In an uncertain economic climate, RegTech offers a great opportunity for any investor.
Want to find a good investment opportunity? Then look no further than the world of RegTech. Here you’ll find a sector which is booming, is full of great companies with big futures and has much further to go.
When most people hear the term regtech they will almost certainly instantly start thinking about fintech – and with that will come a host of caveats.
Fintech has been one of the buzzwords of the last couple of years. Digital technology has fuelled a revolution in the financial sector which has caught many of the older and more established names on the hop. A new generation of agile, innovative companies has surged into the market place, created new business models and opened up new opportunities.
Investment surged in, but for all the good news stories there were plenty of flops. Some of the initial juggernauts are seeing their revenues slow and, after the binge of last year, cryptocurrencies are enduring something of a hangover.
The problem is that while fintech is an area full of potential, it is also extremely uncertain. The majority of start-ups will still fail, and even the most promising idea may find that the market simply isn’t ready. Doom mongers who predict the death of fintech may be a little premature, but they are right to point out what an uncertain sector this can be.
RegTech’s time has come
Which brings us to regtech – here again we see a sector which is experiencing rapid growth. In the first quarter of 2018 the sector saw investment of more than $500million. The market has seen a high number of start-ups moving into this space offering a variety of digital solutions to help businesses manage their compliance.
Some would say it carries many of the hallmarks of fintech, but although these sectors are closely linked there is a key difference. Markets may be volatile at the moment, and with Donald Trump picking trade wars left right and centre, there’s plenty of uncertainty to go around, but the regtech sector has one important advantage.
Whatever happens with the markets, there will still be regulations and companies will have to find ways to work with them. The last couple of years have been extremely busy for regulators as they attempt to come to grips with new technologies and apply the lessons learned from the financial crisis.
We’ve already seen a slew of regulations which has had a major impact on the business world, with GDPR being the most impactful. The chances are there will be more to come as the financial world works out how it should deal with the new realities created by fintech such as the rise of cryptocurrencies.
Regulation is not only here to stay, but it’s likely to become more onerous and complex which means anyone who can help companies ensure compliance will be in demand.
So, this is a sector which has many of the key things investors are looking for. It has already featured stellar growth, but the foundations are in place which mean that growth can continue for the foreseeable future. So, if you’re looking for a sector which has the right mix of safety and profit potential, RegTech is a pretty good bet.