“The first trend that comes to mind for me is that the future of compliance, in my mind, lies in real-time monitoring systems that can detect regulatory violations as they are happening, rather than after the fact.” 

So explained Vall Herald, CEO and co-founder of compliance and risk management firm Saifr, in a webinar at the start of this year exploring key regtech trends. “If we look at electronic communications for example, electronic communications are sent out, then after the fact someone reviews it to see if there are potential issues and then take corrective action,” Herald added. 

“I think the ability to use AI and machine learning to, in real time, catch those potential compliance issues, is a trend that we will see come to the forefront.” 

For the financial services (FS) industry, catching compliance violations as they occur would be no small feat. In a sector where regulations sprout like knotweed at the best of times, the experts warned that 2025 would be even more entangled than usual.  

In the UK, this was in part down to two new things being in place: the Financial Services and Markets Act; as well as the government. “In an environment of perma-change, it is easy for firms to get caught up in meeting compliance deadlines for individual legislative or regulatory initiatives,” Pinsent Masons warned. Deloitte, meanwhile, looked more broadly and argued FS firms would ‘need to be vigilant in the face of a demanding set of interrelated economic and geopolitical risks, and a financial system that is becoming increasingly complex.’ 

Alongside the usual suspects of GDPR and the Data Protection Act, ESG is rapidly becoming a key point of reference. As digital transformation provider Sutherland Global put it: “For organisations, the consequences of non-compliance are severe. In this context, traditional methods of compliance monitoring, reliant on manual processes, are proving unsustainable. It is here that regtech offers a digital-first approach, transforming the compliance landscape.” 

Grant Thornton’s comprehensive 2024 RegTech and Regulatory Change report gives an idea as to where organisations currently sit. The hole has long since been growing which the technology has subsequently tried to fill. More than three quarters (77%) of those polled said they anticipated more regulatory obligations than in previous years. 86% of respondents said they felt communication between departments and stakeholders could be improved upon. Yet only around one third (32%) of companies believed that solving the problem was principally a technology decision. 

But a press of the accelerator is now needed, as Alex Rees, writing for Finextra in May, explains. “As financial crime becomes more sophisticated and real-time transactions dominate, the compliance function must operate at the speed of risk,” Rees writes. “Regulated entities are no longer just asking how to comply, but how to stay ahead. The pressure isn’t just regulatory; it’s operational.”  

The Grant Thornton survey showed that the most sought-after regtech solutions were for financial crime – including AML/KYB/KYC – with governance risk and compliance, ESG, and regulatory reporting not far behind. Operational effectiveness, cited by 17% of respondents, was joint second in terms of priorities for technology procurement, alongside ease of use but behind cost (20%). 

Rees notes four key elements of a system built for real-time compliance: dynamic screening at onboarding and payment initiation; context-aware scoring to reduce false positives; explainable AI to support auditable decisions; and system interoperability via APIs and unified data models. 

What does this look like in practice? An article from Inventive Alliance shows how a stack of AI, natural language processing (NLP), big data analytics, and cloud infrastructure can be able to enforce compliance. Got a new customer to be onboarded? An API can trigger a KYC check via national ID databases and complete the process within seconds. GDPR update in another country that would otherwise have blindsided you? NLP can scan evolving legal texts and flag necessary internal changes, meaning the change is parsed and matched with your privacy policies automatically. 

As Herald noted, AI is vital to real-time monitoring; and as Rees notes, compliance must move ‘from a reactive cost centre to a real-time intelligence layer.’ “From real-time sanctions screening to automated alert prioritisation, new approaches are reshaping the compliance stack,” he concluded. “These technologies enable firms to make decisions in milliseconds, detect threats proactively, and respond with context-aware actions.” 

The UK is home to significant innovation in the regtech sector. According to figures from FinTech Global Research, UK companies provided the top five regtech deals in Europe in 2024. At Fintech Connect, taking place on December 2-3 in London, more than 6,000 attendees across the financial services and tech ecosystem will come together to explore transformative innovation and the future of finance, from payments, to regtech, to blockchain. Register for the event today.