Chye Kit kickstarted the first session of the webinar, RegTech: To Infinity and Beyond, by introducing Singapore FinTech Association (SFA), as well as his role as the Chair of the RegTech Sub-Committee with SFA. Founded in 2017, SFA was established to facilitate collaboration between all market participants and stakeholders in the FinTech ecosystem and till date, they have garnered interests of over 900 corporate members in total. In 2019, the RegTech Sub-Committee was founded to engage the RegTech industry players, including users or Financial Institutions (FIs) looking into RegTech solutions, the regulators, and tertiary institutions. As the Chair of this committee, Chye Kit alongside other committee members has been actively involved in various webinars, trading programmes, and courses to engage participants in the RegTech ecosystem.
Financial Technology (FinTech), Regulatory Technology (RegTech) and Supervisory Technology (SupTech) in a Nutshell
FinTech refers to the use of technology to provide financial services while RegTech is the use of technology to solve regulatory problems and comply with regulatory requirements such as Know Your Customer (KYC) / Anti-Money Laundering (AML) and identity management. Whereas for SupTech, it is commonly used by regulators, using big data analysis and Artificial Intelligence (AI) to extract relevant data from the industry in order to effectively analyse the problematic areas, and deploying the necessary and right amount of resources to the problem.
The promise or the threat of regulations to the FinTech industry
The last thing a RegTech consumer would want to experience is to engage a RegTech service provider that breaches certain regulations. It is important for Banks/FIs or any other RegTech user to engage a solution provider that fits their purpose. As shared by Chye Kit, Singapore has quite a robust regulation around Technology Risk Management (TRM), outsourcing and cyber hygiene, making it an onerous task for FIs or FinTech providers to assess the RegTech solutions providers against TRM guidelines. Despite being a tedious process, it is essential. In addition, RegTech solutions providers will also have to play their part in ensuring that they do not put their clients at risk of breaching the Technology Risk regulations or any other regulations in place.
Earlier on it was mentioned that it is important for RegTech users to engage a solutions provider that fits their purpose. How do we know what we are buying fits the purpose?
Devils are always in the details. Therefore, it is important for Banks/FIs or any other RegTech user to perform their very own due diligence and vendor assessment in assessing the right RegTech providers to engage. One thing to look out for during the vendor assessment is understanding the vendor’s data privacy, and security standards of the service provider (ISO 27001 and TRM), as well as the reliability of their cloud infrastructure.
Moving on to Customer Life Cycle: Customer onboarding, e-KYC and Transaction Monitoring
In general, there are 4 fundamental questions that need to be answered across the entire life cycle:
WHO ARE YOU? This typically involves digital onboarding where we bring in digital identity to the question. In the RegTech space, this means getting extractions of the attributes of the ID documents, which can be used for identity verification. Some examples include leveraging on technology such as Liveness test, facial comparison, Optical Character Recognition (OCR) and electronic signature to help facilitate the mandatory declaration forms.
WHO ARE YOU NOT? You would want to make sure that you are careful when dealing with potential clients who are Politically Exposed Persons (PEPs), in the Sanction list, Adverse news etc. As FIs tend to do a lot of google searches and consequently ending up with too many search results, it is thus important to apply Natural Language Processing (NLP) onto targeted news sources and run negative sentiments to target negative news. Bringing RegTech into play, these would help in reducing false positives and narrowing google search outcomes.
WHO ARE YOU STILL WHO YOU SAY YOU ARE? Continuous ongoing monitoring is required in order to ensure that your clients are still the same person as when they first onboarded. This is performed through technologies and available data sources in the process of continuous obligations.
WHAT DID YOU DO? This boils down to the transactions performed by the client. Transaction monitoring is conducted using data analytics and bucketing of clients. Certain risk parameters have to be set, and the appropriate level of transactional review for clients have to be in place.
At Cynopsis Solutions, we have identified and stayed by these 4 fundamental questions to create our end-to-end suite of regulatory solutions, Ares - Digital Onboarding, Artemis - e-KYC and Athena - Real-time Transaction Monitoring.
Towards the end of the session, Chye Kit shared a few valuable key takeaways for the audiences. One important takeaway shared: RegTech is not an end by itself, but a means to an end. It is a must-have tool to help companies achieve better regulatory outcomes. It is an important race that no one should lose out on to stay ahead of the regulatory curve. In order to accelerate technology solutions adoption for risk management and regulatory compliance in the financial sector, the Monetary Authority of Singapore has also recently pushed out a new Regulatory Technology (RegTech) grant scheme and an enhancement of the Digital Acceleration Grant (DAG) scheme, and we are extremely proud to share that our triple As solutions (Ares, Artemis and Athena) are eligible for the grants.
The 2nd session of the day for Chye Kit took place at the 2021 RegTech Summit, where he moderated in a 20-minutes fireside chat with Mr. Ron Crean, VP Commercial of Windward. Jumping right into the session, Chye Kit raised several interesting questions revolving around - Managing Risk Through Artificial Intelligence (AI). Here are some key takeaways from the fireside session last week:
Answering one of the questions on whether Ron thinks the Maritime sector is using the right tool to manage the risk that they are facing today, Ron highlighted that the current KYV (also known as Know-Your-Vessels) is relatively disjointed, and as the global maritime industry continues to face continuous challenges when protecting the maritime borders, there is an ever-increasing need to bridge the gap in conducting sufficient KYC checks and screening of vessels, identifying any illicit maritime activities and last but not least, reducing false positives. Adding on to Ron’s perspective and continuing the conversation, Chye Kit added that there are several verticals to AI and AI has indeed proven to help Banks and Financial Institutions (FIs) in complying with the ever-stringent regulations.
Moving on to the other questions, Ron also provided a more in-depth description of the term Know-Your-Vessels, and its behavioral algorithm to the audiences. KYV refers to the KYC process of vessels in the maritime industry, and this process includes screening of vessels/ships and understanding the complete relationship map of the vessels including which entity each vessel belong to through risk assessment based on the behavioral analysis; identifying the history of what the vessels have done in the past few years; and investigating the historical activity logs of the vessels to understand where the ship has been to. With this, Ron pointed out that the tricky part is how we build context on what we are looking at and identify the truth to the data that we are looking at.
Coming to the end of the fireside chat, Chye Kit shared his final thoughts on the topic. Using AI to manage risk is a must-have rather than a good-to-have in today’s world. As many industries across the globe are faced with increasingly complicated risks, AI will be especially useful as it will help to automate manual work processes, and ultimately remove a lot of these work processes.
About Cynopsis Solutions
Founded in 2014 and headquartered in Singapore, Cynopsis Solutions offers RegTech solutions designed to digitise and automate Compliance and regulatory processes, in particular know-your-customer, anti-money laundering, and counter-terrorism financing. Cynopsis Solutions’ accolades include MAS FinTech Awards (2018), RegTech100 (2018, 2019) and Financial Times Top 50 High Growth Companies in Asia-Pacific.
Our end-to-end KYC/AML solutions are designed according to the global FATF recommendations, applicable to more than 180 jurisdictions and is already helping more than a thousand B2B customers in the Banking, Financial Services, FinTech and Cryptocurrency, Professional Services and Gaming sectors globally.