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South Africa’s regulatory technology (regtech) market is poised for significant growth, expected to rise by 27.7% annually, reaching $302.31 million (R5.3 billion) in 2024. A recent report by Research and Markets forecasts steady expansion in the regtech industry, projecting a compound annual growth rate of 18.5% from 2024 to 2029.
The report indicates that regtech’s market value will increase from $236.75 million (R4.2 billion) in 2023 to an estimated $705.75 million (R1.25 trillion) by 2029. Regtech leverages information technology to enhance regulatory processes, proving particularly beneficial in heavily regulated sectors such as financial services, gaming, healthcare, pharmaceuticals, energy, and aviation.
The demand for regtech solutions has surged, driven by the growing complexity of regulations, the need for more efficient compliance processes, and the high costs associated with non-compliance. Following South Africa’s recent placement on the Financial Action Task Force (FATF) grey list, there is an urgent need for improved adherence to international compliance standards. This designation has prompted financial institutions to adopt regtech solutions aimed at bolstering their anti-money laundering (AML) and counter-terrorism financing (CTF) capabilities.
Over a year has passed since FATF included South Africa on its grey list, citing the country’s failure to meet international standards in AML, CTF, and proliferation financing. This designation signifies a commitment to addressing these shortcomings, though full implementation of the necessary reforms is still pending. South African authorities, alongside international stakeholders, are closely monitoring ongoing efforts to resolve the issues that led to the greylisting.
According to Research and Markets, the regtech landscape in South Africa is rapidly evolving, fueled by technological advancements and heightened regulatory pressures. As organizations strive to enhance their compliance capabilities, the demand for innovative regtech solutions is expected to continue its upward trajectory.
The firm highlights that while regulatory complexity and market fragmentation persist, opportunities for collaboration and growth remain plentiful. By adopting advanced technologies and fostering partnerships, South Africa’s regtech sector is well-positioned to become a global leader in regulatory innovation, benefiting organizations, regulators, and consumers alike.
Local companies are increasingly implementing systems to automate compliance tasks such as “know your customer” (KYC) procedures and regulatory reporting. This automation not only minimizes manual errors but also enhances efficiency in meeting regulatory obligations.
Furthermore, financial institutions are forming strategic partnerships with regtech firms to harness innovative solutions for their compliance challenges. These collaborations aim to improve operational efficiency and ensure adherence to regulatory frameworks. A notable example is Synthesis, which has developed a regulatory reporting system for TymeBank, significantly enhancing the bank’s reporting efficiency and compliance processes.
“This transformation illustrates how regtech is reshaping compliance practices in South Africa’s financial sector, particularly amid increased regulatory scrutiny,” the report concludes.
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