Financial crime is a perpetual issue which challenges governments and organisations across the world. No matter how hard we work to shore up our organisational defences with layers and layers of policies, processes and systems, the threat of criminal activity is always there. As we continue to push forward into this new age of digital sophistication, criminals are constantly evolving and adopting innovative tactics to achieve their goals. The organisational and societal impacts of financial crime are well versed, so it comes as little surprise that the estimated global cost of financial crime compliance exceeds $180 billion, and the recent pandemic has further accelerated the instances of criminal activity

We are seeing more organisations turn to technology to monitor and combat financial crime, and our research into the supply of technology for financial crime mirrors this growth in demand. Financial Crime is the fastest growing category of our RegTech market research, expanding most rapidly over the past couple of years. Looking back to 2019, this category was home to a mere 120 products – it now boasts over 400. Even in the past two months we have seen a 13% growth in the category, and it shows no sign of slowing.  

The image below shows the growth in the Financial Crime category since February of this year, distributed between the 9 sub-categories. 

Growth in the category is not solely attributable to the creation of new products / companies. As we expand our research we often come across new vendors who have been in the industry for a while. Many have experienced recent growth, onboarding new clients or have identified new use cases, releasing new products to address them.  

The identity and verification segment has seen a lot of activity in recent months, largely driven by market forces as the financial services sector transitions to a reliance on digital onboarding. Alongside being the fastest growing sub-category in the financial crime sphere, identity and verification has attracted a large amount of funding and acquisition interest and we have seen some notable deals come to fruition in Q1 2021:

  • Nasdaq acquires Verafin: this deal worth $2.75bn highlights Nasdaq’s desire to cement its role as a leading SaaS technology provider with stronger regulatory and financial crime solutions.
  • Jumio raises $150 million: this is the single largest funding round for a digital ID RegTech and emphasises the quantities of capital we are seeing flow into this sector
  • Mastercard acquired Ekata for $850m: Following the attempted acquisition of Plaid by VISA, another payment giant looks to improve its online verification process and reduce losses resulting from fraud.  

So, what’s next?

During our recent webinar discussing our recent research report with the City of London Corporation,  financial institutions voiced the need  for collaboration and scalability among RegTech solutions. These larger institutions are looking to purchase technologies that can be leveraged firm wide to protect against a range of threats. Financial Crime vendors are leading the way for the RegTech industry in terms of collaboration, as partnerships and M&As become commonplace. This concerted effort to drive improvements in the fight against financial crime will improve the effectiveness and efficiency of these solutions going forward. We are extremely excited to watch this category as it continues to evolve over the coming months and years.

There is much more to explore within the Financial Crime category. We’ve created an updated market map to help you easily understand and navigate this category. Download it here and sign up to our newsletter to make sure you don’t miss out on our continued research into the RegTech market.  


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