Financial firms shift toward RegTech investment

By Parth Prabhudesai

Rapid regulatory change is placing increasing pressure on financial services firms, with many struggling to keep pace amid limited resources and growing compliance demands. According to a recent survey by AscentAI, the industry is at a pivotal moment as organisations balance rising complexity with the need for greater efficiency.

The study, which surveyed risk and compliance professionals across fintech firms, Tier 1 banks, regional banks, and investment institutions in North America and Europe, highlights the persistence of manual processes as a major bottleneck. As per AscentAI’s findings, 58% of organisations still operate at a “Basic” or “Dependent” maturity level, relying heavily on spreadsheets, manual workflows, or external advisors. Only 16% reported having “Advanced” compliance capabilities, defined by integrated and automated systems.

However, the report suggests a shift is underway. The proportion of firms reaching advanced maturity is expected to more than double to 35% within the next year. Among Tier 1 banks, the transformation is even more pronounced, with 67% anticipating significant progress toward automation, underscoring a strategic push by larger institutions to modernise compliance infrastructure.

Operational challenges remain consistent across organisations. The survey notes that 57% of respondents identified manual processes as their primary pain point, while 39% cited fragmented data systems and the lack of a unified data source. Additionally, 30% expressed uncertainty about whether they possess complete and accurate regulatory information, reflecting widespread concerns around data reliability and oversight (Source: AscentAI Benchmark Survey, 2026).

The difficulties vary by organisation type and geography. According to AscentAI, large institutions, particularly in the EMEA region, find it most challenging to implement regulatory changes across complex internal structures. In contrast, smaller firms, including regional banks and investment entities, struggle more with tracking and monitoring regulatory updates due to limited resources.

Artificial intelligence is emerging as a key area of focus, though sentiment remains mixed. The survey reveals that 46% of respondents view AI as a transformative force in compliance, while 41% acknowledge its potential but remain unconvinced by current solutions. Only a small minority—8%—dismiss AI altogether, indicating broad recognition of its future relevance (Source: AscentAI Benchmark Survey, 2026).

Investment intentions reflect this optimism. Around 74% of organisations plan to invest in compliance technology over the next 12 months, with fintech firms leading adoption at 90%, followed by Tier 1 banks at 87% and regional banks at 80%.

As regulatory demands continue to intensify, the findings from AscentAI suggest that automation, particularly AI-driven solutions, will play a critical role in shaping the future of compliance.