Top 3 Best Regtech Stocks to Watch

Companies face significantly increased scrutiny nowadays. Compliance requirements have increased considerably, which, in turn, has also driven a rise in costs for companies to meet their regulatory obligations.

That’s been especially true in the financial sector, particularly after the 2008 crisis. In this context, regtech (or Regulatory Technology) has emerged as one of the fast-growing sectors. 

Naturally, the growth rate of the regtech industry has drawn plenty of attention from investors. In this article, you will get to know more about the basics of potentially best regtech stocks, how to invest in them, and also their advantages and disadvantages. 

Interested in learning more about Regtech and the best Regtech stocks to watch? Let’s get started. 

Best Regtech Stocks: Introduction 

Regulatory technology, or regtech for short, gained significant importance following the 2008 crisis. Regulations were tightened up, companies were placed under increased scrutiny, and achieving compliance became an even bigger challenge. 

At the same time, the world continued to move towards digital solutions, which also meant that companies had to deal with huge amounts of data. In this scenario, regtech companies rose to prominence. 

The regtech segment provides tools and solutions for other companies to comply with regulations. Regtech services offer several advantages for their clients, such as: 

• Saving costs: by employing regtech services, companies do not need to use their resources for it. 
• Faster operations: regtech companies rely on Artificial Intelligence (AI), which can go through and fine-comb significant amounts of data in a short time. This makes the compliance process much quicker and more efficient. 
• Reducing errors: Automated processes mean that there is no risk of human error. While it does not eliminate the risk of errors, as machines aren’t foolproof either, regtech does reduce it considerably.

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What are Regtech Stocks? 

Investing in regtech companies is also a possibility thanks to regtech stocks. This way, it’s possible to gain exposure to another interesting and rising market. 

Regulations have become increasingly complex in recent years. The landscape is changing at a rapid pace, as digital services become the norm, companies are met with a new set of challenges.

Staying on top of everything is incredibly difficult, which is why regtech services have been on the rise. 

Regtech companies can effectively and efficiently monitor huge amounts of data, immediately reporting any suspicious activity.

In this complex and ever-changing landscape, hiring the services of a regtech partner has become almost imperative for the largest companies. And that can be a positive for regtech stocks as well. 

Best Regtech Stocks: Advantages and Disadvantages 

Regtech stocks aren’t any different from other investments, and thus will also have their pros and cons.

We will review some of the advantages and disadvantages to consider before investing in regtech stocks. 

Best Regtech Stocks: Advantages 

• With the increase in regulatory complexity, demand for regtech companies is likely set to increase going forward. Because of this, the regtech segment could have potential to grow, with forecasts predicting a market value between $40 and $60 billion by 2030. 
• Regulatory agencies have been particularly fond of regtech, which could offer another important boost for the industry. 
• The widespread adoption of AI in regtech has further accelerated the sector’s growth. AI has led to increased efficiency, increased compliance quality thanks to fewer errors, and also reduced costs for regtech customers. 

Best Regtech Stocks: Disadvantages 

• The increased integration between different systems, while positive in some aspects, also gives rise to new risks. With interconnectedness, cyberattacks could have a widespread effect. 
• Software development and updates can be quite costly. As the regulatory landscape continues to change and becomes increasingly complex, software costs could potentially harm the growth of regtech companies. 
• There is still plenty of inconsistency across different regulations and regulatory agencies - not only between different countries but also within the same territory. Combined with the amount of data to be analyzed and tight deadlines for compliance, this puts regtech companies under strain, which can escalate costs and damage their potential for growth. 

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Top 3 Best Regtech Stocks to Watch 

Let’s take a look at some of the best regtech stocks available, as well as their good and bad points. 

1. IBM Corp (IBM) 

The American technology multinational has been one of the leading companies in the regtech segment.

IBM has partnered and integrated its systems with other leading regtech companies, like Deloitte, Ascent, and Thomson Reuters, deploying regtech solutions on its IBM Cloud platform.

Advantage of IBM stocks: 

• IBM provides slow but steady returns, having a solid track record of dividends. And in recent years, thanks to the AI boom, IBM stocks have also received an unexpected, but very welcome boost. 

Disadvantage of IBM stocks: 

• IBM stocks do not have eye-catching growth rates, sitting slightly below the average of other IT companies. Despite its consistent dividend payout, IBM also sits slightly behind other major IT companies. 

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2. Wolters Kluwer NV (WKL) 

Wolters Kluwer has long been a reference in the regtech industry and has collected multiple awards.

Serving customers in over 180 countries, the Dutch company provides services in many other different segments. 

Advantage of Wolters Kluwer stocks: 

• Wolters Kluwer has shown some impressive growth rates in recent years, and that trend looks set to continue. The Dutch company continues to invest heavily in AI and cloud technology, which bodes well for the future. 

Disadvantage of Wolters Kluwer stocks: 

• Wolters Kluwer stocks are available at a relatively high price, and that can potentially make smaller investors hesitant about buying this stock. 

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3. Broadridge Financial Solutions (BR) 

Broadridge is a New York-based company that provides its clients with financial and communication solutions.

As a leading brand in the regtech segment, Broadridge boasts an enviable list of clients, which includes some of the biggest companies in the financial sector. 

Advantage of Broadridge stocks: 

• Broadridge shows plenty of potential to keep growing. With a wide client portfolio and a range of services available, the American regtech could be an interesting option in the long term. 

Disadvantage of Broadridge stocks: 

• Broadridge stocks have shown unusually high volatility over the past 12 months. While Broadridge has been trending up again lately, it’s worth keeping these recent ups and downs in mind. 

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How to Buy Regtech Stocks 

The best way to buy regtech stocks is doing it with a reliable, trusted and regulated broker, like Admirals. 

You can start at Admirals with a risk-free demo account, which does not use real assets.

This way, you can simulate your investments without having to worry about losses, allowing you to gain experience and come up with an investment strategy. After that, you can sign up for a live account and start investing with direct funds. 

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• AI bots for automated trading. 
• Educational tools. 
• Advanced and personalized charting. 
• Free access to market news and indicators. 
• User-friendly, easy-to-use platform. 

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Best Regtech Stocks to Watch: Conclusion 

Regtech could be one of the biggest segments in the technology industry.

With increasing and more complex regulations, companies from different industries will continue to flock towards regtech to lower costs and improve efficiency.

In this landscape, regtech stocks could be an interesting addition to diversify your investment portfolio. 

However, this segment is also set to take on some challenges in the near-future. Increased integration also means additional risks of large-scale security breaches, which could potentially cause major damage.

Additionally, regtech is an expensive segment, as software development and having to adapt to inconsistent regulations across different territories puts quite a strain on the companies.

Overall, regtech has good and bad points, so it’s a matter of weighing positives and negatives, and taking your investment strategy into account, before committing to regtech stocks. 

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