Five key benefits of moving financial crime compliance to the cloud & Global RegTech deal activity bounced back in Q3

Five key benefits of moving financial crime compliance to the cloud

As financial institutions navigate an increasingly complex regulatory environment, many are finding that cloud technology offers a reliable solution for future-proofing compliance efforts. The move to cloud-based financial crime compliance not only enhances agility but also helps institutions meet stringent regulatory requirements more effectively.

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Research highlight

Key RegTech investment stats in Q3 2024:

? Global RegTech deal activity on the bounce back with increase of 34% QoQ

? Average deal value dropped to $8.7m as investors back smaller deals

? Vanta, a leading online security and compliance management platform, secured the largest RegTech deal globally for the quarter with a funding round of $150m

In Q3 2024, the global RegTech sector experienced declines in both deal activity and funding compared to the same quarter last year.

Only 137 deals were recorded in Q3 2024, representing a 27% decrease from the 189 deals completed in Q3 2023.

Funding saw an even more pronounced drop, with RegTech firms raising $1.2bn in Q3 2024—a sharp 63% decline from the $3.2bn raised in Q3 2023.

This combination of reduced deal activity and funding highlights a challenging environment for RegTech firms, with investors showing a clear pullback in capital commitments year-over-year.

When comparing Q2 to Q3 2024, there was an increase in deal volume as the number of transactions rose from 102 to 137 deals, marking a 34% QoQ increase.

However, total funding in Q3 2024 dropped by 41% from $2.0bn in Q2, suggesting that while more deals were made, the average deal size decreased significantly.

The average deal value in Q3 2024 was approximately $8.7m, a steep drop from the $19.8m average in Q2 2024 and significantly lower than the $16.9m average in Q3 2023.

This shift towards smaller deals suggests that investors are proceeding with greater caution, potentially reserving capital for only the most strategic investments, as the sector navigates increasing economic uncertainty and stricter regulatory scrutiny.

The trend indicates that the projected total for deal activity in 2024 would reach 548 deals, a 31% decrease from the 795 deals completed in 2023, while funding would close at $7.2bn, marking a 29% decline from the $10.1bn raised last year.

Vanta, a leading online security and compliance management platform, secured the largest US RegTech funding in Q3 2024 with a $150m investment led by Sequoia Capital, boosting its valuation to $2.45bn.

This strategic funding will enable Vanta to advance its AI-driven platform, pushing the boundaries of compliance automation while expanding into the UK and Australian markets.

With support from heavyweight backers like Goldman Sachs and JPMorgan Chase, this latest round brings Vanta’s total funding to $353m since its founding in 2018.

Serving over 8,000 clients, including companies like SmartRecruiters and ZoomInfo, Vanta’s platform accelerates compliance certification through process automation, replacing legacy compliance tools and positioning it as a pivotal player in the RegTech landscape.

RegTech news

• How TD Bank could have avoided a $3bn compliance disaster - TD Bank has been slapped with a staggering $3bn penalty for breaches of the BSA marking a record-setting moment in U.S. financial regulatory history. Read the full story here.
• How to manage rising ESG reporting costs under the CSRD framework - The introduction of the CSRD presents escalating assurance costs and stringent compliance timelines that pose significant planning and budget challenges for companies. Read the full story here.
• Embracing AI for enhanced regulatory compliance in FinTech - The landscape of regulatory reporting within the financial services industry is witnessing rapid transformations. Read the full story here.

Regulation news

• CDP aligns with ESRS standards to enhance environmental reporting efficiencies - CDP and EFRAG have achieved extensive commonality between the CDP questionnaire and the EU Sustainability Reporting Standard. Read the full story here.
• New global standard for sustainability assurance unveiled by IAASB - The IAASB has recently introduced the ISSA 5000, establishing a robust framework for practitioners engaging in sustainability assurance. Read the full story here.
• UK bolsters financial stability with new third-party oversight rules - UK financial regulators have introduced new rules aimed at increasing the resilience of technology and other third-party services crucial to the financial sector. Read the full story here.

RegTech Deal news

• Notabene secures $14.5m in Series B to propel Stablecoin and payment innovations - Notabene, the leading digital asset payment authorization network, announced today that it has raised $14.5m in a Series B funding round. Read the full story here.
• Israeli cloud security firm Upwind seeks $100m in Series B funding -Israeli cybersecurity firm Upwind, known for its advanced cloud infrastructure security solutions, has attracted significant investor interest in its upcoming funding round.Read the full story here.
• Business Systems, Teneo.ai team to transform contact centres with Voice AI - Business Systems, a frontrunner in CX and contact centre solutions, alongside Teneo.ai, a leader in conversational AI orchestration, have declared a strategic alliance to revolutionise contact centres with Voice Automation and Gen AI technologies. Read the full story here.

CyberTech news

• Bitsight acquires Cybersixgill in $115m deal to enhance cyber threat intelligence - Bitsight, a global leader in cyber risk management, has announced its $115m acquisition of Cybersixgill, a prominent cyber threat intelligence (CTI) provider. Read the full story here.
• Cybereason and Trustwave merge to enhance global cybersecurity capabilities - Cybereason and Trustwave, a top cybersecurity and managed security services provider, have announced their definitive merger agreement. Read the full story here.
• AI-driven cybersecurity startup Corgea raises $2.6m in seed round - Corgea, a CyberTech specialising in AI-driven vulnerability detection and remediation, has closed a $2.6m seed funding round. Read the full story here.

Other RegTech news

• How CDI can transform bank efficiency by 59% in five years - In the ever-evolving landscape of FinTech, banks are constantly seeking ways to enhance their operational efficiencies, particularly in the realm of corporate client onboarding. Read the full story here.
• Navigating regulatory shifts and tech advancements in tax compliance - On October 23rd, industry leaders and TAINA representatives convened at the London Operational Taxes for Investment Firms conference to dissect the latest regulatory trends and challenges affecting funds and custodians. Read the full story here.
• Theta Lake unveils 100+ new compliance capabilities for enhanced digital communications governance including dozens of industry-first capabilities - Theta Lake, the market-leader in digital communications governance and archiving (DCGA) solutions, has announced that it is adding over 100 new capabilities to its flagship offering.?Read the full story here.