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London-headquartered SaaS regtech company SteelEye has raised $21 million in a Series B funding round from a Ten Coves Capital-led investment consortium.
SteelEye intends to use the funding to accelerate its global expansion plans focusing on North America.
Existing investors Fidelity International Strategic Ventures, Illuminate Financial, Beacon Equity Partners, and a large family office also participated in the funding round.
The latest round takes the company’s total capital raise to $43 million.
SteelEye is a SaaS-based platform offering data-driven and automation-led solutions for regulatory reporting, communications and trade surveillance, best execution monitoring and data analytics to banks, brokers, asset managers, and other regulated financial firms.
Regulatory pressure paves way for regtech solutions providers’ growth
The regtech group’s latest capital raise comes as financial firms look to replace their legacy technology with cost-efficient and cloud-based compliance solutions amid the increasing regulatory and expense pressures.
Financial firms have at times failed to comply with the regulations with some facing repercussions for their failure in recent months.
In the US, regulators are set to impose five US investment banks a collective $1 billion fine for the use of unapproved communication tools, including apps like WhatsApp.
In the UK, the Financial Conduct Authority fined Citigroup £12.5 million for failing to properly implement the Market Abuse Regulation trade surveillance requirements.
As firms fall foul of regulations, they have turned to regtech providers to comply with tightening regulations. This, in turn, has made for a suitable environment for growth for service providers like SteelEye.
In March, Know Your Customers solutions provider, Encompass Corporation, raised £25 million to accelerate its global growth, including office openings and recruitment in New York and Amsterdam.
In June, UK regtech, Clausematch also completed a successful funding round and raised $10.8 million to expand its commercial activities in the US.
Traditional firms see value in regtech solutions
The successful funding rounds coincide with the increasing investment in regulatory technologies among financial firms.
According to a 2022 survey of 170 senior compliance decision-makers in financial services across the UK and US, SteelEye found that 44% of the respondents expect to invest more in regtech in the next 12 months, with another 41% expecting to invest the same amount as before.
Similarly, Thomson Reuters’ fintech, regtech and the role of compliance report 2022 also revealed that 49% of respondents are contemplating the use of regtech services, up from 34% in the previous year.
The uptake in regtech solutions has also provided traditional firms with an opportunity to package their regulatory capabilities into technology-based solutions.
In June, UBS began offerings its regulatory knowledge via the Swiss legal information products marketplace, PartnerVine, enabling customers to access the bank’s Swiss regulatory expertise on the Financial Services Act (FinSA), Financial Institutions Act (FinIA) and revised Collective Investment Schemes Act (revCISA).
In March, Dutch investors Main Capital Partners combined Swedish SaaS platform Blike and German internal audit software developer, audimex, to launch a governance, risk, and compliance-specialised software entity.
The A-Z of financial technology solutions