Regulatory Reporting-as-a-Service Market Trends

Growth Drivers

• Increasing complexity of ESG and sustainability reporting: The increasing importance of Environmental, Social, and Governance (ESG) factors has led to more complex reporting needs. Thus, top companies are increasingly investing in digital tools to manage ESG data concisely and comply with evolving rules. In June 2024, Workiva acquired Sustain. Life, a carbon accounting software startup, is to bolster its sustainability reporting capabilities. This acquisition enables Workiva to provide more robust tools for companies aiming to improve their ESG disclosures and meet evolving regulatory standards.

• Globalization and cross-border regulatory compliance: The surge in cross-border data regulations demand jurisdiction-specific reporting. As businesses expand globally, they mostly face diverse regulations across different jurisdictions. This difficulty necessitates sophisticated reporting solutions capable of handling multiple regulatory requirements simultaneously. The increasing occurrence of fraudulent activities, such as the £485.2 million in authorized fraud losses reported in the UK in 2022, underscores the need for robust regulatory reporting solutions. These solutions help detect and prevent fraudulent activities by ensuring compliance with regulatory requirements and facilitating transparency and accuracy in financial reporting.

Challenges

• Data privacy and security concerns: The inconsistent standards in data privacy laws, such as the EU's GDPR and varying practices in other regions, make compliance difficult. Handling sensitive financial and personal information requires strict compliance with global data protection laws. Thus, ensuring secure data storage, transfer, and processing remains a major challenge, especially when cyber threats increase and regulations change.

• Complex and changing regulatory landscape: Frequent updates to international and local regulations make it difficult for RRaaS providers to stay compliant across jurisdictions. For instance, India's data protection regulations have led to increased infrastructure investments for foreign RRaaS providers. Adapting quickly to new reporting standards like ESG, IFRS, or CSRD requires constant platform updates and expert regulatory knowledge.