A new report from Juniper Research has found that spending on regulatory IT will grow by an average of 48% per annum over the next five years, rising from US$10.6 billion in 2017 to US$76.3 billion in 2022.

Juniper's research paper, Regtech Strategies for Financial Services 2017-2022, found that spending on 'regtech' as a percentage of regulatory spending will increase dramatically, from 4.8% in 2017 to 34.4% by 2022.

This represents a vast opportunity for regtech vendors, who can capitalise on the fact that banks are often caught between the devil and the deep blue sea, requiring more and more compliance expertise from a dwindling labour pool of experienced compliance officers. With multinational financial institutions such as Citi having as many as 30,000 compliance staff, report author Nick Maynard has calculated that just three bank compliance departments could fill Wembley Stadium in London. Automation, he surmises, can and will reduce this. Because the headcount of staff is so high, a 50% reduction could save a single large bank US$1.2 billion per annum, taking average wages into account. The research also found that the automation of KYC/CDD ("know your customer/customer due diligence") checks using artificial intelligence will reduce work time by 90%, saving 5.4 million man-hours annually by 2022.

It's not over for the dinosaurs

The research found that Regtech investment will be dominated by established technological companies such as Cisco and IBM, as demonstrated by their acquisitions of CloudLock and Promontory respectively. Juniper anticipates that existing vendors of financial service software, such as Oracle and SAP, will load up their products with regtech features and possibly acquire regtech companies, whose start-ups are legion. The 'Big Four' accountancy firms - EY, PwC, Deloitte and KPMG - also have a part to play, perhaps forming partnerships with regtech vendors.