How and Why Opinions on SaaS Are Changing Within the Tax Industry

For most industries, SaaS is old news. We’ve long since moved past the era of installing software on desktop machines, waiting for disks to load, and managing endless upgrades. SaaS promised speed, automation, cost savings, and freedom from the medieval fortress of on-premise deployments.

Yet here we are, nearing the end of 2025, and only now is SaaS becoming the default choice for many organisations in the tax and regulatory compliance space.

Why has adoption taken so long in this industry? And what’s changing as we head into 2026? Let’s take a look.

1. Cloud Was the Barrier — Until Perception Finally Shifted

If you rewind five to ten years, the biggest blocker to SaaS was simple: cloud anxiety.

Financial institutions were understandably hesitant to move sensitive tax data outside their own perimeter. The risk felt too great, and on-premise environments gave them a sense of control, even though that control was often more illusion than reality. But the world changed. High-profile breaches on internally hosted systems forced organisations to confront an uncomfortable truth: on-premise didn’t inherently mean “safer.”

At the same time:

• Operational costs of maintaining on-prem systems ballooned
• Cloud became ubiquitous in daily life (Netflix, banking apps, government portals)
• Procurement and information security teams gained cloud literacy
• Regulators began producing cloud-friendly guidance

The fear slowly dissolved. Today, cloud is no longer the villain, it’s the expected foundation.

2. The Shift From “Where Is My Data?” to “Who Controls It?”

For years, the single biggest question in procurement discussions was:
“Where exactly is my data hosted?”

Now, in 2025, the more important question is:
“Who else can access it?”

This shift reflects the reality of modern tax operations, where systems process incredibly sensitive information:

• Tax forms
• Customer identity data
• CRS and FATCA output
• Source-of-wealth confirmations
• Risk ratings
• Transaction data

AI advances, particularly generative tools, have amplified these concerns. Institutions now care deeply about:

• How data is governed
• Whether sub-processors have access
• Whether AI models use customer data
• Residency and sovereignty
• Auditability of every action

It’s no longer enough for a vendor to “host securely.” They must prove rigorous data governance. The Tax Industry is no longer scared of where the data sits, but it demands clarity, control, transparency, and zero-trust principles from whoever hosts it.

3. Vendor Risk Management Has Transformed SaaS Expectations

If there’s one function that has reshaped attitudes toward SaaS, it’s Vendor Risk Management.

What once was a simple checklist, “Do you have ISO 27001? Do you encrypt data?” has now evolved into a full forensic audit. VRM teams in 2025 routinely request:

• Penetration test results
• AI governance documentation
• Detailed sub-processor lists
• Data protection impact assessments
• Incident response testing
• Zero-access evidence
• Business continuity and exit plans
• Immutable audit logs

And they want all of this before a POC even starts. This hasn’t slowed SaaS adoption, but it has forced SaaS vendors to grow up quickly.

Today, the fastest-growing RegTechs treat compliance as a competitive advantage, not an obstacle. Those who can “run the VRM gauntlet” with confidence are the ones winning trust, and deals.

4. AI: The Double-Edged Sword Shaping SaaS Adoption

AI has brought extraordinary capability to SaaS platforms:

• Automated extraction
• Real-time case assessment
• Smart document validation
• Agentic workflows
• Predictive checks
• Continuous monitoring

But AI has also triggered an entirely new layer of scrutiny:

“Is my data used to train the model?”
“Which third-party AI services do you call?”
“Can we selectively enable or disable AI?”
“What governance frameworks do you follow?”

SaaS vendors who treat AI as a bolt-on feature are finding institutional buyers hesitant. Those who provide mature, transparent, fully governed AI models are seeing demand skyrocket.

Ironically, many institutions with on-prem preference are discovering they can’t easily benefit from modern AI, their environments simply don’t support it.

5. Cost Pressures Are Accelerating SaaS Adoption

With cost optimisation now a cultural priority across financial services, SaaS is increasingly attractive.

CFOs are asking tough questions:

• “Do we need to maintain this system ourselves?”
• “Why are we paying so much for internal hosting?”
• “Can we reduce cost by outsourcing platform management?”

SaaS vendors who offer:

• Usage-based pricing
• Tiered service levels
• Modular functionality
• Faster deployment
• Lower implementation costs

…are winning significant ground.

When leaders realise that SaaS offers both lower cost and faster time-to-value, the debate tends to disappear.

6. Where SaaS Has Already Become the Preferred Model

Across RegTech, SaaS is becoming the default choice in areas where:

• Constant regulatory updates are required
• Compliance timelines are tight
• Automation significantly reduces manual workload
• Time-to-value is critical
• Cross-border reporting creates operational complexity

FATCA, CRS, CARF and related global tax regimes change constantly. Most institutions simply don’t want to manage this complexity in-house. They want a partner who handles updates, testing, deployment and compatibility, and that is the promise of SaaS.

7. What Will Shape SaaS Adoption in 2026? One Word: Agentic.

As we look into 2026, one trend will dominate SaaS conversations in the tax industry: Agentic AI solutions. These systems use multiple specialised agents working together to complete complex tax due-diligence workflows, from intake to validation to remediation to reporting. This presents a challenge for organisations clinging to on-premise deployments.

Very few institutions today have:

• The infrastructure
• The skills
• The security frameworks
• The model orchestration capability
• The compute elasticity

…required to host agentic systems safely at scale.

SaaS providers, on the other hand, are purpose-built for exactly this. My prediction? Agentic workflows will accelerate the move to SaaS faster than any other force in the industry.

The Tax Industry’s journey to SaaS took longer than other sectors, but the shift is now well underway. The conversation has matured from “Is cloud safe?” to:

• “How do you govern data?”
• “What is your AI oversight model?”
• “Can you support our compliance operations at scale?”
• “Do you meet our VRM expectations?”

SaaS isn’t just the faster and cheaper option. Increasingly, it’s the only option that can support the complexity and pace of global tax compliance as AI reshapes the regulatory landscape.  And as we move into 2026, the rise of agentic systems will make this shift undeniable.

Transform Your FATCA & CRS Tax Due Diligence With Secure AI-Powered SaaS

We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organisation.

For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.

Let us show you how SaaS, automation and agentic AI can reduce manual workload, improve accuracy and accelerate compliance.