Technology is reshaping financial supervision and regulatory compliance

12 Nov

TL;DR

The growing complexity of global financial regulation has turned compliance into one of the sector’s largest cost centres. As institutions expand across jurisdictions, regulatory technology (RegTech) solutions—which automate monitoring, reporting, and risk management—are becoming essential for maintaining compliance and preventing costly fines. By streamlining regulatory processes and providing real-time oversight, RegTech enables firms to meet evolving obligations with greater accuracy, speed, and control.

Why RegTech matters now

Since the 2008 crisis, financial regulators have created a wide array of new regulations, from Dodd–Frank in the US, MiFID II in Europe and UK, to Basel III for international standards. This tightening of oversight, while crucial for market stability, has placed enormous operational strain on firms.

In 2024 alone, financial institutions paid over $19.3 billion in regulatory penalties for compliance breaches—a record figure that highlights both the scale of enforcement and the operational cost of non-compliance. The trend has continued into 2025. According to Fenergo, global fines reached $1.23 billion in the first half of the year, up 417% from the same period in 2024, with the sharpest increases linked to AML and sanctions violations.

At the same time, institutions face a dual challenge: a surge in cross-border operations and the rapid evolution of regulatory expectations around technology, data, and conduct. Against this backdrop, RegTech has evolved from a niche solution into an indispensable component of modern financial infrastructure.

What is RegTech?

RegTech refers to the use of technology—such as artificial intelligence, machine learning, cloud computing, and data analytics—to automate and improve compliance processes. It allows institutions to meet their obligations more efficiently while enhancing transparency and reducing operational risk.

According to McKinsey, current RegTech solutions fall into four main categories:

Financial risk and capital management: Tools for liquidity, stress testing, and fund transfer pricing.
Governance, risk, and compliance (GRC): Platforms that map, monitor, and report on regulatory obligations across jurisdictions.
Cybersecurity and IT risk: Solutions addressing data protection, system integrity, and operational resilience.
Financial crime and AML/KYC: Systems for detecting suspicious transactions, screening customers, and managing fraud prevention.

These technologies enable institutions to interpret, operationalise, and evidence compliance obligations at scale—something manual compliance teams should no longer achieve alone.

A market defined by growth

Industry forecasts point to sustained, double-digit growth across the RegTech sector:

  
      Forecast provider
      Market outlook (2025–2030)
    
      Mordor Intelligence
      
        2025 market size: $20.67 billion; 2030 projection: $44.11 billion; CAGR (2025–2030): 16.37%. 
      
      Grand View Research
      
        2025 market size: ~$22 billion; 2030 projection: $70.64 billion; CAGR (2025–2030): 23.1%. 
      
      IMARC Group
      
        2025 market size: ~$18.7 billion; 2030 projection: ~$45 billion; CAGR (2025–2030): 18.0%.

Beyond its size, the RegTech market’s importance lies in its strategic value: it converts compliance from a cost burden into a competitive advantage, allowing firms to expand confidently in multiple jurisdictions.

Key benefits for financial institutions

  
      Benefit
      Impact
    
      Automation
      
        Dramatically reduces manual workload and human error in data collection, reporting, and monitoring.
      
      Real-time monitoring
      
        Detects compliance issues instantly, crucial for AML and fraud prevention.
      
      Cost efficiency
      
        Yields significant savings by streamlining processes and avoiding fines.
      
      Scalability & accuracy
      
        Adapts to growth and regulatory changes; advanced analytics enhance risk insights.
      
      Centralised oversight
      
        Provides a single view of global requirements, simplifying multi-jurisdictional compliance.

Together, these capabilities translate into fewer breaches, lower operational costs, and stronger regulatory relationships.

Why this matters for multi-jurisdictional compliance

For institutions operating across several jurisdictions, compliance complexity multiplies. Each regulatory regime—from the FCA and PRA in the UK, the SEC in the US, to MAS in Singapore—defines its own reporting rules, timelines, and data standards.

RegTech’s key contribution is unification:

Consolidated oversight: Centralising global regulatory requirements and mapping them to internal controls.
Cross-regulatory alignment: Ensuring consistent adherence to frameworks such as Basel III, MiFID II, and DORA.
Automated evidence generation: Providing audit-ready records that satisfy multiple supervisors simultaneously.

In short, RegTech enables firms to transform fragmented compliance processes into a single, harmonised ecosystem.

The business case: reducing exposure and building resilience

Financial institutions operate within a regulatory landscape that shifts continually, where delays in interpreting new requirements can precipitate non-compliance and substantial penalties. Advanced RegTech platforms illustrate this capability by continuously monitoring regulatory developments and mapping them against existing regulatory requirements as well as internal policies and controls.

Such systems enable firms to:

Lower exposure to enforcement actions: Early identification of emerging obligations and proactive adjustment of controls.
Enhance transparency: Maintaining clear linkages between regulatory updates, affected processes, and audit-ready evidence.
Strengthen resilience and efficiency: Automating horizon scanning, rule interpretation, and reporting—reducing manual effort, accelerating response times, and minimising compliance costs.

Looking Ahead: regulation meets technology

Currently, regulators are themselves adopting RegTech—or SupTech—to enhance their capabilities to supervise and analyse the firms under their purview. This creates and interesting dynamic between authorities and FS firms: as companies deploy RegTech for real-time reporting and compliance automation, regulators leverage SupTech to analyse that data with greater speed and precision, accelerating the shift toward more digitally native regulators.

As compliance evolves from static documentation to dynamic, continuous monitoring, institutions that invest early in robust RegTech infrastructure will be best positioned to adapt. They will seamlessly align with emerging compliance frameworks, meet heightened operational resilience expectations, and capitalise on growing cross-border interoperability as regulators converge on common standards. In this integrated ecosystem, proactive adoption of RegTech becomes a strategic imperative for sustained regulatory alignment and competitive resilience.

How Braithwate can help

As regulatory expectations grow more data-driven and interconnected, compliance demands continuous, technology-enabled oversight. Solutions such as RegPass and FintechXpndr turn this challenge into an advantage.

For fintech start-ups, they clarify licensing pathways and automate readiness. For larger institutions, they map obligations across business lines and jurisdictions in real time.

Both reduce cost, risk, and response time—delivering governance that meets supervisory expectations. In a rapidly evolving landscape, integrating RegTech early ensures firms not only comply, but lead.

Sources