How federated learning combats FinCrime & Europe's RegTech sector shows diverse H1

Harnessing federated learning to mitigate de-risking and combat financial crime

Consilient examines the de-risking trend, which involves financial institutions exiting markets and cutting ties with client categories to mitigate financial crime risks.

Read the full story here.

Research highlight

Eight countries represented in top 10 European RegTech deals in H1 amid investor diversification

 Key European RegTech investment stats in H1 2024:

• European RegTech investments halved in H1 YoY

• Investors diversify as eight countries represented in the top 10 European RegTech deals list

• Napier AI, a RegTech specialising in AI-powered financial crime and compliance solutions, secured the largest RegTech deal in Europe in H1 2024, with a funding round of $56.9m

In H1 2024, the European RegTech sector recorded 52 deals, marking a sharp decline of 76% compared to the 218 deals completed in H1 2023 and a 42% drop from the 89 deals in H2 2023. Total RegTech funding in H1 2024 amounted to $361.6m, representing a 53% decrease from the $771.3m raised in H1 2023 and a 29% drop from the $507.4m raised in H2 2023. This significant reduction in both deal volume and total funding highlights a growing cautiousness among investors, potentially driven by broader economic uncertainties and shifts in regulatory requirements that have slowed investment in the sector.

The top 10 deals in H1 2024 were spread across eight countries, with the United Kingdom maintaining its leadership with three top deals, unchanged from H1 2023. Germany and France each secured one top deal, continuing their presence in the top 10 from the previous period. However, notable shifts occurred as new players like Norway, Bulgaria, Luxembourg, Denmark, and Sweden entered the top 10 in H1 2024, replacing countries like the Netherlands, Czech Republic, and Belgium. This emerging diversification suggests a broadening of the European RegTech landscape, with more countries now actively contributing to significant deals, potentially reflecting the growing need for regulatory technologies across a wider range of markets.

Napier AI, a London-based RegTech specializing in AI-powered financial crime and compliance solutions, has secured a $56.9m of funding from Crestline Investors, marking it the largest RegTech deal in Europe for H1 2024. Known for its advanced anti-money laundering (AML) and know-your-customer (KYC) software, Napier AI's platform, Napier Continuum, is trusted by over 150 institutions globally, transforming regulatory compliance into a strategic advantage. This new funding will accelerate Napier AI's growth, allowing the company to expand its innovative solutions in the financial sector and further its mission of driving down financial crime through cutting-edge technology.

RegTech news

• How automation transforms regulatory compliance in finance - In today’s evolving regulatory environment, financial institutions are increasingly turning to technology to manage their regulatory lifecycles effectively. Read the full story here.
• How Red Oak is revolutionising compliance with AI-driven solutions - Artificial Intelligence (AI) is revolutionising various industries by offering technologies that enhance speed, quality, and efficiency. Read the full story here.
• Navigating the complex world of FinTech compliance in 2024 - In an in-depth discussion this month with The Fintech Times, experts including Lucy Huntley from FullCircl, addressed some of the most pressing challenges that compliance teams face in the FinTech sector. They also explored potential solutions that could ease the compliance burden and enhance fairness and safety within the industry. Read the full story here.

Regulation news

• Demand soars for finfluencer verification amid rising UK investment scams - New research from Barclays highlights a critical gap in the due diligence process of UK investors using social media for financial guidance. Read the full story here.
• HKMA outlines vision for Hong Kong as Asia’s leader in sustainable finance - The HKMA has initiated the Sustainable Finance Action Agenda (Action Agenda), announcing a strategic vision to solidify Hong Kong’s role as the top sustainable finance hub in Asia. Read the full story here.
• Volkswagen Finance hit with £5.4m FCA fine for mishandling customer hardships - In a significant regulatory action, Volkswagen Finance, has been fined £5.4m by the FCA for not treating customers in financial difficulty fairly. Read the full story here.

RegTech Deal news

• Stream.Security lands $30m Series B to bolster cloud security capabilities - Stream.Security, the innovator in real-time cloud security solutions, has successfully closed a substantial $30m Series B funding round. Read the full story here.
• Socket raises $40m in Series B to enhance software supply chain security - Socket, a leading platform in software supply chain security, has just secured a significant $40m in Series B funding. Read the full story here.
• Tookitaki’s anti-financial crime technology garners investment for growth in key Asian markets - Tookitaki, a leader in anti-financial crime software, has recently secured a strategic investment from True Global Ventures (TGV) Opportunity Fund. Read the full story here.

CyberTech news

• Reality Defender secures $33m to combat AI-generated deepfakes in FinTech - Reality Defender, a startup specializing in detecting deepfake and AI-generated media, has secured $33m in its Series A funding round. Read the full story here.
• Sophos acquires Secureworks in $859m deal to boost global cyber capabilities - Sophos and Secureworks, two names in the cybersecurity sector, have entered into an agreement where Sophos will acquire Secureworks. Read the full story here.
• Cyera expands AI data security reach with $162m acquisition of Trail Security - Cyera, an AI-powered data security firm, has completed the acquisition of Trail Security, a data loss prevention firm, for $162m. Read the full story here.

Other RegTech news

• 2025 compliance outlook: Embracing AI and global regulatory shifts - As 2024 draws to a close, the financial services sector is gearing up for a dynamic compliance landscape in the coming year. Read the full story here.
• Why identity proofing is essential for modern security compliance - Identity proofing is a critical process that verifies the authenticity of individuals’ identities against official records, aiming to curb fraud and boost security across various sectors, including banking, healthcare, and government services. Read the full story here.
• SmartSearch bolsters executive team to lead innovation in AML solutions - SmartSearch, a UK provider of digital compliance and AML solutions, recently announced a significant expansion of its executive leadership team. Read the full story here.