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December 2018
BNP PARIBAS SECURITIES
SERVICES
JEAN-MARC GUITEAU
WHY AND HOW TO « TOOL » THE COMPLIANCE FUNCTIONEUROPEAN INSTITUTE FOR FINANCIAL REGULATION SEMINAR
2
New technologies
(Big Data, AI, Blockchain)
New entrants
(Fintechs, Regtechs…)
New customer experience
expectations
Powerful waves are deeply transforming our world
You can’t stop the waves,
but you can learn to surf !
3
New technologies
(Big Data, AI, Blockchain)
New entrants
(Fintechs, Regtechs…)
New customer experience
expectations
Powerful waves are deeply transforming our world
EXECUTIVE SUMMARY
11 December 2018 4
I. THE EVOLUTION OF COMPLIANCE
II. THE TECH JOURNEY OF
COMPLIANCE
III. THE RATIONALE FOR « TOOLING »
COMPLIANCE
IV. TO CONCLUDE
V. Q&A SESSION
- Many kinds of regulations to address, furthermore in an international context and with
extraterrritorial reach of some them,
- The increased cost of compliance AND non compliance,
- Broad scope of responsabilities,
- Obligation of means vs obligation of results,
- Compliance in an defensive approach,
- Piling up of rules overloading processes (ex: KYC),
- Overall evolution to a more open world (outsourcing and partnership),
- Difficult to recruit relevant expertises,
- Operational processes sometimes inefficient,
- Equipment in line with the available technologies at the time,
- Decision processes long and complex in matrix organisations,
- Need for auditability and control.
THE EVOLUTION OF COMPLIANCE – BIGGEST ISSUES
11 December 2018 6
THE WORLD OF “TECHS”
11 December 2018 8
Note 1. Source: Clement Ancri, Board of Governors of the Federal Reserve System. 19 October 2016, Washington D.C.
2. Source: Financial Conduct Authrity.
3. Chuen, D. L. K., & Deng, R. H. (2017). Handbook of Blockchain, Digital Finance, and Inclusion.
FinTech
“ A sub-set of FinTech that focuses
on technologies that may facilitate
the delivery of regulatory
requirements more efficiently and
effectively than existing capabilities.
” 2
Comment Intersection:▪ Reporting Regulatory &
Financial;
▪ KYC, KYI, Digital
Identification;
▪ Knowledge Management;
▪ Financial Crime.
A. FinTech:▪ Payment;
▪ Account Consolidation;
▪ Crowd Funding;
▪ Foreign Exchange Platform;
▪ Algo Trading;
▪ Real Estate.
B. RegTech:▪ Fraud Detection;
▪ Cybersecurity;
▪ Fund Life Cycle;
▪ Investment Compliance;
▪ Risk Management;
▪ Identification;
▪ Authentication.
C. InsureTech:▪ On-demand
Insurance;
▪ Brokerage.
Our focus
in Tech’s market Intersection:
▪ Research;
▪ Advisory.
“ Fintech is an industry composed of
companies that use technology to
make financial systems and the
delivery of financial services more
efficient. ” 1
A: FinTech:
B: RegTech:
RegTechInsureTech
“ It is the application of technology
to address the long list of problems
currently facing insurance industry.
” 3
C: InsureTech:
Definitions
TECHNOLOGIES BEING LEVERAGED BY COMPLYTECH
11 December 20189
SQL
TechnologiesOntologies &
Knowledge BasesCyber
Security
Advanced
TechnologiesBig Data
Data Analytics Artificial Intelligence
Smart Contract
Machine Learning & NLP
RoboticsBlock Chain DLT
ExcelX
GLOBAL REGTECH/COMPLYTECH UNIVERSE
11 December 2018 10
Total 263+
RegTechs1
Risk
Management
Identity
Management &
Control
Regulatory
Reporting
Compliance Transaction
Monitoring
Global Market
Universe
Classification
25 RegTechs
Enable automated
data distribution and
regulatory reporting
through big data
analytics, real time
reporting and cloud.
27 RegTechs
Detect compliance
and regulatory risks,
assess risk exposure
and anticipate future
threats.
41 RegTechs
Facilitate counterparty
due diligence and
Know Your Customer
(KYC) procedures.
AML and anti-fraud
screening and
detection.
69 RegTechs
Real time monitoring
and tracking of current
state of compliance
and upcoming
regulations.
101 RegTechs
Solutions for real time
transaction monitoring
and auditing.
Leverage the benefits
of distributed ledger
through Block chain
technology and
cryptocurrency.
Knowledge
Mgnt, Synthetics
and etc.
Other Relevant
Techs
CATCHING UP TO “COMPLYTECH”
11 December 2018 12
▪ GDPR, MiFID II, PRIIPS, EMIR,
MAD/MAR, CSDR, SFTR;
▪ Crucial Compliance Requirements.
Challenging Regulatory Environment
▪ Operational efficiency;
▪ Better client and employee user experience;
▪ Open source technologies and cost reduction.
Key Benefits from ComplyTech
▪ Regulators;
▪ RegTech Firms;
▪ Professional Services;
▪ Financial Institutions.
Key Stakeholders Across ComplyTech
Ecosystem
▪ Likely increase in fines and penalties globally;
▪ Operational Risk;
▪ Conduct issues;
▪ Regulators strengthened supervision.
Increasing Risk in the Banking Industry
▪ To increase the effectiveness of regulatory
compliance strategies;
▪ To reduce the burden of compliance on business
operations.
Key Principles of ComplyTech
▪ In-house Development;
▪ Co-operation/ Co-development;
▪ Outsourcing/ Purchasing.
Types of ComplyTech Cooperation
CO
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