The global report from Juniper Research found that this 290% growth is being fuelled by greater use of AI to automate highly manual tasks and the transition to digital onboarding, which Juniper says have emerged as critical capabilities in the wake of the pandemic.
The research recommends that Regtech vendors make AI a core part of their solutions, whilst still leveraging human intelligence to keep their decisions fully explainable. AI’s capabilities in automating manual tasks will allow businesses to begin to improve their levels of spending on regulatory compliance.
The new research - Regtech: Market Opportunities, Challenges & Forecasts 2021-2025 - found that nearly 330 million new bank accounts will be opened via digital onboarding in 2025, up from 184 million in 2020 - and tha ultimately, consumers will continue to use digital onboarding in ever-greater numbers and, as such, “vendors must design long-term strategies that support this”.
“Digital onboarding has been accelerated by lockdown measures, but ultimately, it is an acceleration of existing trends towards greater digital engagement,” says research author Nick Maynard.
“Businesses should rebuild their KYC and onboarding processes from the ground up to take advantage of these new capabilities, or they will lose ground to digitally native competitors,” Maynard concludes.
The research also found that almost 18% of banking digital onboarding in 2025 globally will use AI systems, compared to under 4% in 2020.
The report also identified that the introduction of AI in areas like identity document verification means that businesses can finally move from their still largely manual processes to a fully digital model of KYC.
“This will provide significant cost savings of over $460 million in banking onboarding alone, and will also provide a significantly improved user experience,” the report notes.