Cube, a regtech company specializing in regulatory intelligence, announced on Wednesday that it acquired The Hub, a provider of artificial intelligence (AI ) solutions for regulatory technology. The terms of the transaction were not disclosed.

CUBE and The Hub Regtech Cooperation

According to the press release, CUBE intends to merge the technology offered by The Hub with its proprietary RegPlatform platform. It will reduce compliance costs and risks and provide consumers with additional capabilities to automate compliance processes.

"The acquisition of The Hub marks the first in what is expected to be a number of purposeful acquisitions for CUBE as a consolidator of regulatory compliance focused firms and technologies in what is a highly fragmented RegTech market. The Hub's team and solutions are best in class and represent many synergies with CUBE's own capabilities," Ben Richmond, the Founder and CEO of Cube, said.

Both CUBE and TheHub operate in the regtech industry. Established in 2008, CUBE offers its customers Automated Regulatory Intelligence (ARI) solutions, covering 180 jurisdictions and 60 different languages. However, The Hub has been on the market since 2015 and provides AI-based network monitoring and data storage solutions to support regulatory requirements.

The Hub's Co-Founder and CEO, Juned Jable, admits that the two companies have been working together for some time, and he sees the acquisition as a natural step forward to develop AI-based regulatory technology together.

The acquisition comes after CUBE received funding from Bregal Milestone to support further development and expansion into new markets.

RegTech Industry Is Booming

In the increasingly crowded fintech space, regtech appears to be a niche presenting solid growth potential. In 2022, the industry grew to $9.88 billion at a compound annual growth rate (CAGR) of 25.1%. By 2026, analysts expect the global regtech market to be worth $23.7 billion at a CAGR of 24.5%.

One of the main reasons why the industry is so popular is the ability to use artificial intelligence and machine learning effectively. As the example of CUBE and The Hub described above shows, many regtech companies rely on these advanced technologies to automate their processes.

In December, Finance Magnates reported that TAINA, a London-headquartered regulatory technology company founded in 2016, secured an undisclosed sum from returning investors of Deutsche Bank CVS and HSB Asset Management. A few months earlier, SteelEye, another prominent regtech firm, confirmed a successful Series B funding round, raising $21 million to grow its presence in new markets.

Meanwhile, a report prepared by IHS Markit last May confirmed that companies prefer to outsource regulatory processes to specialized regtech firms rather than handle them themselves.