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FinTech Connect x Aqubix

We sat with Kristoff Zammit Ciantar, Aqubix’s Chief Executive Officer. Aqubix is a Malta-based specialist IT consultancy and solution provider enabling customers’ profitability by leveraging technological innovation into real-world commercial applications, to maximise operational productivity, generate revenue stream growth and improve customer retention and acquisition channels. Kristoff helped us measure the temperature of RegTech and its relevance to contemporary finance and compliance departments, offered advice for young fintech entrepreneurs and filled us in on the inspiration behind their brand-new know-your-customer portal.


FT: The emergence of RegTech has widely promised better and cheaper AML, KYC and risk management compliance. With a ton of Chief Compliance Officers at the helm of risk management strategy and scores of monies spent by large financial institutions in shoring up end-to-end client on-boarding and lifespan management, can we really expect the big banks to abandon manual KYC processing?

KZC: Of course, but our opinion is obviously biased. We have learnt a lot over the past years with this business and whilst the customers’ reaction when they see KYC Portal for the first time is priceless, taking the plunge is gutsy.

If I had to break down the emotional process of businesses with KYCP it would be the following. This is a pattern that happens across all services, from the large multi-million revenue banks to the smaller outfits who have to adhere to compliance processes.

The first reaction is denial, the brushing off the potential disruptor as “we already do it all” and do not need anything else. Once we get through to the client by finding the right person who is open to listening to new emerging technologies then a demo is set. A meeting which usually presents me with all the top heads of compliance and MLRO’s ready to shoot us down. Ten minutes into the demo (without fail), I start seeing expressions that change, attendees nodding and I know they are in awe, when they start looking at each other with quizzical surprised looks. Members start realising that even though they currently “do it all”, KYCP could actually reduce their exposure to risk to mere hours, and it could allow them to remove all bottle necks from the process, eliminate cost and much more. Excitement takes over and everyone present starts to see all the areas and pitfalls that could be addressed instantly across the operation of the bank, opening up to huge potential. Discussions evolve into the automation of the entire process through integration with core banking systems making the process efficient. Yet, this is followed by resistance at the realisation of what a change such a system would bring to the operational and cultural aspect of their business.

No matter what, we have had no lead who stopped the process! All the large operators are undergoing studies on how best to apply such a system and how to make the most out of it. Studies that are analysing the cost savings, the impact on operations and how to better utilise the resources already on board. This is further augmented by the realisation that the cost of not automating such processes is much higher and riskier.

 

FT: The Aqubix KYC portal is your premier product for the financial services marketplace. Can you explain the inspiration behind its creation and how exactly it is able to reduce the cost of compliance by up to 60%?

KZC: We have been servicing customers within the financial service market place since our operation started back in 2008. We have always been close to our customers’ needs and have listened and taken on board the issues they are facing. Over the past two years however, it was evident that compliance, due diligence processes and AML are becoming a more stringent process.

When we began our initial research we found that there are many tools that helped organisations collect and search data on subjects. There are third part screening services for PEP and sanction relations, document verification systems, intelligent fraud pattern analysis and much more. All systems that provide the compliance clerk and MLRO with data to be able to evaluate their risk on subjects, both at onboarding as well as on an ongoing basis. The process of checking however … is all manual. The process of collating all this data on a subject, checking for anomalies, reading reports on transactions, identifying fraudulent patterns, assessing risk and many more actions are all done by human beings. With regulatory burdens increasing monthly, the only option that companies have is to throw in more resources at it, unless you automate.

The approach adopted by KYC Portal streamlines the process by removing input from internal resources and having the platform interact directly with the subjects ahead of onboarding, triggering human intervention only in the event of specific triggers and risk alerts.  In turn, this significantly impacts the duration of the acceptance process, reduces touch points to the barest minimum and, as a result allows for greater numbers to be onboarded simultaneously with no bottle necks, at significantly reduced internal costs in acquiring new customers. In banking lingo, the system entirely automates the level 1a and 1b of compliance, usually a process that has teams dedicated to each level.

In turn, our KYC Portal allows you to refocus your expertise and addresses the inefficiencies directly through rule-based automation, process delegation and removal of the absolute dependence on specialised resources. You can then use your recourse to extended due diligence on the higher worth customers that in turn pose a higher risk – a far smaller subset of the total client base that is automatically vetted without human intervention or subjectivity. By speeding up the entire process you minismise the overall cost drastically.

 

FT: There has been talk, albeit muffled that BREXIT without secured passporting rights could lead to many of the UK’s leading banks opting to re-locate their compliance departments to other European nations. Has this been a challenge for you in courting UK-based banks and what are some of the questions or concerns that you’ve heard from customers in regards to BREXIT?

KZC: To be honest in the past year of operation with UK banks, this was never raised as an issue or a stumbling block. The advantage of KYCP for UK banks after Brexit is that the system would allow them to tailor all the risk matrix of each service that they would be offering to clients within the UK and outside (obviously catering for the respective jurisdiction based rules) automating all aspects of risk in an instant. Try doing that with a manual work-force!

We did however have queries from banks on the GDPR aspect of compliance, as that poses a major hassle since even with BREXIT the full law applies and UK Banks would be holding data on subjects residing within the EU. We are launching a separate solution to automate this aspect of compliance shortly.

 

FT: Where do you think the country you are based in ranks now, among the various global fintech hubs?

KZC: We are the first company in Malta who is focused on Fintech for the global market. KYCP was released on the market in November 2016. The market reaction has been overwhelming. We have a small R&D team that is constantly on the lookout for adding new innovative features within KYCP instantly being released to all our customers. The latest feature launched is the compliance community which is helping our customers in anonymously sharing configurations of their KYC processes to be able to match internal operations with a common benchmark. Other upcoming features are already planned however, these are being kept a secret for now.

 

FT: You were recently selected as a finalist for the Ernst & Young Malta Entrepreneur of the Year award. Based on your experience, what advice would you give to young entrepreneurs starting their careers in fintech?

KZC: The industry is moving at an extremely fast pace, it is exciting and scary, but I would say you need to stay on top of the game. Never stop learning. It depends on what kind of fintech you’re looking for a career with, however, if you give your customers an experience that is so smooth and seamless, that before they have even signed on for your service or solution they already think you are cutting edge, half your battle is done.

 

FT: As the UK’s largest fintech exhibition, what will be the core message you would like to communicate to our audience at FinTech Connect Live later this year?

KZC: The following image sums it all up. Let us help you do better.



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