The RegTech sector, born from post-2008 regulatory challenges, is thriving in 2025 as financial institutions adopt regulatory technology to meet compliance demands, marking a pivotal moment for growth and innovation. Featured in Investor Meet, two of Sirma’s top financial experts share their insights on the recent regulatory challenges facing financial institutions in the EU, as well as the technological solutions emerging to address these issues. Vesselina Stoycheva, the Chief Business Compliance Officer in Sirma’s FinTech Vertical, and Merdihan Ismailov, the Vice President of Solutions and Products for Fintech Institutions, discuss these critical topics.
The discussion was opened by presenting the regulatory burden on financial institutions in the European Union, which continues to grow, with new rules being introduced almost every year. Vesselina Stoycheva shared that the scope of regulated entities is expanding, and compliance requirements are becoming increasingly complex. This evolving landscape presents significant challenges for banks and financial companies, leading to the emergence of an entirely new market—RegTech. These technology-driven companies help financial institutions manage their regulatory reporting obligations efficiently.
In addition, Merdihan Ismailov elaborated on the theme by highlighting regulatory diversity. One can quickly mention ESG, DORA, MiCA, the Solvency II directive for the insurers and capital adequacy, regulations for crypto assets, etc. He also highlighted that regulatory deadlines are becoming more demanding. Whereas companies previously reported on a six-month basis, many now face quarterly, monthly, and even daily reporting requirements. This creates additional pressure, particularly for banks, which often operate with more than 30 different internal systems. Consolidating data from these systems into a compliant report that meets regulatory expectations is a significant challenge.
As a result, numerous RegTech companies have emerged, offering specialized solutions across different aspects of the compliance process. Bulgaria is home to several highly capable RegTech firms, many of which partner with Sirma to support financial institutions. The need for these solutions is growing rapidly as banks and financial institutions increasingly turn to specialized IT providers to manage their reporting obligations efficiently.
Stoycheva emphasized that beyond compliance, these solutions enable financial institutions to analyze their data effectively. By leveraging these insights, companies can not only meet regulatory requirements, but also plan their business strategies more effectively. One such solution is RepXpress, developed by Sirma Group. This platform goes beyond regulatory reporting, offering functionalities for business analysis and data structuring. Clients using RepXpress also benefit from Sirma’s expert consulting services, ensuring that they fully understand and implement the necessary regulatory frameworks.
Although the EU regulatory framework is mandatory for all member states, national regulators have the authority to introduce temporary adjustments tailored to local economic conditions. However, upon accession to the Eurozone, all EU regulations will become compulsory. In addition, national regulators adopt their ordinances too. In Bulgaria, examples include ordinances regulating the central credit register, bank accounts and safe deposit boxes, various statistics, etc. Further, national supervisory bodies impose other regulations, such as those of the National Revenue Agency, regulations for reporting under the Bulgarian Deposit Insurance Fund, etc. Additional national requirements also come from agencies such as the National Revenue Agency, which enforces separate compliance obligations on financial institutions.
The process of regulatory reporting was briefly presented with its several key steps. First, financial institutions must establish a centralized data repository that integrates information from their various systems. Next, data correlation tables are used to convert internal data formats into the standardized formats required by regulators. Finally, the processed data is presented in the appropriate regulatory format for submission.
One particularly significant regulatory development is AnaCredit, an EU-wide reporting framework for credit risk introduced in 2016. While it is mandatory for Eurozone countries, countries like Bulgaria, that are in the Eurozone’s waiting room, must also prepare for compliance. The Bulgarian National Bank began implementation of AnaCredit in 2023, with extensive testing taking place throughout 2024. Sirma Group has ensured that RepExpress fully supports these requirements and is ready for production.
According to IM, the AnaCredit framework is expected to be extended to non-banking financial institutions, albeit in a limited capacity. However, even in this smaller scope, it will present additional challenges and require significant resources for compliance. Another major regulatory shift involves the introduction of the Standard Audit File for Tax (SAF-T), which will impose new reporting obligations on financial institutions in their capacity as large taxpayers. In conclusion, Merdihan Ismailov commented that the smaller financial institutions can also benefit from RegTech solutions. They can utilize RegTech services through cloud subscription, pay-as-you-go, or by using individual modules of existing products.
Watch the podcast on our YouTube channel (in Bulgarian only) to see the whole interview!
