#regtechexpert

BIGcontrols: provides modern business intelligence, lifecycle management and regulatory compliance for corporate tax credits & incentives.

GreenKey: offers an AI-driven, voice interface that redefines voice communication, allowing firms to reduce legacy costs, capture data, increase collaboration and improve compliance.

Identity Mind Global: allows companies to perform identity proofing, risk-based authentication, regulatory identification, and ultimately detect and prevent synthetic identities, and stolen identities.

IDmission: delivers elegant solutions to legacy problems of customer engagement including onboarding, identity management, transaction processing and payments.

Quarule: automates compliance program management, certification, and controls by using a controlled vocabulary, semantic rules and reasoning engine to teach computers the meaning of regulations, policies, and standards.

LogicGate: enables enterprises to transform mission-critical risk and compliance processes that lack appropriate controls and, if mismanaged, can expose them to financial risk.

Finomial: automates client onboarding processes to reduce risk and ensure comprehensive due diligence.

Precognitive: combines device intelligence, advanced behavioral analytics and a real-time decision engine to detect and prevent fraud.

Cloud9 Technologies: uses a Software-as-a-Service model to eliminate legacy hardware and improve workflow with a highly secure, cost-effective, and compliant service.

RegTech pioneer Solvassure has created a single compliance platform for GDPR and the Accountability Regime, as the race to meet next year’s implementation deadlines heats up.

The new platform, populated by material licensed to Solvassure by the FCA, PRA and Information Commissioner’s Office, will enable up to 50,000 FCA regulated firms to be compliant with both GDPR and the Accountability Regime in a single cloud-based environment, for the first time. This is achieved using Solvassure’s proprietary regulations library which stores and processes published directives from UK and EU watchdogs.

Solvassure was the first RegTech firm to be granted a development licence to use copyright regulatory material by the FCA and the PRA.

The global demand for regulatory, compliance and governance software is expected to reach $118 billion by 2020. With pressure mounting on budgets and timescales, the benefits of running multiple regulations on the same cloud-based platform will be considerable.

Solvassure’s Founder and CEO, Clive Godwin, commented: “Beyond MiFID II, these are two of the most important regulations to hit the financial services sector in a decade. With significant fines and even jail sentences at stake, it’s not surprising that responsible owners are feeling nervous. Our platform enables them to speed up the process of implementation without breaking the bank.”

A new report from Juniper Research has found that spending on Regtech will grow by an average of 48% per annum over the next five years, rising from $10.6 billion in 2017 to $76.3 billion in 2022 – as banks seek to avoid costly regulatory fines.

The new research, Regtech Strategies for Financial Services 2017-2022, found that Regtech spending, as a percentage of regulatory spending, will increase dramatically, from 4.8% in 2017 to 34.4% by 2022.

This represents a vast opportunity for Regtech vendors, who can capitalise on banks seeking efficiency in meeting regulatory compliance requirements. With multinational financial institutions such as Citi having as many as 30,000 compliance staff, just 3 bank compliance departments could fill London’s Wembley Stadium. Automation has huge potential to reduce this.

This level of staffing means that a 50% reduction could save a single large bank $1.2 billion per annum, based on average wages. The research also found that AI automation of KYC (Know Your Customer) checks will reduce time required by 90%, generating time savings of 5.4 million hours annually by 2022.

Regulation is an increasingly global challenge, with rules in one region very much affecting other regions. It’s becoming a question of standards on a mass scale, says fintech consultant Ghela Boskovich.

“The open banking mandate – to crack open systems and release data for transactions and general data exchange – requires intensive thinking about the standards,” Boskovich says. “One of the biggest challenges comes in setting the right standard from the get-go,” she adds.

Given that 50% of banks’ spending on technology is directly driven by regulation, according to Dejan Kusalovic, Global Head of FinTech Enabling, Intel Corporation, investing in technology to streamline and automate these processes can bring huge cost, risk and efficiency benefits to the table.

As Joan McGowan, Senior Industry Analyst, Celent, says, “There is a top-down push for operational efficiency rather than continued layering of solutions and the addition of compliance staff.”

The ultimate vision of regtech – the “nirvana” – according to Kusalovic at Intel, is real-time regulatory compliance driven by APIs, which give visibility on solutions before they even arise. “Some of the most exciting regtechs are already taking us closer to that vision,” he says.

The leading RegTech company that delivers automated compliance solutions, announced today at Money 20/20 the release of its Complaint Risk Signal Platform which uses data from the Consumer Financial Protection Bureau’s (CFPB) Consumer Complaint Database to provide companies with an up-to-date assessment of the risk associated with their consumer complaints.

The Complaint Risk Signal Platform provides companies with insights into their own complaint data, comparing it to their competitors so they can determine risk on a relative scale. It provides an overall assessment of a company’s risk based on the proprietary analysis of both CFPB complaints and enforcement data.

Offering cloud-based, real-time insights within the PerformLine platform, the Complaint Risk Signal Platform enables companies to see complaint trends over time, monthly trends, sub-product details, issue trends, untimely responses, response types and text analysis. It provides Chief Compliance Officers and any team within an organization a view into how complaints are trending across products and issues, providing critical insights into customer satisfaction and the effectiveness of marketing activities.

“When a company has a better understanding of their consumer complaints, they have a better understanding of their regulatory risk,” said Alex Baydin, CEO of PerformLine. “The intelligence and analysis of consumer complaints provided by our platform offers those using it a competitive advantage with visibility into how complaints are trending across multiple data points.”

Regtech in the fight against financial crime is only part of the solution. Already, it has helped the most important financial establishments to rapidly respond to audit and regulatory findings, however, junior RegTech startups won’t be able to meet the difficult demands of compliance for some of the world’s largest financial institutions. Regtech won’t be able to scale and even has the potential to create more technology silos. In fact, regtech solutions will fail unless they actively help simplify the technology landscape, while providing value, including multi-jurisdictional, multi-product onboarding and transparency to the client and front office for large corporates, streamlining time to transact and essentially improve customer experience. The goal in regtech solutions should go beyond regulation and focus on streamlining onboarding in the digital age. Moving from 100 plus days to 2 days or less for new products and services.”

Vivek Bajaj, vice president, Global Banking and Financial Markets at IBM, who has great expertise on IBM’s AI Watson, also has plenty to say about its potential in financial service. “Regulatory compliance, AML, KYC, conduct surveillance, customer engagement… The applications are many”.

“Many FIs face an unending flow of regulations, and it is a great area of investment. They need to redirect regulation, compare it with internal policies, and determine their obligations from this new regulation. And this is a very manually-intensive process. FIs hire up to tens of thousands of people just to do that piece of work.

“We acquired a company called Promentory Financial Group, which is pretty much 600 financial regulators – a strange acquisition for a tech company like IBM. But domain expertise is essential, and it helps us inject the regulation and internal policies into Watson’s logic and cognitive skills, cross-comparing it with previous and similar cases and actions.

“Financial crime and KYC is a great area, and it’s a very difficult thing to do. It’s very hard to create an accurate profile of SMEs. We will be able to use both unstructured and structured data sources to extract insights, and fill in the customer information file.

“Watson was able to complete 75 customer files in the time the team did 25 manually and couldn’t complete it.

“Many banks are in the range of +95% of false positives, which clearly tells us that something is wrong with the system.”

“We are also helping institutions in staff surveillance. Bad guys can also be found in our own companies, unfortunately, and Watson is able to read emails and spot a leak in an email in code that only talked about the weather, seemingly.”

It is estimated that by 2020 there will be 300 million pages of regulations in existence, with fines for non-compliance likely to rise accordingly.

For Mr Burgess, the addition of tech and the removal of paper processes can offer a competitive advantage, as well as lowering overheads as the costs of increased compliance soars. “As thousands of FIs scream about costs, RegTech is emerging as part of the future of compliance and regulators are taking note,” he says. “In a nutshell, the detailed, prescriptive post-crisis regulations have created hundreds of millions of pages of rule books that demand data. This has given market-leading regulators the opportunity to help shape technology solutions that produce the high quality information required by the regulator in an efficient manner.”

In a financial world that has seen regulatory compliance obligations expand rapidly in the years since the financial crisis, RegTech is gaining traction as a cheaper, simpler and faster way of meeting said obligations – a go-to solution that is likely to skyrocket as FIs search for positive answers to probing compliance questions.

While the RegTech concept is innovative in itself, many FIs are already pushing the envelope and utilising RegTech as part of more complex collaborations in order to achieve regulatory compliance. An example of this is mapping functional taxonomy to the language used by regulators – while overcoming any semantic disjuncts that may exist – resulting in a direct link between regulatory authorities and designated compliance practitioners.

“One of the great things about RegTech is that it works better with collaboration,” says Mr Burgess. “Obviously, if one firm is using a taxonomy to reduce the cost of onboarding a new regulation, it makes sense to involve others to ensure that this is being done correctly. This means that a number of firms will voluntarily give up their time to create an artefact that they can all use and pull their vendor ecosystems along with them. These types of solutions can provide great efficiencies if deployed correctly to ease the compliance burden.”