On October 11th, more than 150 finance, compliance and technology professionals gathered at the LHoFT to attend the second edition of the RegTech Summit. During the day, experts discussed the latest trends of the sector while also sharing their best practices and discovering the newest services offered by innovative startups.

The event started with Stéphanie Noël (COO, eProseed) and Nasir Zubairi (CEO, LHoFT) officially opening the 2018 edition of the RegTech Summit. Stéphanie Noël started by stating that "regulatory solutions can help and reduce complexity". She also highlighted the importance of creating an ecosystem involving RegTechs, regulators and regulated entities, as well as customers and end-users. According to Nasir Zubairi, RegTech has now become sexy, as it brings added value to the financial institutions which are facing margin, fees and transparency pressure. "Also, it brings immediate results and drives innovation," he added.

Fabien Henriet (Global CTO & Partner, eProseedRTC) then took the stage with a presentation entitled "Mega Model – The solution for overlaying regulations into a 360° view". The CTO began by explaining the current context, with our world seeing more and more regulations, since the crisis of 2008: "According to a recent report on the cost of compliance, 69% of firms are expecting new regulations". Over the last years, many companies therefore decided to go with automation and technological platforms, which lead to fragmented IT tools, data issues, but also budget constraints and limited resources. Also, these solutions are built to address specific needs and regulations. "Moreover, organizations are subject to several regulations, while some regulations apply to all sectors. Therefore, having specific data repositories brings to the following issues: duplication of data, consistency, difficulties to establish a global risk management and governance: a monolithic architecture operating system with one super single model. A new model is needed, and we are currently working on the next step: a megamodel, "explained Fabien Henriet. Along with the LIST, eProseedRTC is currently exploring the idea of providing one single model, aiming at finding the intersection between those models (analytical, simulation, ontological, data driven, etc) and making them work together. According to the CTO, such a platform could offer a 360 view, would be capable of mastering the co-evolution of data and models and of supporting the creation of what-if analysis, predictive analytics and scenario explorations (such as stress testing or benchmarking). Many benefits would therefore emerge, from a global risk management and risk governance for regulated entities to systemic risks oversight and assessment for supervisory authorities.

The first round table of the day, focusing on the state of the RegTech market, brought together Diana Paredes (CEO and Co-Founder, Suade), Henri Wagner (Partner, Allen & Overy), Christophe Buschmann (Data Protection Commissioner, CNPD) and Jacques Pütz (CEO, LUXHUB). It was moderated by Stéphanie Noël. According to Henri Wagner, "RegTech is the next big thing, and it will be as promising as we think". He then explained that we are currently witnessing a regulation avalanche, which started after the financial crisis. "In such a context, risk must be managed in a new way. The marriage between regulation and technology, in 2017, made it possible". This is why, according to him, RegTech has a bright future. Yet, he pointed a couple of challenges that need to be addressed in the near future: the potential regulation of RegTechs and the issue of data protection. Christophe Buschmann then shared his views on the current state of the market: "Sure, regulation brings additional constraints, but it is more of a question of how you look at it, because it brings many opportunities. In the current context, trust is key, and regulation can be a very helpful tool". He then explained that the regulator's role is to leave sufficient room to RegTechs  so that they can explore these opportunities. The CNPD expert also added that Luxembourg has a culture of sharing, making it quite unique and open to innovation. He concluded: "We face risk all the time. Let's build something sustainable for the future". According to Diana Parades, success comes from the fact that we considered data as the new oil: "We use the regulation to better use the data. It allows us to do analytics, AI, etc. Yet, it can only be done if the data is clean and normalized". She also insisted on the fact that regulators need to think about the new regulations they put them out there. She then shared the example of the GDPR, which has made it difficult for small companies to sell their services. "Also, lately, we have seen many incumbents call themselves RegTechs, but actual RegTechs bring real innovation, as it's all about interoperability. There are so many technologies out here: sky's the limit. The problem is more about the legacy mentality, a change in mindset is needed. It actually has nothing to do with technology, but with the way we adopt it," she added. Then, Jacques Pütz, took the example of LUXHUB, founded by 4 Luxemburgish banks in order to mutualize the costs with the implementation of PSD2. "All banks are currently facing the same challenges and time is ticking for them. Some banks are even afraid, but they have no other choice, they have to open up. It means a change of culture," he added.

"Is AI the next Compliance Officer?" was the question asked by Nasir Zubairi, and the topic of the second round table of the day. Christian Gillot (CEO, Tetrao), Josselin Hebert (Head of Innovation, BGL BNP Paribas), Yoann Jagoury (CEO, Alto Funds Solution) and Andrew Campbell (Business Development, Apiax) took part in the discussion. The experts first discussed the accountability topic with the advent of AI-powered solutions. Josselin Hebert explained that the banks, and its employees, will still be responsible, and that AI, RegTech and FinTech are here to help and improve their efficiency. Andrew Campbell underlined that defining which type of AI companies want to use was the first question to ask. Christian Gillot and Yoann Jagoury agreed on the fact that AI was a tool offered to employees to help them in their daily tasks, and that, therefore, AI needs to be human centric.: "it allows the users to do their jobs better. In the end, the Human has something to say and can focus on bringing value". On why banks are not developing these innovate tools themselves, experts explained that it is simply impossible for banks to do everything by themselves, even if the innovation teams at BGL BNP Paribas are working on AI and fraud detection, notably. According to the Head of Innovation, "banks need to assess what they can do internally and see where they can work with partners to go faster". The bank is currently working with Tetrao on facilitating customer onboarding. He also explained that a change of mindset was needed in order to innovation and understand how startups work. Christian Gillot can only agree: "AI is difficult and you need to prove that your solution actually brings value. Moreover, you need to know the business". According to Andrew Campbell, many compliance officers still prefer to use their own ways of structuring data and that the real advantages and use cases of AI are still crystalized: "We will soon find out where it makes really sense". Finally, the participants agreed on the fact that experts from all departments of the companies need to be involved in such RegTech projects. "It's not the easy way, but it's the only way," highlighted Josselin Herbert.

Jacques Pütz, CEO of LUXHUB, also shared his vision with a presentation entitled "PSD2 - Political will to force banks to open up". According to him, "the main point is that banks have to publish so called APIs to give their customers the possibility to share their payment account information to authorized Third Parties and even to enable them to initiate payments through these APIs". He continued: "It is a political will, it contributes to a more integrated and efficient European payments market," he added. According to the CEO of LUXHUB, it also improves the level playing field for payment service providers, makes payments safer and more secure. Meanwhile, it also protects customers, while defining clear standards. Jacques Pütz then described some of the challenges inherent to the implementation of PSD2: respecting milestones, dealing with a lack of clear regulation, the pace of change, new competitors, figuring out new roles in the ecosystem, building legal relationship and the fact that the same technical effort is required for small banks. He also talked about the GAFAs: "for instance, banks customers are all already customer of Amazon: they already trust the company and Amazon has already put the customers right in the middle of their business. Therefore, banks can learn a lot from such companies". The CEO of LUXHUB ended his presentation with a focus on Luxembourg, stating that PSD2 really introduced Open Banking. Moreover, the country will face specific challenges due to the fact that customers own multiple bank accounts, cross the border and because of the number of FinTechs active in Luxembourg: "A new competition will start".

His presentation was followed by the keynote speech of Jonathan Prince (Co-founder of Finologee). He focused on "a new era of collaboration and API based RegTech products & services" and explained that APIs are to be seen as LEGO bricks and can be used to facilitate KYC, messaging, payments, when Finologee also provides its clients with a digital platform. He then highlighted the fact that these bricks are available for financial players in what he called an API Marketplace, in order for them to create their own products and new business modes, and not only to cut costs. He then notably shared the example of a collaboration with Société Général Bank & Trust, but also with Clearstream, KPMG and Figo, notably on the topic of AI-based payment products. "Such projects do not only deal only with IT, but also with compliance and legal. Moreover, we need to make sure banks can focus on their core business," he added. Finologee also works on a messaging app, allowing banks and their clients to connect easily and to leverage marketing techniques. Jonathan Prince concluded his presentation by stating that outsourcing has necessary: "it is simply impossible to develop each and every component in-house. You need to rely on partners. At Finologee, we are a one-stop-shop for best in class FinTech, ensure total neutrality, full regulation compliance and high end and compliant hosting and operations".

Then, a pitch session was organized. First, Thomas Gilbert, Founder and CEO of Neterium, a Belgian RegTech which aims at being the most efficient screening solution in the market, in a context of high regulatory pressure. Then came Andrew Campbell (Business Development, Apiax). The Swiss RegTech's goal is to master financial regulations digitally, and allows financial players to save time, reduce the risk and become compliant by design. Audric Debaisieux, Managing Partner of Apentis, then took the stage, presenting his FinTech providing risk management services, report and SaaS portfolio management system, which aims at bringing compliance to Asset Managers. Franck Chatillon (CEO of Greenwich Dealing) then presented his startup, which he defined as "the outsourced trading desk for asset and wealth managers". Finally, Peter van Tienen (Business Development Director EMEA, Emailage) explained the unique solutions provided by Emailage, the world's first global fraud database, which currently contains more than 4 billion email addresses.

 

Alexandre Keilmann

Photos: Dominique Gaull


Publié le 11 octobre 2018