What motivations were behind the creation of Fenergo?
Back in 2008, we saw the Lehman crisis. The largest gap that the Lehman crisis highlighted was the opaqueness around client and counterparty data. Banks, at the time, could not unequivocally identify counterparties who had the largest exposures. As a result, regulators created and enforced new rules for know-your-customer (KYC) and determining the ultimate beneficial owners (UBO) of financial products. At the same time, regulations were being passed to reform over-the-counter (OTC) derivatives, such as the European Market Infrastructure Regulation (EMIR), Dodd-Frank, and market rules such as the second Markets in Financial Instruments Directive (MiFID II). Coupled with these demands was the introduction of tax-based legislation such as the Foreign Account Tax Compliance Act (FATCA) in the US, and the Common Reporting Standard (CRS).
We recognised the need for banks to efficiently address these increasing regulatory demands by automating the client onboarding process. Our understanding of banking operations led us to design a best-in-class client lifecycle management solution that increased operational efficiency, lowered costs, reduced risk and improved a bank’s time-to-revenue.
Fenergo, a client lifecycle management solution, is used by a variety of tier one banks including UBS, Santander and BNP Paribas. What is Fenergo’s unique selling point?
One of Fenergo’s distinct market differentiators is its regulatory community that we have built through our regulatory forums in which a global collective of 20,000 plus risk and compliance experts convene on a regular basis to discuss the regulatory and technological challenges in the industry and within their organisations. These forums ensure that all of their regulatory compliance and entity data management requirements are met adequately and satisfy regulatory scrutiny.
This singular approach to the market directly feeds Fenergo’s regulatory and product roadmaps. Fenergo runs five types of forums which enable us to ensure that our clients’ needs are closely aligned to our own regulatory and product roadmaps. These forums include our Client Advisory Board (CAB), Regulatory Forum, Technology Forum, User Experience (UX) Forum and Client Council.
The CAB is traditionally represented by a senior client representative. The CAB meets twice yearly, face-to-face, to ensure product and regulatory roadmaps are aligned and on-track. This forum also enables clients to explore new areas of research in terms of where the industry is progressing and how our solutions need to change to meet that change.
The second forum—the Regulatory Forum—meets on a monthly basis in a more informal setting (a mixture of conference calls and face-to-face meetings throughout the year) and is represented by a senior compliance professional from the client organisation.
These sessions ensure that the Fenergo regulatory compliance solution is on-track for all planned or visible regulations and enables the teams to explore potential new regulatory risks coming down the line.
As regulatory compliance is a non-competitive area for financial investors, they are free to share information and can collectively drive down the cost of compliance.
What is needed to launch a successful fintech start-up? What were the main challenges you faced and what opportunities did you see when first starting up?
You need to see that your core solution addresses a real need in the marketplace. You have to also ensure that you can replicate that first successful implementation project over and over again. Staffing, especially in the early days, is key and you also need to establish tight procedures across all areas, from design to quality assurance to implementation to consulting to day-to-day support and beyond. Early on, we put a learning platform in place—Fenergo University—that supports everything from subject matter expertise to project methodology.
This has been expanded into the Consulting Accreditation Programme that is rolled out internally and to our partner ecosystem. This directly addresses the real challenge that comes as the business grows—making sure that you can scale and deliver on a global basis.
What impact is Fenergo’s technology having on financial institutions who are managing their compliance obligations and operational requirements?
Fenergo’s client lifecycle management solution enables financial institutions to efficiently manage the end-to-end regulatory onboarding and entity data management processes. Fenergo’s solutions cover anti-money laundering/know your customer and tax compliance, client onboarding and lifecycle management, and client and counterparty data management.
The intelligent rules-driven solution ensures compliance with multiple regulatory frameworks and supports the collection, centralisation, and sharing of client counterparty data and documentation across the institution. By expediting compliance and improving operational efficiencies, Fenergo’s solutions can help onboard clients faster, improve time-to-revenue, and enhance the overall client experience.
What advice would you have on how to approach tier one banks with a new solution?
The financial institution itself needs to define the exact problems it is looking to solve. It also needs to identify each jurisdiction it is looking to convert and the data elements required for compliance. Also, from a technology perspective, it needs to identify all the touchpoints required in their environment. With large global banks, it is very common that there are several disparate systems that either contain customer data or need to be fed new customer records. It also needs to determine why they are undertaking the project—is it for cost reduction or increasing operational efficiency or speeding up time-to-revenue?
In many cases, it’s a combination of these, but the objectives need to be clearly stated up-front. This is key in establishing expectations and driving project governance. We also advise banks to automate what they can first; addressing the easier challenges as the first past, allowing us to concentrate on the more larger tasks at hand, whether that is integration mapping to disparate downstream systems or data feeds and screening providers. It is, essentially, the 80-20 rule.
What trends are you currently seeing in financial regulation?
Over the past couple of years, we’ve seen banks, especially the large global banks, begin to embrace fintech—and regtech by association—as a part of not only their growth strategy but their own survival strategy as well. They’ve witnessed the changes that disruptive technologies have created and wanted to be part of that transformation. As far as trends in regulation, we see a global take-up in data privacy, either as something as well-defined as the General Data Protection Regulation in Europe or as a best practice in the US. Also, UBO rules have become a global trend, from Financial Crimes Enforcement Network in the US to various jurisdictions throughout the Asia-Pacific region. We have also been working with regulations on the buy-side as many of our clients have asset management lines of business and have asked us to help. While the regulatory demands are different, creating a standard platform for onboarding investors within a buy-side firm is essential. That is why we have rolled out our buy-side division, headed by a senior executive with extensive experience in that market, Kevin O’Neill.
What new technologies are you embracing at Fenergo?
Our innovation team is evaluating just about all the current disruptive technologies—artificial intelligence, robotics, machine learning, and even blockchain. The primary thing to keep in mind is to not embrace the technology for technology’s sake but to ensure that there is a real value-add in deploying platforms that will automate redundant and manually-intensive processes and provide a solid return. Also, we are working closely with our clients in their digital transformation strategies as lifecycle management, compliance, and the end-customer experience are core elements in that conversion.
To what extent do you think AI/machine learning is going to change financial services in the next five to 10 years?
While there is no doubt a lot of hype surrounding disruptive technologies, enablers such as AI can automate the onboarding process by unlocking data either through the use of data hubs or the deployment of such technologies as Optical Character Recognition. Using those technologies, firms can gather and action insights from that data to support front office and sales efforts. In a similar way, blockchain has potential as an industry utility for gathering and sharing data throughout the lifecycle. However, it needs government and regulator support, as well as engagement by the banking community. For a truly better client experience, the interaction must be instant, proactive, automated, contextual, personalised, and intuitive. The industry has the means in place to create this environment.
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