A WHITE PAPER FROM FINEXTRA IN ASSOCIATION WITH PEGASYSTEMS JANUARY 2017

BUILDING REGTECH INTO YOUR FINTECH STRATEGY: INNOVATING TO STAY COMPETITIVE IN THE DIGITAL AGE CONTENTS

01 Foreword...... 3

02 Introduction...... 5

03 Regulation: A Double-Edged Sword...... 7 04 Customer Onboarding: Falling at the First Hurdle...... 11 05 Fintech New Entrants: Friend or Foe?...... 15 06 Regtech: The Missing Link?...... 19 07 Integrating Regtech: Thinking Cross-Jurisdiction and End-to-End...... 22 08 About ...... 26 01 FOREWORD TOWARDS INDUSTRIAL STRENGTH REGTECH

By Reetu Khosla, Senior Director, Risk, Compliance and Onboarding, Pegasystems 3 |

LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE

Regtech has become one of the most used of the canon of financial technology buzzwords. But what does it offer and how should the industry embrace this concept?

Essentially, regtech aims to simplify and speed up compliance and release of regulatory requirements linked to onboarding new and existing customers.

It is vital for banks to accelerate and improve onboarding and know your customer (KYC) processes to not only meet regulations but also to stay competitive in the digital global marketplace. Large and often changing regulatory requirements and enforcement are impacting onboarding times globally. This, combined with the impact on time to revenue and customer experience, is driving banks to re-establish their regulatory and onboarding processes across jurisdictions, lines of business and client base.

As a result, the major global banks are investing in KYC, regulatory, and onboarding technology not only to reduce the impact on costs but as part of the broader digital transformation agenda. And they need to do it fast to not only stay competitive, but to minimise the impact of regulatory scrutiny while keeping up with the constant change.

The need for a streamlined, dedicated solution makes regtech attractive. But in advancing a regtech strategy, what should banks consider? The most innovative banks understand the pace of regulatory change is almost impossible to keep up with, and are turning to regulatory technology for their compliance needs, using regtech to rapidly respond to audit and regulatory findings with capabilities including automated bulk case creation, routing and escalation, as well as the auditability of rule changes. As large global banks look at their regtech strategies, they should think think should strategies, they regtech their at look As banks large global about not only their broader fintech and digital transformation strategies transformation digital and fintech broader their only not about can be tested that model and a target but operating ofacross business, lines quickly re-adjusted and specialised.” “ I hope you find the paper informative and interesting, and I invite you to get to you I invite and interesting, and informative paper find the you I hope discuss like client to regtech aspect or any regulation, would of if you in touch in further detail. management lifecycle service – and the opportunities and potential pitfalls presented by regtech by service pitfalls presented the opportunities – and potential and in this context. solutions white paper in order to further explore the challenges banks further to the challenges in balancing face in order explore paper white customer with world-class of regulatory the demands meeting compliance broader agenda to transform client experience and digitalisation. experience and transform to client agenda broader with in has Finextra this worked the research Pegasystems on presented utilities continues, and other considerations include the fact that in a ‘start-up’ in that the fact a ‘start-up’ include considerations other and utilities continues, cannot that be part a of is technologies a risk selecting there of environment, and digital transformation strategies across lines of business, but a target but business, lines of across digitaland strategies transformation specialised. and can that quickly re-adjusted and be tested model operating KYC of is in still as progress the adoption a work ‘standardisation’ of idea The and to be able to adapt to change and to scale. As to and banks at global large change to look adapt to be able to and fintech broader their only think not about they should regtechtheir strategies, In short, the goal should be around ‘one client, one view’ one in a digital The client, age. ‘one be around should the goal In short, banks be industrial global large to that need strength select regtech solutions lifecycle management and digital transformation technology that offers offers front- that digital and technology transformation management lifecycle ability toandthe drive onboarding,global ofthe a customer view office to-back scale. a global on onboarding multi-product and multi-jurisdictional But in reaching out for solutions, there is a risk that regtech could be deployed is a risk there be deployed regtech that could solutions, for out in reaching But client be part to need broader a of solutions in such fact, when solutions as point

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02 INTRODUCTION especially minimising by transact the time fulfilling while to even regulatory demands. on operations and the bottom line. Maintaining a global approach to client client to Maintaining approach line. a global the bottom and operations on differences regional manage and requires monitor the ability to management in this digital Banks revenues their in age, regulation. protect also to need In light of these conflicting demands, financial institutions need to control control to these need financial conflictingdemands, of Ininstitutions light with up minimising while regulatory the change impact keeping the cost of experience is unlikely to encourage new customers to recommend their bank their recommend to customers new experience is encourage unlikely to obligations. compliance their meet to but choice banks no have Yet, others. to is brought into play, the amount of information banks need to gather during banks gather to information need of the amount play, into isbrought a second get process is growing.the onboarding As don’t you the saying goes, painful long, onboarding a and first make a good impression, chance to just at a time when new rivals are hovering, looking to win the rivals to looking new over are a time when hovering, at just regulation more and As more providers. incumbent of clients disenchanted To add further difficulty, the increasing demands of regulation can have a regulationof have demands can further increasing the add difficulty, To directly the experience banks on customers, their detrimental to impact give spent on regulatory compliance with the time and money that need to be to need that with regulatory the time money and compliance on spent to in order renewing technology focus and sharpening on customer spent needs. customer evolving with meet and entrants new compete Banks face a clear challenge in balancing the time and money that must be must that inBanks the balancing time money and a clear challenge face compliance efforts and costs just to stay in business – and business – significantly efforts are and to stay in costsjust and compliance new needs and changing customer to respond in ability their to hampered competition. legacy technology and legacy business models that are that In the current siloed. models business legacy and technology legacy escalating face regulatory these players environment, regulation-heavy Disruption is changing the landscape in which banks operate. Agile is changing banks new the landscape in which Disruption operate. customer- with market technology-driven, are to coming exciting, entrants banks with established many contrast, By are saddled focused propositions. recommender, ratherrecommender, than a detractor.” technologies can also underpin their response to new customer requirements requirements customer to new response their can also underpin technologies regtech, of fintech, subset much-hyped the entrants – and market new and regulatory the and simplifying to mastering burden, key the hold could a into customer every existing and new turning and onboarding, speeding Fintech is creating a new source of competition for banks, but innovative new new innovative but banks, for of competition source a new creating is Fintech “ leverage innovation, stay competitive in a world in which if a large corporate can corporate if in a large which in a world competitive stay innovation, leverage quickly withtransact bank will boost than it their and more one another move, in this changing landscape. competition new to respond ability to orchestration and client lifecycle management solutions to enable the data to to the data enable to solutions management lifecycle client and orchestration the – banks right in time, and the right way at can in the right place, be applied In particular, the paper examines how, by leveraging regtech in a coherent regtech in a coherent leveraging by examinesIn particular, how, the paper analytics sources data data and the new only not exploiting by is, – that way in also the latest but is producing, the regtech that movement techniques and looks at the options available to them to turn these challenges into turn to them into to these challenges available the options at looks and opportunities. financial institutions and other ecosystem players, this research players, the explores ecosystem financialother institutions and demands, changing customer banksand fintech challenges from regulation, face to drive multi-jurisdictional and multi-product onboarding on a global scale. a global on onboarding multi-product and driveto multi-jurisdictional interviews in-depth Based on with industry of experts a range from leading implemented in the context of broader client lifecycle management and digital and management lifecycle client broader of in thecontext implemented and view the customer a global of provide to designed solutions, transformation there is a risk that regtech systems could be deployed as point solutions, thus thus solutions, as point is a riskthere be deployed regtech that could systems future impede regulatory potentially could that silos operational new creating to be need solutions regtech this, avoid To and innovation. efficiency demands, That said, it is also important that banks approach regtech in the is context also it said, banks that important That approach existing their Otherwise, strategies. digitalof and fintech transformation simplifyingturning and speeding and onboarding, every existing and new than rather a detractor. a recommender, into customer them, but innovative new technologies can to response their alsounderpin technologies new innovative but them, subset much-hyped The entrants. market new and requirements customer new masteringto burden, regulatorykey the the hold regtech, could fintech, of Against this backdrop, the fintech movement represents both a challenge and and bothchallenge a represents movement the fintech Against this backdrop, for competition an of source banks. opportunity is a new creating Fintech for

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A DOUBLE-EDGED SWORD REGULATION: REGULATION: to be made more stringent. Banks stringent. will deal with more to be made have the pain likely to of come. time to some for regulation done. Unpicking the wealth of regulation put in place since the financial since crisis in place put the wealth regulation of Unpicking done. ongoing take time effort, deal and a in great of the and probability would all rules continue terrorismagainstlaundering fight willmean anti-money that crocodile pit – the bankscrocodile be very to pit careful need thoughtful.” and than is said far easier the regulatory burden course, reducing of In reality, the banking industry, it is potentially a positive environment, but it is also it but environment, a positive is potentially it the banking industry, the over the tightrope after on the other foot one It’s challenging. potentially there were also were warningsthere As the picture that is be clear cut. so unlikely to Financial Promontory Officer, Executive Chief and Founder Ludwig, Eugene see kills that For you. don’t you bolt always the lightning “It’s it: put Group, Indeed, throughout this high-powered banking conference, the sense of of the sense banking this conference, high-powered throughout Indeed, However, was palpable. be lessened might the regulatory that burden relief the new rules,” he said. “Regarding regulation, at the very least as long as the the very least as at long regulation, “Regarding said. he rules,” the new swinging it’ll stops be very out, beneficial.” pendulum banks, given the severely negative impact heavy regulation has had on the heavy on has had regulation impact negative banks, the severely given Barclays. Managing Director, Goldberg, Jason banking suggested business, banks’ all the cost stocks of because of afraid been hold to have “Investors Clearly, a reduction in the regulatory burden would be a good thing for thing be a good for would in the regulatory burden a reduction Clearly, was down to the fact it was “… perceived as a catalyst. People are looking for for are looking as a catalyst. perceived People waswas “… it the fact down to expected that they and believe than tax other the status and something quo, willregulatory relief growth.” be a catalyst for CEO, KeyCorp, told delegates during The Clearing House Annual Conference Annual Clearing Conference during The House delegates KeyCorp, told CEO, the election” to reaction “constructive the markets’ recently, York in New The rise in banking stocks in the US since the Republican election victory rise election The in banking the Republican stocks since in the US administration will the new that small in no partwas the anticipation due to Chairman and As regulation. Beth stringent Mooney, less a period of herald Poutiainen: Creating that regulation respects all equally responsibilities is a challenge really opening up access and making it easier for new entrants to come to the to come to entrants new access makingreally and for up easier opening it you – providers and banks – new entrants fintech and new have “You market”. have really never would you that services from players have can now you buy Tuomas Toivonen, Co-Founder of Holvi, the Finnish bank start- business Holvi, of Co-Founder Toivonen, Tuomas constraining, just is it is not agrees “regulation that BBVA, acquired by up create regulation that respects these responsibilities and the two different sets respects that the two regulation and different these responsibilities create in an equal is a challenge.” way stakeholders of foster competition, “The payments business recently has attracted a lot of new new of has recently attracted a lot business “The payments competition, foster Mainly focus is the their service providing user. theplayers. end experience to “To said. he – the plumbing,” things that important work more is even it But creates another set. As Erkki Poutiainen, Strategy Manager, Nordea, told told Nordea, As set. Strategy Manager, Erkki another creates Poutiainen, to Finextra, designed a regulatory partly environment of as a consequence markets, and to prevent terrorist financing, creates one set of challenges challenges of set one terroristcreates financing, prevent to and markets, KYC AML, and onboarding, banks, to comes for especially it another when – in the market increase competition to – designed regulation strand of While regulation designed to increase the safety and soundness of the increase the safety of to soundness and designed While regulation adherence to compliance, transaction monitoring and the prevention of cyber- of the prevention and transaction monitoring compliance, to adherence risk dealing with is operational an there increase in potential attacks. Thirdly, certain counterparties countries.” or Corporates, Deutsche Bank. “One is the increase in complexity due to more more to due is the increase in Bank. complexity “One Deutsche Corporates, harmonised countries or across entirely is that not regulation tighter and to costs due operational is the increase of second Finextra. “A told he regions,” For transaction banks, regulation is among a number of challenging issues, issues, challenging of transaction a number banks, is among regulation For Finance & Cash Management Trade of Head Global Spiegel, Michael says clients, the intersection of local requirements and global footprint is creating footprint global and local of requirements the intersection clients, challenge.” an additional are scarce resources everywhere this and a time when cost at is an additional resources are margins international and limited And for are compressed. the cost of processing transactions for many stakeholders in an environment in an environment stakeholders many transactions processing the cost for of Sales of Head Global Maurier, Mathieu says is alreadywhich constrained,” Securities Generale Societe Services. “There Management, Relationship and “There is a very long list of regulation that is impacting and it is increasing is increasing it and is that impacting regulation list of is“There a very long information in the next year, with 26 percent expecting with percent in the 26 nextmore. significantly year, information week least than at each entire day an the firms one-third of spend More rising steadily regulatory of track change. keeping at more than financial 300 reveals more services at consistently worldwide, firms –findings those in like 2016 The overload. significant regulatoryand fatigue more even firmsof publish expectto percent 69 – suggest regulators 2015 That pain is well-documented. The Thomson Reuters seventh annual Cost seventh of Reuters Thomson The pain is well-documented. That canvasses practitioners which the views compliance survey, of Compliance

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MARK MULLEN, CEO, ATOM BANK Yes, our objective is to make the whole customer experience as slick as we as slick as experience whole the customer to make is objective our  Yes, can make it, but we have a moral imperative. We have no desire to have our our to have desire no have We imperative. a moral it, have we but can make hard are lax has that Reputations rules. a bank by being damaged reputation to recover.” difficult damaged once and to build “ making it harder for banks to innovate is yes and no,” she says. “Yes, in the “Yes, says. she no,” is and yes banks innovate making for to harder it Regulation both helps and hinders innovation, suggests Joan McGowan, McGowan, suggests Joan innovation, hinders and both helps Regulation is regulation whether of the question Analyst, “The answer to Senior Celent. front of our mind, and come up with innovative services with meet up that them innovative come and mind, for our of front do.” to they need what do to them help needs and their a better industry for our clients, and therefore we need to look at that as that an at look to need we therefore and clients, our a better industry for can we take think how and the clients, about for it’s remember opportunity, the at the client keeping with the regulator, work board and on the regulation Sean Gilchrist, Managing Director, Commercial Digital,Sean Banking Commercial Lloyds Gilchrist, Managing Director, welcome. should we is something makes “Regulation a similar point. Group, are trying the regulators think what they are tryingIf you do, about to make to acceptance that security in all its forms plays a bigger role in our lives.” in our security that role acceptance a bigger in all plays forms its rules. Reputations are hard to build and once damaged difficult to recover. It to damaged difficult recover. once and are build hard to rules. Reputations inevitably that in, but an experience design from the customer is to important a growing I think in – and the main have customers requires compromise experience as slick as we can make it, but we have a moral imperative. We We imperative. a moral have we as canexperience as we slick but make it, a bank being has that damaged by lax reputation our have to desire no have Nor is regulation in itself a negative force, says Mark Mullen, CEO of UK CEO of Mullen, Mark says force, a negative in itself is regulation Nor customer make the whole is to objective our “Yes, bank Atom. challenger and payment system operators. This is positive, and the PSR’s emphasis on on emphasis the PSR’s and This is positive, operators. system payment and in infrastructurecompetition gives both small providers large and provision equal terms.” on reassurance they that access will compete to and be able Group, led by Marion King, Director of Payments, RBS, a wide comprised King, Marion Payments, by of Director led Group, companies sizes,technology banks different of including stakeholders of range create innovation from all payment service providers (PSPs),” she says. Of the says. she service from all (PSPs),” payment providers innovation create she in the UK, example, for (PSR) Regulator Systems Payment the new of work Working Forum Simplifying Competition Access Promote to “The PSR’s adds: new entrants, as Teresa Connors, Head of Payments Market Management, RBS, Management, Market Payments of Head Connors, as Teresa entrants, new to landscape are designed in the payments the changes of “Many out. points will they be something other new entrants willwill entrants new other provide?” they be something justmore than benefits competition up open to Of designed course, regulation associated withassociated financial services, tailored serviceswant Customers before. these, or the banks provide is to whether are agile the question enough and McGowan: New New McGowan: are technologies bank’s the extending value chain

MATHIEU MAURIER, GLOBAL HEAD OF SALES AND RELATIONSHIP MANAGEMENT, SOCIETE GENERALE SECURITIES SERVICES challenge, but it is also helping us to develop new solutions for our customers. customers. our for solutions new to develop us also is it helping but challenge, to innovate.” us helping is Regulation an asset servicing provider we are also building solutions to allow other other to allow solutions assetan servicing also we are building provider regulatory a is burden increasing the – so yes, to be compliant organisations First and foremost, as a universal bank, we have to be compliant, but as as but to be compliant, First foremost, have we bank, a universal and as “ potential of regtech to help them manage many key aspects of compliance and and aspects key many compliance manage them of help regtech to of potential customer experience. compliance broadens to cover cyber risks. However, they are also viewing cyber risks. cover to However, broadens compliance opportunity – as they assess than as before a bigger the ever technology Cost of Compliance survey reveals. According to the survey, more compliance compliance more survey reveals. the survey, Compliance Cost According to of than ever challenge as a bigger technology to looking are now professionals of the remit and change, as drive regulatory actions technology before, This double-edged sword of regulation as it relates to innovation is also innovation to relates as it regulation of sword This double-edged 2016 as the technology, between regulation and in relationship reflected the challenge, but it is also helping us to develop new solutions for our customers. customers. our for solutions new develop us to is also it helping but challenge, innovate.” us to is helping Regulation says. “First and foremost, as a universal bank, we have to be compliant, but but be compliant, as to a universal bank, have we “First foremost, and says. other allow to as an asset are servicing we also solutions building provider is a regulatory the increasing burden yes, – so be compliant to organisations Regulatory compliance can provide product and service and can product opportunities for provide Regulatory compliance Securities at Generale Societe Servicesfinancial Maurier well, institutions as as gives the opportunity to go over and beyond the change demanded by by demanded the change beyond and over gives the opportunity go to experience.” the customer improve and regulation level of regulation – but makes for a stronger, safer and more innovative innovative more and safer a stronger, makes for – but regulation of level can Regulation innovation. Withinmarket. RBS, for is a spur regulation services, and products systems, change a mandatory so to changes demand challenge to it. “The level of regulation remains high. The UK benefits UK remainsfrom benefits The high. regulation of “The level it. to challenge this and raises the technology, and in payments interest government strong that is forcing firms to weigh risk/reward considerations more carefully.” more considerations firms weigh to risk/reward isthat forcing RBS as as well a at agrees canConnors regulation innovation, be a boost to leaner and cheaper, and thus to engage customers more profitably. Winners Winners will profitably. more customers engage to thus and cheaper, and leaner in an environment efficiency be banks financialoperational achieve and that sense that budgets are restricted and processes are becoming much tighter are restricted tighter processes budgets that and sense aremuch becoming are technologies new that in the sense No, regulatory to requirements. due running chain, allowing value faster, banks the bank’s execute extending to

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Banks should stop differentiating differentiating stop Banks should , part Standards the Sibos very by of keenly Forum,

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FALLING AT THE FIRST HURDLE FIRST THE AT FALLING CUSTOMER ONBOARDING: CUSTOMER ONBOARDING: This was during highlighted the discussion, servicesnon-competitive from GE, taking Spiegel Bank on Strategy & Solutions, Marshall, Director, John taken, most obviously in basic services in basic KYC AML. as and obviously onboarding, most taken, such customers. The upshot was that they are not, and the strong message from the message the strong was and they that are not, upshot The customers. banks the right. The basics was get for the panels to on represented corporates be strides to treasurer need view greater that was from the corporate clearly corroborated during several sessions at Sibos 2016 in Geneva. The event marked marked event The in Geneva. 2016 Sibos at during sessions several corroborated to designed sessions of a number Swift years were of 20 there and corporates, for banking corporate their for banks enough whether are of doing the issue address The sense that banks that sense The are failing not in the fundamentals, frequently and like, was would experience customers their the onboarding delivering process can be much more burdensome than another’s because of that particular that because of than another’s burdensome more process can be much experience withbank’s the regulators.” often unclear, means that banks end up requesting information that may not not may that information requesting means banks that up end unclear, often bank’s one process.addition, actually In onboarding a specific be required for requires multiple touchpoints with the company in order to complete due due complete to in withorder the company touchpoints requires multiple banks with globally the or need operating clients, global “For says. she diligence,” and jurisdictions, with which are inconsistent in different regulations comply to but for corporates. “The need to thoroughly understand a prospective client’s client’s a prospective understand thoroughly to “The need corporates. for but of structurecorporate analysis requires and a combination the collection of often and can that take complete information weeks to non-public and public emphasis on AML, the client onboarding process – especially for corporate AML, process on – especially corporate onboarding for emphasis the client banks for just not burden bigger an – has even become institutionaland clients flexible enough to rapidly handle changing handle rules. to rapidly enough flexible the increasing to due out, Analyst points Senior Celent, As Susan Feinberg, due diligence requirements are affecting their onboarding times. Even more more are affectingEven onboarding times. requirements their diligence due is banks KYC current their of technology believe cent per 21 only worryingly, There is no question that complex due diligence requirements are impacting are impacting requirements diligence due complex that question is no There As process. survey onboarding a recent carried Finextrathe customer by out banks KYC that of believe cent per 88 with showed, in association Pegasystems

SUSAN FEINBERG, SENIOR ANALYST, CELENT ANALYST, SENIOR SUSAN FEINBERG, it ‘easier to do business’ with them, the actual and perceived regulatory and actual the with them, business’ to do ‘easier it requirements are making it harder.” corporates, as well as banks claiming that a particular need for a particular for need that claiming banks as well corporates, as regulatory is risk fact, for policy in bank when, documentation is it striving are to make when banks these times, In purposes. management The inconsistency between banks is another frustration for global global for frustration between another is inconsistency The banks “ onboarding experience – even when the bank offers superior digitalbanking superior the bank offers when experience – even onboarding wallet.” share of a lower to leads – often solutions regulatory requirements with their prospective clients at the beginning the at with of regulatory clients prospective their requirements or – foot ontheright ‘getting canoff between mean the difference relationship A negative digital This is environment. truer than in today’s ever in it’. stepping the tone for the entire client relationship. Onboarding becomes an becomes important Onboarding relationship. client the entire for the tone manage those and present bankto a How chooses differentiator. competitive consequences, Feinberg emphasises. “The impact of this of unsatisfactory “The impact process emphasises. Feinberg consequences, from revenue is delayed which the least of not consequences, of has a number process sets onboarding bank a way handles a complex The client. the new requirements are making harder.” requirements it business potential dangerous in this has some way customers Disappointing management purposes. banks In these times, when are strivingmanagement make to with the actual regulatory business’ them, do perceived and to ‘easier it specific markets,” she says. “The inconsistency betweenbanks inconsistency says. “The is she another markets,” specific as as well banks corporates, global frustration claiming for a particular that risk is bank in for it fact, policy is regulatory when, documentation for need services, is especially which frustrating this corporates many at time when banksof because bankingexitingnew find relationships to forced are being and onboarding as “probably the biggest complaint of the multinational the multinational of complaint the biggest as “probably onboarding and a lot produce “They to asked are being speaking 2016. Sibos corporates” at banking new of down the implementation slowing documentation, more Celent’s Feinberg – who moderated this debate – also highlights this KYC debate moderated – who Feinberg Celent’s for interpretation as possible. This is where we have collectively failed. We need need failed. We collectively have we This is where as possible. interpretation for to we want ends; We same allthe have start to ecosystem. a different creating team realise up.” to to need need we that but risk-free, and safer make it can’t even set a common standard in a single country, amongst ourselves, and and ourselves, amongst standard country, in a single common a set even can’t as address I think banks to need we is with that something that so regulators is trulywhat determine to required, can we a way out figure with a little room Deutsche Bank, in a head-to-head debate. The complex and lengthy onboarding onboarding lengthy and complex The debate. Bank, inDeutsche a head-to-head “We said: Spiegel tackled in the exist debate. that were today requirements

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TOM DURKIN, MANAGING DIRECTOR, DIGITAL CHANNELS, BANK OF AMERICA MERRILL LYNCH MERRILL AMERICA OF BANK CHANNELS, MANAGING DIGITAL DIRECTOR, DURKIN, TOM terms of additional business they may bring to the bank. It could set could It the bank. to the bring may they business of additional terms first the customer It’s products to want deploy. they stage additional for translate could to a positive you aspect.” that point experience The corporate customer’s first experience could lead to a good referral in lead could referral to a good in first experience corporateThe customer’s “ become a recommender or a detractor. Corporates are members of the same the same of are members Corporates a detractor. or a recommender become important It’s detractors. want don’t We talk They other. each associations. to experience and it is exceedingly important to do it, because during first that it, is do exceedingly it experience to important and – they will has with – in moment that experience the client you operational by an onboarding experience because no one likes providing the process of one experience because no anby onboarding is the “opportunity However, says. he is,” it good how matter no information the onboarding materially improve to is possible “It adds. he nonetheless, large” It is important to be realistic about how much can in the be achieved much how be realistic is to important about It & Client of Head Global Reilly, Brendan process, cautions onboarding delighted being ever really see a client don’t “I Barclays. Execution, Market that you could translate to a positive aspect.” aspect.” positive a to translate could you that The corporate customer’s first experience could lead to a good referralterms to a in lead first experience could customer’s corporate The for the stage set could the bank. bring to they It may business additional of experience point the first customer It’s deploy. to they want products additional painful onboarding. It’s the first experience the customer has. Imagine it has.in Imagine the first experience customer the painful It’s onboarding. socially. rate you Uber driver who a new to reaction terms asthe same your There are benefits for the bank in improving client onboarding, he continues. he continues. onboarding, bank client for the in improving are benefits There and long “The banks a and cost. Think are about very efficiency focused on aspects from a corporate customers’ standpoint they add up to numerous points points numerous to up they add standpoint aspects customers’ from a corporate be tackled standpoint,” frombank a to onboarding got have that the way along Durkin adds. that. And the third is visibility. How can they gain a visible understanding of can of And theythat. understanding gain the How third a visible is visibility. those three combine you When be done? has that to work the comprehensive is the documentation process, and the initial process, and with experience goes that that. isthe documentation is they the technical their can on second – what resource capability do The with them the bank the technical can up resources, line how and to help side corporate customers, and there are probably three areas they that talk are there probably and us to customers, corporate says. he first “The process,” ofthe the efficiency improving in terms of about Banks commonly hear complaints about the onboarding process from the onboarding about Banks hear complaints commonly Digital Bank of Channels, Durkin, Managing Director, Tom corporates, Finextra. isAmerica a critical our “Onboarding Merrill told time for Lynch, path to success – but it is not an easy path,” Reilly says. an easy is not path,” it success – but to path “Solve it first in one location, create a good client experience, and then use experience, that and then good client a create location, firstone it in “Solve the be on jurisdictions, you’ll and tackle other to baseline your and technology possible if you decide on your base line data, and then build a process to gather gather a process to build then and data, base line your on decide if you possible jurisdiction. per data the additional information, making it simple for them to upload documents, and when you’ve you’ve when and documents, upload to them for making simple it information, This end-to-end. systems your through flow allowing to it the information, got it is But very jurisdictions. in multiple difficult it’s jurisdiction: one isdifficult in jurisdiction first – and by getting it right I mean end-to-end: the ability to present present abilityto the gettingmeanjurisdictionend-to-end: it first I by – right and the right information, gather to them help to the client to solution a simple repeat fromhaving them to can, as preventing you as much pre-populating standardisation across different markets – but he cautions that it is better that he cautions but – markets different across standardisation right in country one it a time. “The thing important get at tackle one is to to Operating across multiple jurisdictions makes the process even more complicated, complicated, jurisdictions makes more the process even multiple across Operating achieving from banks global efficiencies – and can leverage acknowledges he quickly are we doing this? Are we doing processes in serial that could be done in processes Are in serial this? be done doing we could that quickly are doing we parallel?” looked at lots of different measures. How often do we touch the client? The more more The client? the touch we do often How measures. different of lots at looked a becoming has about the client urgency of sense the less back, go you often How information? for requests times many are duplicating we How customer. to refresh when they are a client.” As streamline to part onboarding, project its of theyare refresh a client.” to when “We says.Reilly drive opportunities to efficiency, of a number sought Barclays Reilly agrees. “It’s clearly getting more complicated. When we talk about AML talk we When about complicated. getting more clearly Reilly agrees. “It’s of the gathering are drivers many for There bucket. KYC,and this a big is quite have we which and them, onboard we when client, the from in general information get it right.” it get regulation, by exacerbated is being challenge the onboarding of complexity The to align the customer experience along with as so experience along getting the right align information, to the customer you if can it risk. also to But be a differentiator up yourself open don’t a bank you

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Lyon: CorporateLyon: customers have frustratedbeen by the customer experience

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FRIEND OR FOE? FRIEND FINTECH NEW ENTRANTS: FINTECH opening process is an issue – the time it takes to get through KYC et cetera.” through process takes is KYC – the an time get it opening issue et cetera.” to with the additional populated layer”, a “data operate is to approach Fire’s all system CRM combined,” a payment and “It’s provide. customers information “We are focusing on how seamless the integration can be,” he says. “Corporate “Corporate says. he can seamless be,” the integration how are on focusing “We account The experience. very been frustrated have the customer by customers Colm Lyon, CEO and Co-Founder of Ireland-based Fire Financial, Ireland-based a neobank of Co-Founder CEO and Colm Lyon, an advantage. have agrees entrants businesses, and new targeting consumers provides customers with a better, smoother, easier onboarding experience, it experience, it onboarding easier smoother, with a better, customers provides undertaken by carries the work recognise of risk the extent not does and some banks. established their services, and rely on the KYC and AML checks done by incumbents throughservices, the KYC incumbents by AML on and rely and checks done Whilst this the incumbent. at linked funding or account validating a customers in a modular way, collecting the data once and making it available to multiple multiple to making and available collecting once the data it way, in a modular already business seen have also we highlights He additionally that systems”. products and less only risk-laden offer entrants new whereby developed models advantage, suggests Kevin Brown, Senior Advisor, Global Payments. “If you you “If Payments. Global suggests Kevin Advisor, Senior advantage, Brown, servicing can functionality the customer you design systems, of a clean set have While being new and tech-driven doesn’t guarantee a new entrant an easy entrant guarantee ride a new tech-driven and doesn’t new While being can start-ups be nature an of the legacy-free compliance, to comes it when be as simple, transparent, intuitive and fast as you can fast and as because transparent, intuitive the you make it, be as simple, everything is for digital and happen to world expectation inbaseline the mobile instantly.” as a spend, but it’s your ticket to the game. What you’re trying is do to you’re What the game. to ticket your it’s but as a spend, has to It line. the front at the customer minimise causes to it the disruption an established bank by way of framework is pretty All framework of recognisable. bank that way an by of established a tech-based you’re whether institution your architecture for be has created to pretty unattractive It’s the waterline. below the iceberg It’s not. or business underlying rules and guidelines are the same for all players,” he says, “and “and says, he all rules are players,” for the guidelines same and underlying a digital What bank credibility our shares with anyway. isthat for important As Atom Bank’s Mullen points out, “there isn’t a different set of rules for of for set rules a different isn’t “there out, points Mullen Bank’s As Atom from having incumbents versus special no relief get entrants New neobanks”. with KYC AML and comply process. “The to in the onboarding regulations are seeing a lot of that starting to happen. These days it’s more about co- about more it’s days These starting that of happen. a lot are to seeing relevance,” thanfor partnership and rather fighting other with each operation says. he fantastic technology and banks have got the client base and distribution distribution base and the client banks and got fantastic technology have between Co-operation these two streamscapabilities. we and was inevitable Gautam Jain, Global Head, Digitisation & Client Access, Transaction banking, Access, Transaction & Client Digitisation Head, Global Jain, Gautam and fantastic ideas some got Standard Chartered, have agrees. “Fintechs and fintechs off against each other, and what we have seen in the inthe yearseen past have is we what and against off each other, fintechs and can you is that what and collaboration to from competition are we that going Finextra. told he do,” to attempting see every or bank is doing Business Development, Business Innovation, Nordea. “In the past few years, the past few “In Nordea. Innovation, Business Development, Business tryingbanks everyone seen play we have to and boom big has a been fintech together in the same sandbox,” he said. he in sandbox,” the same together of is certainly Head forward,Collaboration Heikki the way says Harkonen, summing up the general view well: “The fintechs’ ideas, married ideas, our to “The view fintechs’ well: the general summing up infrastructure, and capabilities play if we can outcomes strong realise some The spirit of collaboration was highlighted throughout the New York York the New was throughout highlighted collaboration of spirit The Clearing The House, Vice President, Senior with McDade, Jim conference, that fintechs “have brought the banking industry together to allow more more bankingto allow the brought industrytogether “have fintechs that bank into embedded service the same have and elements collaboration offerings”. fashionable to predict between banks and fintechs. “The energising element element between predict to banksenergising “The fintechs. and fashionable adding delegates, told she pharmato the industry,” biotech is like fintech of at this point if you want to drive your organisation forward”. organisation drive to your want if this you at point has become it which the collaboration Graseck highlighted side, On the plus cited the example of digital wallet Venmo, which she said “has brought an “has said brought she which digital of wallet Venmo, the example cited stakes is “table which simplicity “a Amazon-like experience in banking land”, many observers. Addressing The Clearing House Annual Conference, Betsy Annual Clearing Conference, The House Addressing observers. many “fintechs that delegates told Stanley, Morgan Graseck, Managing Director, She the ball forward moved agility withhave speed, interface”. execution, and Indeed, simplicity is the essence of what fintechs are bringing,to according are fintechs what of is the essence simplicity Indeed, are not shocked at the end of the month. of the end at shocked are not adds. he very simple,” It’s science. rocket not “It’s Fire, you see who you have paid and who has paid you, and then you drill you then and you, has paid who and paid have you see who Fire, you view the transactions, of see a relationship thetransactions. You down into also everything charge We in view. customers real-time, our so an account not Lyon says. “Banking today is very much account and transaction-based. The The transaction-based. and account is “Banking very today much says. Lyon into log transactions. experience is If you logging in seeing and customer’s

16 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE 17 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE

EBRU PAKCAN, HEAD OF TREASURY AND TRADE SOLUTIONS, EMEA, CITI regulation – the things that banks are good at.” good are banks that things – the regulation to help them scale up some of their propositions and also to manage some some also to and manage propositions of their some scale up them to help and compliance risk, liquidity, like difficult, more a bit are that things of the fintechs are really focusing on the customer value proposition, a niche flow a niche proposition, value customer the on focusing really are fintechs but to succeed, a particular going are serviceand they believe I do and to partner with willing partners, them need will they way the banks, along regulators alike to deliver end to end value for the customer. Some of the of the Some customer. the for value to end end to deliver regulators alike Fintechs need to work with each other and with banks and clients and and clients and with banks and with other to work need each Fintechs “ something called compliance, understand why the banks have behaved the way the way the banks behaved why have understand calledsomething compliance, behaved.” they have comes to collaboration. Banks need to be more open, transparent and forward and transparent open, Banks be more to need collaboration. to comes is there understand industry, the to needunderstand fintechs also But looking. and fintechs is already in the museums,” he says. “Collaboration is key. We have We have key. is “Collaboration says. he museums,” is fintechs in and already the won’t we collaborate started realise to respective our strengths, don’t if and we it when Both parties challenges their have bring the full the customer. to value Erik Zingmark, Co-Head of Transaction Banking, Nordea, also Banking, highlights Nordea, Erik Transaction of Zingmark, Co-Head between banks competition banks’ regulatory strengths. about “The thought bit more difficult, like liquidity, risk, compliance and regulation –theregulation and things that compliance risk, difficult,liquidity, like more bit adds. she banks at,” are good a particular service and I do believe they are going to succeed, but along the way the way a particular along succeed, but to service they are going believe I do and they will partners, need banks, willing scale them partner to with help to them the things of are that a some also and manage to propositions their of some up and regulators alike to deliver end to end value for the customer. Some of the of Some the customer. for value end to end alike deliver regulators and to and flow a niche proposition, value reallyare on fintechs customer focusing the organisations bring different skills and different advantages to the marketplace,” tothe marketplace,” advantages skills bring different different and organisations the EMEA for region Solutions Treasury Trade and of Pakcan, Ebru Head says with with and other each banks work to need clients and Citi. “Fintechs at is one of the reasons fintechs the reasons fintechs of partnerwillto is want one is with “There them. realise all to we and different that have do, to everyone for business some for BNP Paribas International Financial Services. Paribas BNP International for the part is also on banks a belief There of expertise their that in compliance years the whole financial industry yearsand the whole by willeconomic driven the change, in a business our is impacting technology the way by and political environment, Initiatives Strategic of Andreas Head says Lambropoulos, way,” intensive more Some observers believe that co-operation withco-operation that is essentialbanks believe fintechs observers if Some are the next “In the business. across technologies new of the potential leverage to

Mihaescu: obstacle main The to collaboration between and banks cultural is fintechs mindset and operate in a more agile way than ever before – without losing losing – without than agile way before in ever a more mindset operate and the client.” focus on that mean the banks, I mean the fintechs: they are very good at gettingat very mean thegood banks, they to are things I mean the fintechs: iterating then and use it clients and customers how seeing quickly, market start a small company up into get to As got proving it. and a bank, we’ve clients need and want then we are missing we a trick. just then want and we need Asclients an industry, I don’t are doing. start competitors to our need then think what to about “The biggest thing to focus on is the client. There’s some fantastic technology fantastic technology some There’s is the client. thing focus on to “The biggest our what on focusing are if we not but there out coming propositions and response needs to be quite thoughtful in terms of how we are going to operate operate to are we going thoughtful how be quite in terms needs of to response says. he in this world,” fast-changing and anywhere, and we have to adapt to that in the commercial sector as well, as well, sector in that the commercial to adapt to have anywhere, we and and in wouldn’t areas we competing fintechs of especially as see the emergence we Our expect to. them wouldn’t we that pools afterexpect revenue going and “They were built from the customer backwards, can we and learn from the customer from that.” built “They were bank to anytime expect be able agrees. to Gilchrist Lloyds “Customers at In any event, banks can learn from fintechs, partners or not, Rogers added. added. banks can event, Rogers In any partnersnot, learnor from fintechs, banks and fintechs are living in concentric circles and watching each other other bankseach are watching fintechs living and circles and in concentric not tryand out destroy to us – they’re come fintechs that very The carefully. partners.” our are limits, as William Rogers, chairman and CEO of SunTrust Banks, told Banks,are limits, as told William chairman SunTrust CEO Rogers, of and where in a world “We’re Annual Clearing Conference. The House at delegates their bankstheir survive.” between banksbut there good,is fintechs and all wellCollaboration and – these kinds experiences will of banks, the and incumbent by be targeted digitalCEOs the chief see and officersthat this onesensure willthat be the with technologies, with customer experience, with the new ways of doing experience, with doing with of ways with the new customer technologies, not customers focus on banking. to and As they is learn possible, what the transaction not start should with customer, you – that your products Operating Officer at neobank Moven, points out, there are challenges to be out,therechallenges are points Moven, neobank at Officer Operating between banks is fintechs and collaboration to “The main obstacle overcome. experience have don’t who executives of a lot “Banks says. have he cultural,” Even some of the new entrants believe that collaboration between neo and between and neo collaboration that believe entrants the new of some Even banks forward isincumbent the as way – though Mircea Mihaescu, Chief

18 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE 19 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE

THE MISSING LINK?

06 REGTECH: applied for the benefit of the customer experience.” of customer the the benefit for applied Ruth Wandhöfer, Global Head of Regulatory & Market Strategy, Citi. “They are Strategy, Regulatory & Market of Head Global Wandhöfer, Ruth banks but yet, buy to us for available not they are applications, fully not fledged be could these technologies see how to with a lot the innovators engage to need some interesting solutions and technologies out there and we are we starting and there out to technologies and solutions interesting some says context,” in the onboarding be deployed they could how of idea some get The size of the prize in resolving regulatory compliance challenges is also the prize challenges size of inThe resolving regulatory compliance are “There technologies. edge leading of developers for be a magnet proving to said the FCA. “We have a particular interest in working with those involved in a particular with have in working the FCA. those involved said interest “We reporting data and regulatory compliance, improve to technologies developing sharing known as regtech.” innovative financial products and services financialproducts and fostering innovative to FCA is and the committed of consumers,” in interests the effective competition promote to innovation Cambridge University. University. Cambridge in delivering role a fundamental pivotal increasingly and plays “Technology and fintech start-ups, including Barclays, Credit Suisse, Monzo, Santander, Santander, Monzo, Suisse,Credit Barclays, including start-ups, fintech and and from UCL students as as well post graduate Kluwer, Wolters and Suade compliance requirements. requirements. compliance financialservices included Participants technology firms large firms, academics, as well as convening a hackathon which brought together 100 developers developers 100 together brought which a hackathon as as well convening to application proof-of-concept a prototype or build to organisations 30 and of streamline firms’ to understanding regulatory reportinghelp improve and are wading in as well, notably the UK’s Financial Conduct Authority, which which Authority, Financial Conduct the UK’s are in wading notably as well, regtech,on consultation market on a findings its published and has conducted going to help me do my client due diligence even more effectively.” more even diligence due client my do me help to going themselves regulators regtech. The about in excitement their Banks alone are not has come to play in regulatory compliance, as we think about how we can we bring as think how we in regulatory about compliance, play to has come is Innovation flows. at and data at looking of ways new and digital technologies One of the hottest fintech narratives of 2016 has been the regtech story. As has regtech been story. the 2016 narratives of fintech the hottest of One Banking Sector Financial Public Institutions, Global of Head Wolf, Stephanie Canada Finextra:and Sales, Bank America “Innovation of Merrill told Lynch,

RUTH WANDHÖFER, GLOBAL HEAD OF REGULATORY MARKET& STRATEGY, CITI us to buy yet, but banks need to engage a lot with the innovators to a lot see with innovators the to engage to need buyus yet, banks but customer of benefit the the for be applied could these technologies how experience.” starting to get some idea of how they could be deployed in the onboarding onboarding the in starting be deployed could they of how idea some to get for available not are they applications, fledged context. not fully are They There are some interesting solutions and technologies out there and we are are we and there out technologies and solutions interesting some are There “ ledger technology can provide a unified view of clients whilst can a unified clients of significantly provide also technology view ledger verifying costs time and spent reducing identity.” compliance requirements presents a major challenge for banks onboarding new banks new for onboarding challenge a major presents requirements compliance Distributed relationships. those client on impact is and having a negative clients which in turnwhich streamlines process.and onboarding simplifies the KYC cost and R3, “The of growing CEO of complexity says: Rutter, David help banks fulfill basic KYC requirements of new customer onboarding while onboarding banksnew fulfill customer help of basic requirements KYC it addition, In security increased cost-efficiencies. providing transparency, and managing identity, global their with for bank interface clients provided a single on a proof of concept for a distributed ledger technology-based shared KYC technology-based a distributed ledger for concept of a proof on can technology distributed ledger how show to wasdesigned PoC The registry. consortium banks through R3, global the blockchain Meanwhile, – among 10 worked Bank US – have and Generale Societe UBS, Nordea, ING, BBVA, them representing 32% of current annual costs – in the form of reduced compliance compliance annual current costs reduced of of – in the form 32% representing regulatory penalties. fewer and spend technology lower headcount, Indeed, a report from QuinlanIndeed, & Associates has blockchain estimated that in annual the industry AML billion $4.6 cost deliver savings could – technology is in the exchange of information in a trusted way between parties who don’t in a trusted between information way parties of don’t isin the who exchange use casesnecessarily really the compliance trust is that where and other each says. he start interesting,” become to KYC, AML, Anything screening. sanctions of source requires which a single real The in. benefit comes blockchain of the value is where truth information for transfer applications towards more complex use cases around information use cases information around complex more towards transfer applications willsharing. “The killer apps with be can those that existing work legacy – improving compliance around largely withinsystems think banks. it’s We Co-Founder and CEO of blockchain start-up Identitii, told Finextra, during told Identitii, start-up blockchain CEO of and Co-Founder asset was there a shift from simple away in thinking blockchain 2016 about One of the technologies in the frame to help address the regulatory compliance the regulatory address compliance in the frame help to the technologies of One As Armstrong, Nick technology). distributed ledger (or is blockchain challenge

20 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE 21 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE

DAVID RUTTER, CEO OF R3 impact on those client relationships. Distributed ledger technology can technology ledger Distributed relationships. those client on impact costs and reducing view whilst of clients alsoprovide a unified significantly verifying spent time identity.” a major challenge for banks onboarding new clients and is having a negative a negative having is and clients new onboarding banks for challenge a major The growing complexity cost presents growing The and of KYC requirements compliance “ handled by different systems. This means you can be more agile in for example example agile for meansThis more in you can systems. be different by handled specific reports.” creating this is helping institutions to be much more responsive and agile. The data is then is data then agile. and The responsive more be much to institutions this is helping needs, extracted specific irrespectiveit wasbeing meet being fact of to that the departments, set in silos. The organisations had the data but they were not able to to able not they were but thedata had organisations The in set silos. departments, as data such technology New cost was The prohibitive. in an it agile way. exploit and repository a single into systems from multiple data lakes group allows us to traditional data challenges, Maurier continues. “In the past, the difficulty “In we continues. Maurier challenges, data traditional organised in different systems, is having in data facing multiple been have meaningful output from big data, and to be nimbler and more agile,” he says. he agile,” more and be nimbler to and data, meaningful from big output banks circumvent as to lakes data are such helping technologies data Key big regulatory requirements,” says Maurier at Societe Generale Securities Generale Societe Services. at Maurier says regulatory requirements,” regulatory constraints are and and dealing data with huge of a lot got “Banks have a more us get help regtechs to and are Fintechs here them. regtechs are helping Big data is another hot technology tipped to contribute to the regtech cause. to contribute to tipped technology hot is data another Big smart to data meet and data from big move organisations are“Regtechs helping

07 AND END-TO-END THINKING CROSS-JURISDICTION THINKINGCROSS-JURISDICTION INTEGRATING REGTECH: footprint withfootprint respect these regulations.” to motivating everyone to move forward with move to this everyone has this been motivating pressure global our impact these changes how understand to able being and regulations of challenge in this regard. “We’re at the point now where we’re challenged with challenged we’re where now the point at in this “We’re challenge regard. portfolio a third client the entire re-evaluate having nearly of to potentially actually the thing that’s “and delegates, told he regulations,” some because of Speaking during a Pegasystems conference recently, the director of one leading leading one the director of recently, Speaking conference during a Pegasystems the regulatory of bank both the highlighted size the complexity and investment different jurisdictions. As a consequence, solutions need to be able to adapt adapt to able to be need jurisdictions.solutions different As a consequence, business users. – withby effected change change to that rapidly member states implement 4AMLD into national law for example, it is certain it example, 4AMLD for law national into implement states member a bank operating For market. by will market emerge in application nuances that in is that different this change markets, – and means change multiple across In this context, a key driver for the implementation of solutions to enable this enable to solutions of the implementation In this driver a key for context, are in variations rules from jurisdiction. jurisdictionorchestration As to EU data sources, banks need to be able to get it to the right place and apply it to the to it apply and the right place to it get to banks sources, data be able to need right requirements. exploit the strand of regtech which integrates those data sources, and underpins underpins and sources, those data integrates regtech the strand which of exploit an increase orchestration, Without regulation. of the application of orchestration more as they exploit in sources than data can a hindrance rather helping become to approach compliance with them in a consistent manner. Alongside the strand Alongside manner. with in a consistent them compliance approach to banks also compliance, to need of side the data is regtech improving which of In addition to the requirement for the right information to comply, banks need comply, to the right information for the requirement to In addition and products, what for and where apply regulations which identify to be able to requirements (such as reporting). There is also a need to manage the application the application is manage also to as a need There reporting). (such requirements as as basis, well a global the fulfilmentof on regulations the rules. of While regtech is rightfully is not important it attracting interest, deal a great of – especially those regtech solutions Many an dimension. important overlook to analytics data in areas key as big such regulatory meeting – are focused on

22 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE 23 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE

Brown: KYC Brown: is an just not onboarding issue

DIRECTOR AN AT INVESTMENT BANK Client data is always changing, and the rules on that are always changing, changing, always are that rules on the and changing, data always is Client and the response to those rules is constantly evolving. It’s not an onboarding onboarding not an It’s evolving. constantly to those response rules is the and lifecycle.” a complete event. It’s “ relationship.” run, we need to leverage this. We have to capitalise on the knowledge we may may we the knowledge on capitalise to have this. We leverage run, to need we bear to learn during process the bring it future and during the onboarding as Durkin at Bank of America Merrill Lynch says. “So much goes into the into goes as Durkin Bank America of at much “So Merrill says. Lynch left – the initial behind testing, the aspect of it’s process then and onboarding long hurdles. the Over through different together working the organisations Above and beyond improving customer experience, the impact of a positive a positive of the experience, impact customer improving beyond and Above banks, for benefits business term experience long canonboarding have maintenance of KYC data, and there are some interesting opportunities to opportunities to interesting KYC are there some of and data, maintenance here.” solutions fintech/regtech leverage Brown reinforces this point. “Banks should not look at this at as just an look not “Banks this reinforces should Brown point. the ongoing is probably challenge “The bigger says. he issue,” onboarding Reilly at Barclays points out, banks are obliged to reconfirm information about about reconfirm to banks information out, are obliged points Barclays Reilly at the relationship. throughout corporates Clearly, while the barriers compliance obligations and legacy technologies and and technologies legacy and obligations the barriers while compliance Clearly, are significant corporates in process the bank for processes onboarding create with As end onboarding. don’t the problems customers, by much-rued and that are always changing, and the response to those rules arethat to always the changing, response and is constantly evolving. lifecycle.” a complete It’s event. an onboarding not It’s deployed by the bank need to be able to “manage and understand the dynamic understand and “manage to be able the bank to by need deployed is data always the changing, rules and on “Client said. he data, client of nature” environment will like.” environment look bank Any this director echoed solutions point. important investment The designing the system, you’re not designing for today’s regulations or today’s today’s or regulations today’s for designing not you’re the system, designing regulatory the what years now see five to from able to need You ecosystem. During the same session, a development manager for client lifecycle lifecycle client for manager a development Duringsession, the same the need bank emphasised international another at technology management in is mind when keep to always have we “What change. continual for plan to while also providing a target operating model in the application.“ the in model a target operating alsowhile providing for example, replacing the historical manual checklist applied by analysts by analysts applied checklist manual historical the replacing example, for compliance dictated rules, bank’s the by the embeds with which technology experts, effect – so its in in logic regulations, enforces the technology the Many leading banks are moving to a shared service model for due diligence service diligence to a shared due moving for are model banks leading Many “ for the customer across lines of business, breaking business, down silos. lines of across the customer for quickly, and by avoiding a siloed deployment, financial institutions can use deployment, a siloed avoiding by and quickly, this of type time costs and approximately onboarding by regtech cut solutions to This also transact cent. time to means per faster a true and 70 digital experience CLM solutions which enable these approaches empower banks understand to empower these approaches enable which CLM solutions more much gains costsavings revenue and compliance, global from benefit and compliance experts, in its logic – so in effect the technology enforces experts,enforces the in – so technology effect compliance in logic its the in the application. model also while a targetregulations, operating providing In tandem, many leading banks leading many are a shared serviceIn moving tandem, to for model the historical manual checklist replacing applied example, for diligence due analystsby the rules, the bank’s embeds by with which dictated technology build on their capabilities and be flexible to change. change. to be flexible and capabilities their on build into new jurisdictions new are occurrences. allinto Whilefrequent banks many start may with or business one of line – in one problem a single solve the CLM to journey will they ensure – the leaders can to take a forward-thinkingproduct approach changes – without the requirement for any hard coding. The reality hard any coding. banks The for for is the requirement – without changes business extending and products, new Acquisitions, is a constant. change that Banks should in fact seek solutions which can underpin front to back office office back to can front which underpin solutions in seek fact Banks should reflect regulatory to updating rapid and view the customer a global of onboarding, of siloed systems which stand in the way of coherent, streamlined client lifecycle streamlined lifecycle client coherent, of stand in the way which systems siloed of infrastructures.management coupled with the current hype around regtech – could lead banks to reach out for with for banks out the hype current reach lead regtech to – could coupled around a without particular solve to basis, problems, standalone a on deploy to solutions This in turn result in the implementation could applicability. viewwider their on customer lifecycle management end-to-end. end-to-end. management lifecycle customer damaging and pressing with issues process – solve the onboarding to desire The But this positive outcome is only possible if banks’ investment in innovative in innovative if banks’ investment possible is only this outcome positive But improving to approach is part onboarding a coherent of improve to technologies

24 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE 25 | LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE One universal bank recently implemented an end-to-end client lifecycle and lifecycle and client end-to-end an implemented recently bank universal One transparency and customer centricity. A unified solution that combined combined that solution A unified centricity. customer and transparency pre- using deploy service to rapidly customer bank the and regtech enabled built processes and requirements.” work optimisation platform in nine countries for more than 200 production 200production than more for countries platform nine in optimisation work opportunity the has terms benefits now It to in deliver months. three users in increasing and cost the of service compliance of and reducing client per “ to focus on innovation, new products and improved revenues.” improved and products new innovation, focus on to As McGowan at Celent says: “CLM technology that is focused on providing a providing is that focused on technology “CLM says: As Celent at McGowan is a the customer contextually and fully experience for aware more engaged faster, regtech will banks allow time investment and implemented, Once changer. game approaches, in order to deliver the best results for their customers and their own their and customers their the best results for deliver to in order approaches, future development. business term strategy – in mind, and ensure that any regtech deployment is seamlessly strategyterm regtech any that ensure – in deployment and mind, digital and transformation management lifecycle with client their integrated In conclusion, when approaching the onboarding challenge, and considering considering and challenge, the onboarding approaching when In conclusion, the picture longer- – and the bigger keep banks should help, to regtech solutions customer service enabled the bank to rapidly deploy using pre-built processes and pre-built using deploy the service bank rapidly to customer enabled requirements. wanted to reap, in terms of reducing the cost of service per client and compliance service compliance the cost and of reducing in client terms per of reap, to wanted will now application The centricity. transparency increasing and customer and regtech and combined that unifiedsolution A pre-built globally. be deployed As a result of this project, this bank implemented an end-to-end client lifecycle lifecycle client an end-to-end As this this a result of bank project, implemented than production 200 more in countries nine for platform optimisation work and it the benefits has the opportunity deliver now to It users in three months. global customer services customer global platform. adherence and the lack of IT bankingIts of agility the lack and global investor and they offered. adherence two focused on programme, a transformation upon embarked group solutions a new implementing and platform, onboarding client inhouse its replacing goals: solution. The bank’s internal customers were expressing concern about the global the global about expressing concern were customers internal bank’s The solution. local and compliance personalisation of existing the lack its cost of platforms, One universal bank realisedworking One recently by with a regtech these benefits

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08 ABOUT Visit 3670 3100 call (0)20 or +44 surveys reports. and moreFor information: participate in posting their opinions and comments on the evolution of of the evolution on comments and in posting opinions their participate to Finextra data and information contribute they addition, In fintech. professionals working inside banks inside financial and specialist working institutions, professionals and service organisations and consulting providers, application fintech Finextra The mainstream actively community providers. technology and cardsand worldwide. sectors fintech 30,000 over consists community of global unique Finextra’s technology innovation and operation involving banks, involving and institutions operation and innovation technology retail within and banking, organisations the wholesale payments vendor fintech news, features and TV content items to visitors to to www.finextra.com. items visitors featuresnews, and fintech TV content Finextra in Research all 1999, covers aspects financial of Founded Finextra Research is the world’s leading specialist leading financialtechnology Finextra Research is the world’s 100,000 over source. Finextraoffers news information and (fintech) Finextra Finextra by Research.This report is published

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We are Pegasystems – dedicated to streamlining business and enhancing LEVERAGING REGTECH TO STAY COMPETITIVE IN THE DIGITAL AGE customer engagement. Our Global 3000 customers rely on our dynamic, strategic applications to drive excellence in their sales, marketing, service and operations. We seamlessly connect our customers with their customers across channels, in real-time. Our adaptive, on-premise and cloud-based apps – built on our unified Pega 7 platform – empower people with comprehensive visual tools to extend and change applications to meet strategic business needs. www.pega.com www.pegaonboarding.com Finextra Research Ltd All rights reserved. 1 Gresham Street No part of this publication may be London reproduced or transmitted in any EC2V 7BX form or by any means, electronic United Kingdom or mechanical, including photocopy, recording or any information storage Telephone and retrieval system, without prior +44 (0)20 3100 3670 permission in writing from the publisher. Email [email protected] © Finextra Research Ltd 2017 Web www.finextra.com