Will the UK seize its RegTech edge as global competition heats up?

By Puja Sharma

UK must prioritise RegTech to maintain financial leadership—-As the UK Chancellor Rachel Reeves prepares to deliver the Spring Statement, financial industry leaders are calling on the government to bolster support for the regulatory technology (RegTech) sector.

With London closing the gap on New York as a global financial hub, investing in RegTech could be the key to securing the UK’s position as a leader in financial innovation.

The latest Z/Yen Global Financial Centres Index indicates that London is making strides to reassert its dominance on the global financial stage. However, staying competitive in an increasingly complex regulatory environment requires a forward-thinking approach. The RegTech industry, which streamlines compliance through advanced technology, is projected to be worth up to $85 billion by 2032, according to industry estimates. This makes it one of the most critical areas for FinTech investment.

The role of RegTech in financial services

Regulatory compliance has become a significant challenge for financial institutions worldwide. Stricter regulatory frameworks, rising enforcement actions, and the cost of maintaining compliance processes have led firms to seek innovative solutions. RegTech companies provide automation, artificial intelligence, and data-driven tools to help financial firms efficiently manage regulatory obligations.

Leo Labeis, Founder & CEO of REGnosys, highlighted the urgency for the UK government to embrace RegTech as a growth enabler: “The RegTech sector gained significant traction last year as global regulatory rewrites and heightened regulatory scrutiny, reflected in substantial fines, forced financial institutions to reassess their compliance processes and adopt innovative solutions.

Due to this compliance drive, the global industry could be worth up to $85 billion by 2032, and the sector has been earmarked as a key driver of FinTech investment this year. As firms grapple with ongoing and costly compliance challenges, the UK government has a critical opportunity to solidify London’s position as a premier RegTech hub. Support for the sector creates high-quality jobs while enabling all participants in the UK’s financial services and FinTech firms to access the tools they need to compete dynamically.

As financial hubs across the world such as New York and Singapore strengthen and global competition intensifies, the UK government must look to cement its position as a leader in FinTech and take action to support this critical growth opportunity. By nurturing the RegTech sector through policy incentives, funding, industry collaboration, and regulatory nimbleness, the UK can reinforce its position as a leader in financial innovation.”

Policy support: A critical need

Despite the promising potential of RegTech, the sector requires a supportive regulatory and investment framework. The government has the opportunity to foster this growth by introducing targeted policies such as tax incentives for RegTech development, funding for startups, and regulatory sandboxes that encourage innovation. Additionally, collaboration between financial institutions and technology firms could accelerate the adoption of RegTech solutions, ensuring the UK remains at the forefront of compliance technology.

As the global financial landscape evolves, London must position itself as a hub for financial services and innovation. The UK government’s upcoming Spring Statement will be a crucial moment to lay the groundwork for the future of RegTech and FinTech as a whole. With strategic investments and supportive policies, the UK can maintain its financial leadership while fostering a robust and dynamic regulatory technology ecosystem.