RegTech Landscape 2025: Growth, Funding, Opportunity
RegTech is no longer a niche—it is now a core strand in how financial services evolve and adapt.
With regulatory complexity accelerating and compliance costs rising, early and growth-stage RegTech firms find themselves standing at a crossroads: evolve fast, or risk being left behind. In 2025, while investor appetite is shifting and deal volumes are contracting, there’s growing demand for smarter, sharper solutions—particularly from firms that can demonstrate real-world impact, AI integration, and market readiness. This article explores where the smart money is going, and what it takes to attract it.
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Market Growth vs Deal Drought
The global RegTech market is experiencing significant growth despite recent fluctuations in deal activity. Current projections indicate the market will expand from approximately £10.26 billion in 2023 to between £60-68 billion by 2030, representing a compound annual growth rate (CAGR) of 12-23.6% depending on the forecast model[1][2][3]. This growth is primarily driven by increasing regulatory complexity, rising compliance costs, and financial institutions' need to navigate mounting regulatory pressures[4].
Regional Investment Analysis
United Kingdom
The UK RegTech landscape experienced a significant contraction in deal volume during 2024, with transactions declining 59% year-over-year to just 27 deals compared to 66 in 2023 and 223 in 2020[5]. However, this reduction in deal count was partially offset by larger transaction sizes:
· Average deal size surged to $11.8 million in 2024, representing a 27% increase from 2023 and an astounding 416% jump from 2020 levels[5]
· Total funding reached $318 million in 2024, a marginal 1% increase from 2020 but a 48% decline from 2023's $612 million[5]
· No deals exceeded $100 million in 2024, indicating investor preference for smaller, early-stage investments[5]
European Union
European RegTech investment experienced a sharp downturn in mid-2024:
· Deal activity fell by 74% year-over-year in Q2 2024[6]
· Total funding dropped to $80.8 million, an 80% decline from Q2 2023's $394.5 million[6]
· Average deal value decreased to $4.5 million, down 34% from Q1 2024 and 21% from Q2 2023[6]
Asia-Pacific
APAC organisations are bucking the global trend with increased tech spending plans for 2025:
· 44% of organisations in APAC plan to increase IT spending in 2025, nearly matching the global average of 48%[7]
· Cyber security, customer experience, and application development are emerging as primary investment priorities[7]
Investor Priorities in RegTech 2025
Investors are demonstrating clear preferences for specific technological capabilities and business models in RegTech firms. Understanding these priorities is crucial for companies seeking funding in today's market.
1. AI Integration and Advanced Analytics
Artificial intelligence has become a cornerstone of RegTech innovation, with Gartner reporting that over half of compliance officers plan to invest in AI-enhanced RegTech solutions in 2025[4]. AI-powered platforms that can automate intricate compliance processes, analyse vast datasets in real-time, and flag suspicious activities are particularly attractive to investors[4][8].
2. Real-Time Compliance Monitoring
The future of compliance lies in real-time monitoring systems that can detect regulatory violations as they occur, rather than after the fact[9]. Investors are prioritising RegTech solutions that enable:
· Immediate detection of high-risk transactions[10]
· Automation of intricate compliance processes[4]
· Reduction in false positives and manual errors[4]
· Improved reporting efficiency and accuracy[4]
3. Cloud Infrastructure and Scalability
Cloud-based solutions have become essential for modern RegTech offerings, with investors seeking platforms that provide:
· Scalable infrastructure to accommodate growing regulatory demands[10]
· Secure environments for storing and analysing regulatory data[10]
· Cross-jurisdictional compliance capabilities[10]
· Seamless integration with existing systems[11]
4. Specialised Compliance Solutions
As regulatory landscapes become increasingly complex, investors are showing preference for RegTech firms that address specific compliance challenges:
· Digital asset compliance tools, with blockchain-based tokens potentially comprising 10% of global GDP by 2027[4][10]
· ESG monitoring and reporting solutions[10]
· Advanced data protection systems compliant with GDPR and MiFID II[4]
Investor Red Flags and Challenges
Understanding the common reasons investors pass on RegTech opportunities is crucial for companies seeking funding:
1. Implementation and Integration Issues
Regulators have observed a substantial uptick in cases where financial institutions failed to properly implement RegTech solutions[13]. Investors are increasingly cautious about:
· RegTech solutions deployed before proper testing[13]
· Products that lack seamless integration with legacy systems[11]
· Technologies with limited API capabilities[11]
2. Data Quality and Security Concerns
Data quality, security, and privacy issues represent significant challenges for RegTech adoption[11]. Investors scrutinise:
· Data governance frameworks
· Privacy protection mechanisms
· Overall data quality management
3. Unclear Value Proposition and Market Awareness
Limited awareness of RegTech solutions and complex due diligence processes remain obstacles to market development[11]. Investors tend to avoid:
· Solutions with vague compliance benefits
· Companies lacking clear differentiation
· Platforms without demonstrable regulatory alignment
Strategic Framework for RegTech Investment Readiness
Based on market trends and investor priorities, RegTech firms could consider the following strategic framework when preparing for investment:
1. Technology Validation Approach
In an article published by moneylaundering.com in December 2024, Peter Oakes, former director of AML enforcement at the Central Bank of Ireland, emphasised: "They normally already have a framework for product governance elsewhere, but firms need to extend that to any regtech offerings they bring on board. They also need to identify it [new regtech] as a risk, so that there's a discussion around monitoring and regular testing".
RegTech firms should:
· Implement rigorous testing protocols before deployment
· Establish clear governance frameworks for AI and other advanced technologies
· Document regulatory alignment and compliance benefits
2. Commercial Strategy Development
The European Banking Authority's analysis suggests that successful RegTech adoption requires:
· Clearly defined implementation timelines and resource allocation[11]
· Executive sponsorship and stakeholder alignment[11]
· Comprehensive integration planning with existing systems[11]
· Detailed ROI analysis demonstrating compliance cost reduction[11]
3. Market Positioning for Investment
As investor priorities shift toward specialised solutions, RegTech firms should:
· Focus on specific compliance domains where they can demonstrate expertise
· Build partnerships with financial institutions, regulators, and other stakeholders[10]
· Develop case studies quantifying regulatory burden reduction
· Emphasise scalability and adaptability to evolving regulatory requirements
Conclusion
The 2025 RegTech investment landscape presents both challenges and opportunities for early and growth-stage companies. While overall deal volumes have declined in key markets like the UK and Europe, average deal sizes have increased significantly, indicating investor preference for quality over quantity.
To succeed in this environment, RegTech firms need a pragmatic, working commercial strategy that addresses investor priorities including AI integration, real-time monitoring capabilities, cloud infrastructure, and specialised compliance solutions. Equally important is avoiding common red flags such as implementation issues, data quality concerns, and unclear value propositions.
Is your RegTech firm ready to grow, raise capital or expand internationally?
At Lagom Consulting, we work with ambitious RegTech firms that want more than just advice — they want action. Whether you're raising capital, launching into new markets, or repositioning for growth, we bring the strategic clarity and hands-on support to make it happen.
Our team provides everything from fractional CMO leadership and growth board advisory to practical support in marketing strategy, service line development, and international expansion. We help you sharpen your value proposition, build investor confidence, and deliver real commercial traction.
We've done it before — across financial services, fintech, and fast-growth tech — and we're doing it now for RegTech leaders who refuse to settle for average.
If you're serious about growth, let's talk. Reach out to Lagom Consulting today and find out how we can help you scale with purpose.
Who are Lagom Consulting?
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References
1. https://www.bobsguide.com/top-10-regtech-trends-for-2025/
3. https://www.markssattin.co.uk/general/2025-3/why-regtech-is-the-industry-to-watch-in-2025
5. https://www.linkedin.com/pulse/why-traceability-vital-compliance-uk-regtech-deals-plummet-nrzae
7. https://www.computerweekly.com/news/366618762/APAC-organisations-to-ramp-up-tech-spending-in-2025
8. https://www.fstech.co.uk/fst/Regtech_in_2025_what_next_for_financial_services.php
9. https://wealthsolutionsreport.com/2024/12/12/regtech-surge-what-to-expect-in-regtech-for-2025/
https://www.moneylaundering.com/news/exclusive-regtech-failures-plaguing-european-banks/