Demand for regtech at financial firms is large and set to grow, according to new research from Greenwich Associates.

In a report, the U.S. consulting firm said that companies invested heavily in regtech in 2018 in a variety of areas, including trade surveillance, anti-money laundering and know-your-client functions.

The report noted that financial firms are increasingly using regtech in other areas as well, such as monitoring communications and ensuring employee trade compliance.

Greenwich reported that firms spent over US$1 billion on third-party trade surveillance technology last year. Looking ahead, that spending its set to continue “or even accelerate,” Greenwich said, noting that 25% of firms single out “insufficient technology infrastructure” as their biggest regulatory challenge in the short term, based on a survey of industry compliance personnel.

“One trend to watch in regtech is the increasing utilization of automated solutions in previously manual processes, such as regulatory change management and noncompliance issue tracking,” Dan Connell, managing director at Greenwich, said in a statement.