97% of FIs are apprehensive about GenAI & Canadian RegTech funding soars 86% YoY

How FIs are tackling Gen AI challenges: Key insights from Theta Lake’s 2024 report

Theta Lake, a leader in DCGA, has unveiled its sixth annual report, revealing significant insights into the adoption of Gen AI? in the financial services sector.

Read the full story here.

Research highlight

Canadian RegTech deals projected to double in 2024 as investors’ interest recovers

• Key Canadian RegTech investment stats in H1 2024:
• Canadian RegTech funding increased by 86% YoY
• Trend analysis showed Canadian RegTech deal volume for the year is set to double compared to 2023
• Thentia, a RegTech leader in the Canadian marketplace, secured the largest RegTech deal in Canada in H1 2024, with a Series B funding round of $38m

During the first six months of 2024, the Canadian RegTech sector was off to a strong start to the year in terms of deal activity and funding. A total of nine deals were recorded in the first half of the year, marking an 80% increase compared to the five deals completed during H1 2023. RegTech companies in Canada raised $67m in H1 2024, a substantial 86% jump from the $36m raised in the same period in 2023.

If the current trend continues, the projected number of deals for the Canadian RegTech market in 2024 is set to reach 18, a 2x increase from the 9 deals completed in 2023. Funding for the year is on track to reach approximately $134m, a 28% increase from the $104.6m raised in 2023. This suggests that while deal activity and overall funding are both on the rise, investors are showing greater interest in the sector, potentially driven by increased demand for regulatory technologies.

The average deal value in H1 2024 stood at approximately $7.4m, which is lower than the $17.2m average in H2 2023 but higher than the $7.2m in H1 2023. This suggests that while more deals were made in H1 2024, the focus may have shifted towards a mix of smaller and mid-sized investments rather than large-scale funding rounds.

Thentia, a leading innovator in regulatory technology, has secured US$38m in a Series B extension round, marking it the largest RegTech funding rounds in Canada for H1 2024. The investment, led by existing backers including First Ascent Ventures, Spring Mountain Capital, BDC Capital, and Espresso Capital, will accelerate Thentia’s expansion and enhance its AI-driven platform, Thentia Cloud. Designed specifically for regulators, Thentia Cloud digitizes and streamlines critical regulatory functions, enabling efficient license management, enforcement, and investigations. With this funding, Thentia aims to expand globally and introduce new innovations, solidifying its leadership in transforming regulatory processes for public protection.

RegTech news

• The cost of overlooking compliance in challenger banks - Launching a new consumer and commercial bank involves numerous complexities and is a very costly venture. Ignoring compliance comes with a heavy price. Read the full story here.
• The critical role of W-8IMY forms and withholding statements - Understanding the nuances of W-8IMY Forms is crucial for foreign intermediaries, flow-through entities, and certain U.S. branches, which must certify their status for withholding tax purposes. Read the full story here.
• Understanding the impact of the SEC’s Marketing Rule on financial advisors in 2024 - In late 2022, the SEC implemented Rule 206(4), marking a significant change in compliance requirements for Investment Advisers (IAs). Read the full story here.

Regulation news

• FCA to transform BNPL market with enhanced consumer safeguards -?In a move to enhance consumer safety, the government has initiated a consultation to bring BNPL companies under the oversight of the FCA. Read the full story here.
• SC and World Bank advocate for stronger ESG disclosures in Malaysia - The SC and the World Bank have unveiled the “ESG Disclosure Assessment of Malaysia’s Listed Companies and Recommendations for Policy Development” report during the SC-World Bank Conference 2024. Read the full story here.
• Australian government launches initiative to boost small business cyber resilience - The Australian government has unveiled a significant initiative, unveiling the Small Business Cyber Resilience Service with an investment of $11.1m. Read the full story here.

RegTech Deal news

• ACA Group expands international presence by acquiring Effecta Compliance Group - ACA Group, a leader in governance, risk, and compliance (GRC) solutions within the financial services sector, has recently taken a significant step to enhance its international reach by acquiring Effecta Compliance Group. Read the full story here.
• Regnology bolsters US presence with strategic acquisition of CG3-1 - Regnology has successfully acquired CG3-1, a firm noted for its regulatory calculations for the USA broker-dealer market. Read the full story here.
• Napier AI and ThreatMark team to boost fraud detection and AML compliance - Napier AI?and ThreatMark, a fraud prevention-focused firm, have recently entered into a strategic partnership. Read the full story here.

CyberTech news

• Social engineering emerges as top threat in cyber security landscape - In a landscape increasingly fraught with cyber threats, social engineering attacks are claiming prominence by exploiting human psychology over technological vulnerabilities. Read the full story here.
• Sto?k secures $27m in Series B to bolster cyber insurance for European SMEs - Sto?k, a French InsurTech startup, recently secured Series B funding of €25m ($27m). Read the full story here.
• Over 60% of UK consumers see mobile app fraud as top security threat - In a study conducted by the OWASP and Appdome, concerns over mobile app fraud are increasingly alarming among UK consumers. Read the full story here.

Other RegTech news

• Unlocking business success: How KYC enhances financial security in Mexico - KYC regulations serve as a critical safeguard in Mexico, a country identified by the U.S. Department of State as a major conduit for laundering money derived from drug trafficking, corruption, and other illegal activities. Read the full story here.
• How to define organisational boundaries for CSRD compliance - The CSRD aims to elevate and standardise sustainability disclosures for companies both within and outside the EU that operate across Europe. Read the full story here.
• Building a culture of compliance in telecommunications - Telecommunications companies are facing an increasingly complex regulatory landscape, influenced by rapid technological advancements and evolving consumer behaviours. Read the full story here.