service providers and beyond. All these institutions, as well as their regulators and users, through the Asia Pacific benefit from innovative, efficient and profitable regtech solutions to fight financial crime and promote efficiency and financial inclusion, regardless of the origin of these technological solutions. “
“However, the road to adoption is certainly not straightforward. We congratulate Enterprise Ireland for making this comprehensive report on the state of Regtech in APAC public for Regtech solution providers around the world, as well. that APAC’s policymakers can take advantage of its findings to help drive the adoption of regtech in the region, ”he added.
Key regional highlights:
Here is some information from the report preview:
• Impact of Covid-19
The Covid-19 has accelerated the transition to the digitization of financial services, especially in the areas of regulation, risk and compliance.
• Compliance costs are expected to increase
The projected cost of AML compliance in Indonesia, Malaysia, The Philippines, and Singapore combined is estimated at 6.09 billion US dollars annually, of which more than half Singapore.
• Impact of regulators through APAC
Country-specific regulators have the most impact on regulatory compliance, but that of Singapore regulators also have a substantial impact in the APAC study countries.
• Adopting advanced technology
Advances in regtech solutions in developed APAC countries are starting to accelerate, driven by regulators’ need for greater oversight and a tighter regulatory environment.
• Promising areas for Regtechs
Market and industry drivers such as the rise of digital banking, P2P lending, digital assets and remote integration offer regtechs an opportunity to meet the need for specialized solutions.
• Regulatory changes
Changes in the regulatory position put more emphasis on compliance and the use of new technologies to meet standards more effectively and efficiently.
• Obstacles and challenges
Long sales cycles challenge the adoption of regtech in developed APAC, while regulatory inertia and lack of appropriate regulatory processes can hamper the adoption of regtech in developing APAC.
The Regtech Status Report in APAC is available for download here
SOURCE Company Ireland