EMERGING TECHNOLOGIES | BDO LLP
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a whole raft of regulatory obligations, such as Dodd-Frank and PCI-DSS in the US, and the EU’s Markets in Financial Instruments Directive (MiFID II) and GDPR (General Data Protection Regulation) privacy regulation. As ever, there are heavy fines and reputational risks in store for non-compliers. Regtech provider Theta Lake , for example, has developed an AI-powered solution that enables businesses in regulated industries to easily record and review calls for their compliance content. It uses AI, Deep Learning and natural language processing ‘to detect compliance risks in video collaboration, video marketing, social video, call recordings, and other rich media content. Detections feed into intuitive, AI-assisted supervision workflow with secure retention and compliant archiving options.’ Working from home also raises risks of a cyber-attack and provides digital criminals with another window of opportunity.
been targeted with cynical phishing campaigns, and bad actors have hacked into video meetings. Outside of the office environment, the risks of lapses in protocol grow. As John- Erik Setsaas, Signicat VP of Innovation and Identity told Fintech Global : ‘Accessing new services, onboarding new customers, and granting permissions to third parties digitally, and without the proper identity checks, risks everything from GDPR breaches to full scale hacks.’ Cybersecurity, already one of the best- funded sub-sectors of Regtech for several years, could see even bigger opportunities ahead. As financial crime inevitably increases significantly in times of crisis, so does the need for RegTech. ‘The money is just going to try and go wherever it’s easiest to commit fraud or launder funds, so there will be a constant effort to try and make protections more stringent,’ says Kate Marsden, CMO of KYC Global whose SaaS product is Riskscreen , a
fast-growing cloud-based AML provider of KYC screening and customer risk management. It works to reduce financial crime through a platform-based approach that includes electronic identification and matching records against the two most established KYC databases in the world, Dow Jones and Refinitiv. ‘With our world the way it is at the moment this is one area that isn’t going away. Investment- wise if you are looking across the whole of the tech space, RegTech definitely feels a safe, reliable option.’ Not only that, but in a world where brands are increasingly expected to demonstrate an authentic sense of purpose, Marsden sees a growing interest in screening from an ethical perspective. ‘Even outside the regulated industries, we’re seeing more and more companies seeking to perform due diligence on their clients, because of the reputational risks of certain kinds of association. Companies are feeling more of a moral imperative to really show that they know their customers.’
CORONAVIRUS AND BEYOND Funding in RegTech held up well in the early part of 2020 and the sector was on course for another record year, prompting some to suggest that the sector was relatively resistant to the pandemic fallout. But though funding is inevitably slowing, investors are more likely to invest in scale-ups with some tested success from an existing offering with a strong business case, rather than in unproven innovations and new startups which will inevitably struggle to raise new capital in a crisis. This fact plays well with the RegTech sector, whose solutions are designed to pivot and adapt as new regulations and directives emerge. Just as in the crash of 2008, so the current crisis is seeing the launch of new regulatory initiatives to help re-stabilise markets. Short selling in Europe was banned, at least temporarily, at the start of the crisis. Singapore and Australia both introduced measures to relax investment rules, and company reporting deadlines have been deferred
REGTECH SOLUTIONS USE BIG DATA AND MACHINE LEARNING TO HELP REGULATED COMPANIES TO MANAGE THEIR RISK...
THE MONEY IS JUST GOING TO TRY AND GO WHEREVER IT’S EASIEST TO COMMIT FRAUD OR LAUNDER FUNDS...
all around the world. When regulations change this rapidly, businesses will need smart support to keep up with the changing compliance burden. Another trend of note for RegTech is the migration to homeworking. As companies send their staff home and struggle to reconfigure the workplace, video conferencing and other remote working tools have – as we all well know by now – assumed a new ascendancy in our working lives. These tools bring with them
KATE MARSDEN CMO,KYC GLOBAL
Homeworking companies have faced ransomware attacks, individuals have
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