Know Your Customer: The Real World of RegTech

BY Aishling RuigrokDecember 16, 2020

Maggie Mespo, Know Your Customer - RegTech

From Revolut to Stripe to Transferwise, FinTech may well be the coolest guy at the party right now. It’s young, trendy and all anyone is talking about. But what about FinTech’s lesser-known cousin, RegTech? Despite always being by FinTech’s side, RegTech doesn’t seem to weaken knees in quite the same way. 

With several members shaping the future of the sector right here at Huckletree, I decided to dip my toe properly into the world of regulatory technology, starting with a virtual chat with Huckletree D2 member Margherita ‘Maggie’ Maspero, Marketing Manager of Know Your Customer. Know Your Customer was founded in 2015 and specialises in providing digital onboarding solutions to financial institutions and regulated organisations.

Essentially, if you’re a bank or a FinTech, you are required by the financial regulator to check the identity of your customer, both if they’re an individual but especially if it’s a corporate entity or company. KYC provides the infrastructure and services to help you onboard that customer swiftly, safely and digitally.

So, the burning question – why has RegTech been denied its turn in the limelight?

“I think it is perceived as boring by those not familiar with its implications. I was guilty of this myself before joining Know Your Customer. People need to consider the connection between RegTech and FinTech. Arguably, RegTech is the engine or backend infrastructure that enables the exciting, tech-driven innovations of FinTech. It’s taking care of business away from the spotlight. Without RegTech, there could be no FinTech.”

As Maggie delved into the hugely important work that Know Your Customer is doing, the vital role of this strand of innovation became much clearer:

“RegTech is firstly essential for anti-money laundering and making sure dirty money doesn’t enter the financial system as much as possible. We are also trying to reduce the manual workloads for compliance teams and ultimately, we want to offer customers the user experience they want, deserve and have come to expect in many aspects of their lives.”

So far, so logical. So why are we starting to hear more about this sector? Firstly, RegTech has gained a lot of momentum in recent years, especially in Ireland where there is a real hub for bold minds innovating in this arena. Maggie explains:

“2020 has been a pivotal year for RegTech advancements. From a sector perspective, COVID-19 has been an incredible catalyst for digital transformation trends that had been in the making in financial services for a long time, especially in the area of customer onboarding. Our ‘new normal’ has made remote digital processes a priority and RegTech solutions like ours a necessity. Now, if you can’t onboard customers digitally or remotely, you can’t onboard them at all.”

That surge in reliance on RegTech is here to stay, with predictions that an increasing number of financial institutions will decide the benefits (automation to avoid the very real likelihood of staff sickness or furlough/redundancies) will outweigh the barriers to adoption. Positive news for Maggie, the KYC team and the wider community, too.

Life in Lockdown

With Ireland in strict lockdown measures this year, I wanted an insider perspective on how the Know Your Customer team has stayed connected. Turns out, being a global company (their European headquarters is at Huckletree in Dublin with bases in Hong Kong and Singapore) has turned out to be a positive when it comes to navigating the almost-overnight working from home experiment. Drawings on her learnings as part of a distributed and highly remote team, Maggie shared her top tips for teams adjusting to the current reality of work:

“Get your 1:1 facetime in. It’s really important to have those 1:1 conversations with your camera on, not just emailing or having big group meetings where it’s easy to switch off. The KYC Dublin team has a coffee morning every Friday at 11am for anyone to dial in. You need to work to maintain the human connection or you run the risk of becoming detached.”

The risk of detachment is something that’s been on most of our minds this year. In our survey of 200 founders and startup talent, 89% reported missing their work friends – myself included. Maggie also felt the strain of distance from her workmates and our community:

“It’s crazy how long it’s been since mid-March. To be honest, it really hasn’t been easy. I really miss the daily interactions with my colleagues and the team at Huckletree. That said, we are used to working with a distributed team on Slack and Zoom so it hasn’t been as hard an adjustment as it may have been for others.”

The Future is RegTech

Cultural commentators, grads thinking about their next steps and banks take note: RegTech is making moves and has no plans to slow down anytime soon. I asked Maggie for an industry insider’s forecast on the sector’s next steps: 

“I might be biased but I think the future of RegTech looks bright. Even though it is quite a young space as financial institutions and regulators have only recently started embracing technology, the sector is growing really fast. The way I see it, we have now gone through the first wave of RegTech innovation but we are about to see a lot more growth in terms of sophistication and application. There will also be a lot more specialist technology being applied going forward. We already work with Machine Learning, Artificial Intelligence, API and Cloud. Traditionally, it has been the more forward-looking companies that have been embracing these types of technologies but I think as more and more companies realise the benefits and the impacts, we will see a massive acceleration.”

So, it certainly seems that RegTech won’t be a behind-the-scenes star forever. Warming to the theme, Maggie gave me a taste of what’s to come, including greater visibility for us as consumers: 

“I find it really interesting to see how in certain markets (definitely in Europe, more in Hong Kong and Singapore as well), how the regulators themselves are now increasingly embracing innovation. As regulators write their recommendations and increasingly make space for technology, this could act as a major catalyst for the RegTech sector. The hope is that this will result in a more secure and solid financial system for everybody.  

On a personal level, I’m looking forward to seeing how RegTech can emulate the customer-centricity and attention that we are used to having with big tech companies such as Netflix or Spotify, in sectors like financial services. As consumers, we can really benefit from these advancements and RegTech can get us there. In general, I’m also excited to see how technology enables the sector as a whole and what that means for young generations whether it be through investment platforms becoming more easily accessible or access to credit.”

There you have it: I’m officially fascinated by the world of RegTech – and you might just be too. If you want to learn more, you can check out Know Your Customer’s new podcast RegTalks here and next time you’re at the party, maybe give RegTech the eyes. God knows you’ll have stumbled upon a real hidden gem. 

AUTHOR

Aishling Ruigrok