The global regtech industry could be worth $85bn by 2032, how can the UK become a market leader?
One of the key challenges facing the City of London is the growing competition from finance centres all around the world. New York continues to be a powerhouse attracting many exciting businesses to list, Singapore’s regulatory environment and digital infrastructure
remain a massive appeal to businesses, and of course Dubai and UAE continue to grow in prominence as major financial centres. As custodians of the London’s finance district, the City of London Corporation leads the way in promoting the innovation and growth
teeming from our financial services ecosystem.
While global financial centres jostle for first place in capital markets, insurance and many more key industries in our sector, world-beating fintechs remain an unfaltering product of the City of London. Recent data published by KPMG showed that investment
in the UK’s fintech industry almost tripled in the first half of 2024 totalling £5.7bn over the six months, up from £2bn in the same period in 2023.
Although the UK holds the crown as the centre for European fintech, the US still leads globally with just under half of all fintech investment. So, the question beckons, how does the UK close the fintech gap on our friends across the Atlantic?
Just last year the City Corporation announced a partnership with industry body Innovate Finance to strengthen the collective voice of the UK regtech industry. The global regtech market was valued at £9bn ($12.54bn) in 2024 and is projected to grow to £64.9bn
($85.92bn) in 2032 representing a compound annual growth rate of 23.6%. The reality is, in a world of ever-growing cybercrime and fraud, coupled with a push from regulators to stamp this out, the demand from financial institutions and businesses to be compliant
will increase astronomically.
UK as a regtech leader
Currently, London remains the heart of global regtech. We have the world’s largest cluster of financial services in the Square Mile providing a deep pool of talent, clients and partners for regtech vendors. We have a business-friendly regulatory environment
with strong regulator and investor support and not to mention a fintech friendly ecosystem with some 3000 fintech companies headquartered in London alongside hundreds of foreign banks.
London has all the tools to lead a regtech wildfire across the UK and globally. However, without tightknit collaboration between the industry and regulators, there’s a risk that the measures our innovative regtech firms need to grow could be overlooked.
One of the first pieces of work we set out with Innovate Finance was calling on the PRA and FCA to establish a Regtech Test to help assess how technology can best enable regulatory compliance. A key aim of the platform is to involve industry in the policymaking
process by consulting on the impact of new regulation on compliance technology. This will create a ‘learning loop’ between regulated firms, vendors and regulatory policy makers with insights flowing in all directions.
The case for regtech focus
Regtech is a key growth opportunity for the UK. Stronger alignment between Government, regulatory bodies, and industry will only produce a more robust framework for firms to improve compliance using regulatory technology. Another key challenge in scaling
the adoption of regtech solutions is the lack of awareness about the benefits they offer.
The case for a strengthened focus on regtech is clear to see in the success stories across the industry which the City Corporation shone a light on in a recent report.
From facilitating digital inclusion to streamlining the document-heavy mortgage process, there is more than enough evidence to highlight the UK’s position at the vanguard of regtech and the opportunity to be the world’s one-stop shop for compliance technology.
Take the work of Bloom Money and IDVerse in facilitating financial inclusion. The platform is effectively a digital version of a traditional way of saving money known formally as rotating savings and credit association, but informally as Ajo, Esusu or Pardna
among African Caribbean communities.
Bloom Money digitises these money clubs to serve members of diasporas who are new to the UK and may have trouble securing a bank account when first coming to the country. Bloom Money partnered with IDVerse to shore up its customer verification and onboarding
and is now serving migrant communities across the country giving them vital access to safe and monitored financial services.
Or take the work of online mortgage broker Habito partnering with Resistant AI to bolster its fraud protection through automated document authentication. As technology becomes more sophisticated, so are the methods used by fraudsters, making the case for
regtech innovations even stronger.
No room for complacency
The Reg Doctor, Dr Sian Lewis, who led on our work looking at
regtech success stories, said: “A financial services sector that is robustly compliant can only be good for the economic development of the UK.”
Economic growth is a key focus not only for the current Labour Government but also British people and businesses in every corner of the country. Financial services, often described as the engine room of the economy, is integral to economic growth and therefore
we must seize every opportunity to bolster our regtech industry and take full advantage of the lead we have.