European RegTech companies raised $2.2bn across 215 transactions between 2015 and 2019, with UK, Germany, France, and Switzerland capturing 81.1% of the sector investment in the region during the period.
The RegTech sector on the continent has experienced rapid growth in funding, which increased from $167.5m in 2015 to $1.3bn in 2019. Since the financial crisis in 2008, financial regulators introduced new regulations in order to maintain capital reserves, improve risk controls, and to make the financial sector more transparent, explaining the surge in sector investment in Europe over the period.
UK companies raised 52.9% of RegTech investment in Europe since 2015. The announcement of the UK referendum (Brexit) created major economic uncertainty, especially for the future of financial regulation. Consequently, most of UK companies may experience negative knock-on effects and may cause many regulatory changes. However, this has provided RegTech companies with a large opportunity due to the technology being adaptable and able to transform quickly, which has become an important tool for both traditional and challenger banks.
The Rest of Europe category contains other European countries such as Italy, Austria, Spain, Norway, etc., which collectively account for 15.7% of RegTech investment in the region since 2015.
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