leading governance, risk, and compliance services provider has announced an exclusive multi-year partnership with KPMG in the UK to leverage AI-based technology in order to enrich and streamline compliance solutions for its global corporate and financial institution clients.
KPMG’s adoption and integration of Exiger’s solutions includes
The partnership will enhance KPMG’s offerings across financial crime, KYC, Anti-Bribery & Corruption (“ABC”), and reputational risk management. KPMG will be the only Big Four firm with access to the technology and will be a key collaborator with Exiger to continually enhance the DDIQ to benefit the market.
Michael Beber, Exiger President and Chief Executive Officer, commented: “Exiger’s and KPMG’s clients are increasingly under pressure to satisfy shareholder demands to meet financial objectives amidst the weight of growing regulatory pressure in today’s market. The stakes have never been higher. Meanwhile, there are very few solutions and providers that can truly manage these demands.”
“The traditional way of doing things, with teams executing web research, diligence, and other routinized compliance tasks is no longer the most effective way of working. We have always been at the cutting-edge of combining innovative service delivery with technology. The decision to introduce a custom version of DDIQ, the leading AI-based, compliance product into KPMG continues that tradition and offers greater benefit to our global clients”, said Nigel Layton, KPMG Partner in Forensic, Risk Consulting Practice.
“Partnering with KPMG, as an evangelist and collaborator in the growth of DDIQ and 3PM, ensures that this technology will be the standard for KYC diligence, corporate intelligence, and third party management in the areas of financial crime compliance and anti-bribery and corruption. The partnership marks a significant moment for Exiger, KPMG and the entire compliance market”, said Brandon Daniels, President of ExigerTech.
Arachnys, the leading provider of cloud-based solutions for assessing financial crime and customer risk, and for ensuring compliance for regulatory CDD, KYC and EDD requirements, announced today that veteran professional Edward Sander has assumed the role of President.
Sanders comes with 20 years of executive experience running high growth software organizations, including NICE Actimize, and most recently, Model N, a Silicon Valley-based, cloud software company that pioneered the Revenue Management category.
Greg Meekings, Arachnys Board Chairman and former Thomson-Reuters CIO, said:
David Buxton has demonstrated exemplary leadership as Arachnys’ Founder and CEO for the past 7 years. Under his stewardship, the company has pioneered a new platform for accelerating risk investigations, in the cloud, that reduces cost and accelerates revenue for the world’s top global FIs. We’re incredibly excited to add a global executive of Ed’s caliber to work with David and help drive Arachnys to the next level.
David Buxton, Arachnys CEO, said:
At this juncture in Arachnys’ journey, with the accelerating momentum and adoption for our D3 cloud platform at the world’s top-tier financial institutions, the timing is right for us to bring an operating executive with proven experience building global businesses into the company.
I’m truly thrilled that Ed is joining as our President. His leadership experience, AML domain expertise and proven track record will help us take Arachnys to new heights and I look forward to working closely with him in the years ahead.
Prior to leading Revenue Management firm Model N, Edward Sander spent five years as General Manager of Anti-Money Laundering at NICE Actimize, where he had previously served as Chief Product Officer.
As General Manager of NICE’s Actimize Anti-Money Laundering line he oversaw product creation, solution delivery, go-to-market planning, and client relationship management activities. His expertise in the compliance disciplines of anti-money laundering (AML), know-your-customer (KYC), customer due diligence (CDD) and enhanced due diligence (EDD) is renowned throughout the industry. His skills also extend to portfolio management and new product development across analytics, audit-compliance, business process management, and customer relationship management solutions for the banking, insurance, energy, and life science markets.
Commenting on his new role, Sander said:
I am excited to join Arachnys as President because of our opportunity to help financial institutions transform their customer risk assessment processes.
David has created a company with a truly unique, cloud-based platform that leverages machine learning and robotic process automation unlike anything I’ve seen during my time in the AML industry. I’m fortunate to be joining the company now and partnering with David, and the Arachnys team, to lead the company into its next phase of growth.
The Australian Regulatory Summit 2017, hosted by Thomson Reuters, saw the convergence of thought leaders on regulatory updates and potential developments in the finance industry. Amongst the key themes presented to advance industry regulation was the need for cultural accountability in banking, and improved responsibility of senior management. David Coleman MP, Federal Member for Banks and Chair of the House Economics Committee, provided that there is a need to address the internal culture of banks to establish accountability.
Tabled in the Major Bank Levy Bill 2017, the Banking Executive Accountability Regime forms part of the federal governments measures announced in the most recent budget. Announced earlier in May, the Turnbull government’s Banking and Executive Regime will implement measures to make executives of authorised deposit-taking institutions more accountable. This comes as the government adopts 9 out of the 10 recommendations put forward by the House Economics Committee in their review of the four major banks (released November 2016). Other changes will include the establishment of the Australian Financial Complaints Authority (AFCA) as the “one-stop-shop” for dispute resolution; greater powers for the ACCC to review the financial sector and promotion of open customer data.
David Coleman explained that the changes will improve executive accountability, requiring reporting of changes to APRA and the deferrable of bonus remuneration. Under the new regime:
- Banks will be required to register proposed executive or director appointments with APRA, along with a map of their responsibilities;
- APRA will be given stronger powers to disqualify directors and executives; and
- Executive remuneration frameworks will be restructured to require a minimum of 40% (and up to 60% for certain executives such as CEOs) of variable remuneration to be deferred for a minimum for four years.
Additionally, not only will APRA have increased maximum penalties for ADI’s who breach these expectations, but will also have the extended power to implement penalty where ADI’s fail to monitor the suitability of these executives.
As ASIC seeks stronger powers of regulation in the financial industry, particularly with a focus on enforced criminal accountability, it holds banks will need to be able to trace accountability to responsible executives and senior management. Under ASIC’s proposed self-reporting framework, ADIs are encouraged to proactively identify, report and remediate breaches, with senior management responsibility. Peter Kell, Deputy Chairman, ASIC, commented that such framework will limit individuals managing finance companies, creating a culture of responsible management.
RegTech, developed to improve efficiency of monitoring and reporting financial transactions, is the way of the future of the compliance with financial regulation. The launch of ASIC’s Innovation Hub, and the increasing support for the development of FinTech, promotes the adoption of innovative regulatory solutions in financial operations. RegTech, a regulatory framework designed to be built into a financial organisation’s operating system, allow real-time monitoring and flagging for reporting and compliance, and long-term data collation and analysis.
The opening address of the Australian Regulatory Summit 2017, presented by Sanjeev Chatrath, Regional Head and Managing Director of Financial and Risk, Thomson Reuters, identified the need for technological growth and adoption to match the rapid growth of financial regulation. Chatrath provided that the rapid pace of regulatory reform, and the increased availability and improvement of technology means organisations need to keep up. Currently, there are 50,000 regulatory reform a year: one every 10 minutes, and bodies need to be abreast of and compliant with these.
Additionally, the increased threat of cyber-crime arising from technological developments means organisations need to take account of the increasing risk associated with technology. Peter Clark, acting CEO of AUSTRAC, identified the application of quantum computers and AI as the efficient way of the future. But points out with this is the increased risk of fraud and data loss where not monitored correctly. As a result, AUSTRAC’s smarter regulation program announced in their 2017-18 Industry Contribution Consultation Paper, improvement in data quality and timeliness of lodgement is necessary, ensuring compliance with AML/CTF regulation.
ASIC identifies that RegTech’s design is to address:
- identity verification;
- fraud prevention through transactional analysis and predictive data compilation;
- trade tracking analysis;
- anti-money laundering (AML) mechanisms; and
- know your customer (KYC) compliance.
As a result, they foresee the automation of previously manual processes and facilitation of real-time data collection and analysis. This will create a platform for standardised data collection, provide the framework for the efficient analysis of large data sets and allow the automatic response of reporting.
At their RegTech Roundtable, ASIC promoted the need for banks to be involved in the development of RegTech, creating a potential revenue stream for organisations and a hands-on approach to adoption. And with a call for a collaborative approach towards regulatory compliance, banks are called to partake in the upcoming boom of RegTech.
SafeCharge International Group Ltd, the payment technologies solutions provider, announced today a partnership with risk management firm Sphonic. The partnership will allow SafeCharge to add complementary compliance services such as KYC (Know Your Customer), document verification, PEPS/Sanctions and to enhance the company’s fraud prevention solution with additional capabilities.
Thomson Reuters’ 2016 Know Your Customer Survey revealed that the leading regulatory challenge for financial services companies is KYC-related: 87 percent of banks and 75 percent of investment managers believe regulatory and legislative change is the most influential factor for their KYC processes.
Sphonic is a data network of leading third party vendors that provides real time authentication and fraud management decisions to a burgeoning digital world, to address industrywide KYC and fraud prevention challenges.
Through its Workflow Manager (WFM), Sphonic’s KYC and document verification capabilities will address the growing needs of regulated gaming businesses and CFD brokers in readiness for changes in the regulatory landscape, including PSD2 and the fourth AML Directive.
Apart from reducing customer friction and operational overheads, it also allows SafeCharge to create a vendor-agnostic solution that allow merchants to select and work with their KYC and document verification vendor of choice as well as increase onboarding customer conversion.
The service includes:
- Multi-bureau KYC verification, with intelligent in-flight routing based on pre-defined criteria such as geography, match rate level, commercial viability and more
- Regulatory AML checks for PEPS/Sanctions
- Enhanced digital insight including Device ID and Reputation capability, email/phone verification and validation, geo-location and distancing — and a host of others coupled with Sphonic’s unique approach in fusing multiple services to derive greater context
David Avgi, Chief Executive Officer at SafeCharge, said: “To meet the needs of ongoing regulatory changes and our growing, diverse client-base, a multi-faceted approach to manage risk was required — and as such flexibility and access to multiple technologies was key to selecting Sphonic. SafeCharge continues to stay a step ahead in the digital KYC and fraud prevention space by embedding Sphonic’s technology into our Payments Platform, enabling us to provide comprehensive payments, anti-fraud and compliance services via a single integration.”
Riten Gohil, Chief Executive Officer at Sphonic, said: “We are excited to be part of SafeCharge’s enhancement of their KYC and fraud prevention services through our innovative WFM platform. The collaboration gives SafeCharge the ability to create a workflow that will cascade checks between different providers to get optimal results for merchants that are providing KYC for their customers. These customers now have access to our extensive capabilities, global reach and market-leading insights from our team of experts in this space.”
Can financial institutions provide friction-free customer experiences?
Balancing regulatory requirements with customer experience is like walking a tightrope, and it’s one on which many businesses have lost their footing. For regulated traditional financial institutions and FinTech disruptors, the complex regulatory frameworks they must adhere to can often make this challenge all the greater.
The simplification of online engagements, particularly in the e-retail channel, has had the effect of vastly changing consumer expectations across a host of industries. One click procurement (as patented by Amazon in the US as far back as 1999) has driven phenomenal revenues and put the customer front and centre, removing potential friction in online transactions, increasing retention and customer spend. The reduction in friction and the ability to generate greater revenue was so significant that it was licensed by Apple into their iTunes and App Store services. Interestingly, this patent (which covers US only) actually lapses in 2017, meaning we could well expect to see retailers accelerating take up at that point.
So, these vast organisations have by nature set the benchmark for friction-light transactions. The consumer’s experience shapes their expectations, and creates a desire for similar experiences when they transact in markets other than e-retail. Often this desire, combined with a lack of detailed understanding of the complexity inherent to a market (e.g. Financial Services), allows consumers to assume all procurement and onboarding processes can and should be as simple. But in reality, the complex requirements of Anti Money Laundering (AML) legislation fundamentally prevents a comparably simple experience in the Financial Services market… or is that just an excuse?
The Target Demographic
Nowhere is this expectation of seamless engagement greater than in millennials, a generation born into technology and thus more conscious of the digital channel than ever before. With consumers still as unwilling as ever to change bank account providers, these millennials are the fuel for the new “Challenger” banks and they must be won if a new offering is to survive and stand a chance of becoming an established entity amongst the traditional players. It has been commented however that then managing to retain millennials is another complex issue, as the same characteristics that encourage them to open an account could just as easily see them leaving – meaning organisations will have to work harder to retain them through the provision of ever more relevant, accessible product and services.
In Financial Services, the challenger’s differentiator is often to focus on the use of technology to mimic successful methods of engagement from other markets. Activities seen as ‘the standard’ in e-retail (such as goods/service selection and procurement methods, enhancement and offering of multiple communication channels with their customer, simplification of point of access to their services via app, enhancement of mobile offerings, and streamlining the sign up/onboarding experience) are all areas of differentiation opportunities – and those that deliver these differentiators are both reaping the rewards and hurting the traditional entities.