Coinfirm estimates that RegTech can reduce compliance costs for financial services companies by as much as 50 percent.
\nRegTech may be \u201cthe next big thing\u201d in fintech as digital currency and blockchain startups bump up against new government regulations, resulting in an increase in the demand for legal compliance information that will help companies navigate regulatory requirements and conduct risk assessments.<\/p>\n
Banks and other financial institutions are also looking for cost-effective ways to assess the risks of using new blockchain technologies in different jurisdictions and to modify their practices to minimize increasing compliance costs.<\/p>\n
Accenture estimates that business compliance costs could drop by 30 to 50 percent at the product level with the use of a blockchain database.<\/p>\n
In its recent news release , Coinfirm estimates that companies can save as much as 50 percent by using regulatory and compliance technology. As recognized experts in the regulatory compliance field, the U.K.-based startup is well placed to benefit from this growing demand.<\/p>\n
Pawel Kuskowski, Coinfirm CEO and cofounder, noted recently that RegTech is a once-in-a-generation opportunity to take advantage of the inevitable increase in rules and regulations that accompany a new field of enterprise.<\/p>\n
Kuskowski told Bitcoin Magazine :<\/p>\n
\u201cFor us, challenges include segmented regulations for cryptocurrencies or blockchain transactions on local levels. Bitlicense [is] an extreme example, but locally driven regulations create segmentation for a technology, system and industry that is organically without borders.<\/p>\n
\u201cThat\u2019s one of the reasons we are so active with regulators and are influencing the direction of the regulatory landscape. Our goal is to create a global standard for blockchain transactions with our AML & Compliance platform being a part of that global standard.\u201d<\/p>\n
SEI Gets Ahead of the Curve With Codify, Its New RegTech Incubator<\/p>\n
Recognizing the growing importance of knowing and understanding increasingly complex \u201crules,\u201d SEI , a leading U.K.-based financial services and wealth management firm, has launched Codify \u2013 an incubator specifically for RegTech firms that are positioning themselves to take advantage of this demand.<\/p>\n
Ahsan Mallick, general counsel at SEI U.K. and executive sponsor of Codify, told Bitcoin Magazine :<\/p>\n
\u201cWe created Codify to support promising early-stage businesses that are developing tech solutions to address the world\u2019s growing and demanding regulatory requirements.<\/p>\n
\u201cThe importance of regulatory tech can\u2019t be overstated as domestic and international regulation become more complex for all types of institutions,\u201d he added.<\/p>\n
The Codify incubator offers the three current startups office space in SEI\u2019s headquarters in London, mentoring from both SEI employees and external experts like Jason Boud of RegTech Forum, access to SEI\u2019s clients for potential investment and an opportunity to pitch their RegTech solutions.<\/p>\n
The three RegTech startups currently in Codify are Coinfirm, Enforcd and Neuroprofiler .<\/p>\n
RegTech Automates Routine Compliance, Freeing Up Analysts to Problem Solve<\/p>\n
The automation of regulatory compliance comes from a combination of increasing compliance demands and the need to be cost effective.<\/p>\n
Coinfirm estimates that the current compliance systems catch only around 2 percent of money laundering, if not less, and that with blockchain adoption and using a platform like Coinfirm\u2019s, that 2 percent effectiveness could increase to over 90 percent.<\/p>\n
Amber D. Scott, whose company Outlier Solutions works with digital currency and blockchain startups on anti-money laundering (AML) and regulatory compliance, told Bitcoin Magazine :<\/p>\n
\u201cThe complexity of regulatory requirements has been increasing for over a decade now. In step with this, compliance costs have been continuously increasing over the same period \u2026 but this is hurting more than just firms\u2019 bottom lines.\u201d<\/p>\n
Scott noted that, for most businesses, it is becoming impossible to conduct effective transaction monitoring or to have any real sense of the data without automation. \u201cWe often hear people say that they \u2018know their clients\u2019 \u2013 this is a common refrain in every regulated business, but regulators aren\u2019t buying it. Unless you can prove it, you\u2019re out of luck \u2026 Fortunately, most automated tools have excellent audit trails.\u201d<\/p>\n
Coinfirm is most recognized for its Blockchain AML and Compliance platform, which has been used by major banks and digital currencies like Dash. Its platform uses proprietary algorithms and big data analytics to increase efficiency, reduce costs and streamline compliance to near automation.<\/p>\n
It is also blockchain agnostic, meaning that it is technically adoptable for any type of blockchain whether public like Bitcoin or Dash, or private such as the blockchain solutions many large companies and institutions are developing.<\/p>\n
Coinfirm is also promoting its blockchain solution for the registration and verification of authenticity of any type of document, record or file. Their Document Verification Platform is currently bringing in traditional players to use public blockchains like Bitcoin or Dash but in a way that naturally fits their already existing needs and processes.<\/p>\n
The challenge that RegTech encounters is obtaining accurate and timely data from a myriad of legacy systems and interpreting this data appropriately.<\/p>\n
Scott isn\u2019t concerned about the growth of automated RegTech:<\/p>\n
\u201cI\u2019m occasionally asked if I am at all concerned about the cannibalization of these industries by automation, but I think that this is an absurd question. I hope that large swaths of the industry will be automated, freeing up humans to add real value rather than performing repetitive compliance tasks. Ultimately, automation will lead to happier compliance geeks because we will be able to focus on solving novel problems.\u201d<\/p>\n