RegTech’s tailwinds are gathering speed
As regulatory complexity increases and businesses seek cost-effective ways to stay compliant, RegTech is becoming a mainstay of enterprise software investment. In an uncertain and volatile world made unpredictable by AI change, it offers investors recurring revenue, mission-critical functionality, and scalable demand tied to non-discretionary budgets.
We have seen this most recently in the sale of Acin, a global operational risk and AI platform, to CUBE, a leader in automated regulatory intelligence which was itself backed by Hg Capital last year. CUBE’s acquisition of Acin demonstrates the strong strategic appetite for RegTech that blends compliance, data, and automation.
These deals reflect what modern RegTech looks like: embedded, auditable, automated, and clearly linked to risk mitigation and efficiency.
We see three structural tailwinds driving RegTech’s continued growth.
First, the regulatory burden is not easing but becoming ever more complex and dynamic. From banking regulations around regulatory reporting to Know Your Customer (KYC) and Anti-Money Lanundering (AML), to operational resilience frameworks to AI governance, businesses across sectors – particularly financial services – are facing a compliance environment that requires greater speed, precision, and auditability. RegTech platforms are being adopted to automate that burden, replacing manual effort with machine logic and enabling leaner, more responsive compliance functions.
Second, the regulatory mood is shifting. While the Labour government in the UK has signalled a deregulatory push in areas like planning and financial services, the real shift is towards smarter regulation, with less red tape, but higher expectations. In financial services, this includes an increased focus by regulators on regulatory reporting and robust KYC and AML procedures, aiming for deeper transparency and stronger safeguards against financial crime. Regulators are moving away from box-ticking toward data-led, outcome-based supervision. That evolution plays directly to RegTech’s ability to deliver tools that demonstrate control, assurance and auditability.
Third, the technology is now enterprise-grade. Cloud-native, API-driven platforms are easier to deploy, faster to integrate, and increasingly used beyond traditional financial services markets given the level of straight through processing now available, driving clear ROI. As a result, demand is broadening, particularly in mid-market and regulated growth sectors like healthcare, life sciences, energy and utilities.
That doesn’t mean every platform will scale. The sector is fragmented, and some tools are narrow solutions with long sales cycles or limited expansion paths. The businesses that will continue to compound will present a well-defined vertical solution, seamless integration with client infrastructure and high customer retention rates.
Valuations in the sector remain attractive relative to adjacent software and data categories, particularly where platforms have yet fully to monetise cross-sell or international expansion. Bolt-on opportunities also abound, making RegTech a popular theme for buy-and-build strategies.
In an age of constant scrutiny and evolving regulation, RegTech offers foundational services and the promise of solutions to developing challenges. For investors seeking resilient, cash-generative software and data businesses with long-term strategic value, this is a market where momentum is building.
Contact the team
