On the back of the expanding thicket of national, EU and international regulations, financial activity in the regtech space has been rising notably this year.
“The Pulse of Fintech 2018” report, published by KPMG, stated that: “New regulations [are] becoming a driving force for fintech investment” driven by “transformative regulations” such as PSD2 and GDPR.
According to the consultancy’s report:
“These changes to the financial services landscape are expected to drive additional fintech investment. Over time, we may also see increasing participation from non-financial services companies, such as communications companies, energy providers and retailers interested in leveraging open banking as a means to extend their reach into financial services.”
The KPMG paper also reported that: “So far, 2018 year-to-date funding has already exceeded total annual regtech funding in every year previous except 2016.”
KPMG tallied 26 regtech VC deals globally worth a total of $233m during the first half of 2018, compared to 54 deals worth a total of $206m for all of 2017.
Adding private equity and M&A activity to those VC investments, KPMG reported 36 regtech deals worldwide worth a collective $1.37bn during the first of the 2018, compared to 81 deals worth $1.02bn for all of last year.
“Over the next 12 to 24 months, we expect to see investment in regtech to grow rapidly--particularly in areas like AI, know your customer (KYC) and know your data (KYD),” KPMG wrote in July.