Chart of the day
Resilient RegTech
Among stubborn inflation and slowing economic growth, one industry continues to display resilience — the RegTech industry. Given the current outlook, this may sound surprising, with early-stage RegTech companies often being dependent on the availability of credit (particularly at the seed funding level), which has become expensive. However, there are several significant regulatory trends currently afoot in capital markets, which are emphasising the need for robust RegTech technology, and as shown above, it is undoubtedly where the money is flowing right now. To name a few regulatory trends, there’s the shift to T+1 trade settlement in the US next year. US Banks are currently coming under fire from US regulators over their use of illicit messaging channels. There’s also the increase in capital reserve requirements for banks in light of the SVB collapse earlier this year, with the requirements set to become effective in 2028. You can also throw MiCA into the mix too in the EU, which has provided the first globally recognised crypto regulatory framework and is coming into force next year.
As such, the following statistics arguably shouldn’t come as a surprise;
Global RegTech seed deal activity is on track to reach 134 deals in 2023, a 11% increase YoY.
Global RegTech seed investment is on track to reach 314m in 2023, a 5% increase from 2022.
The USA was the most active RegTech seed deal country with 32 deals, representing a 47% share of total deals.
That’s resilient RegTech for you.