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

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I. THE EVOLUTION OF COMPLIANCE

II. THE TECH JOURNEY OF

COMPLIANCE

III. THE RATIONALE FOR « TOOLING »

COMPLIANCE

IV. TO CONCLUDE

V. Q&A SESSION

I. THE EVOLUTION OF COMPLIANCE

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- 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

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II. THE TECH JOURNEY OF COMPLIANCE

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THE WORLD OF “TECHS”

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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

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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

III. THE RATIONALE FOR « TOOLING » COMPLIANCE

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CATCHING UP TO “COMPLYTECH”

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▪ 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

NT

EX

TA

RE

AS

TO

FO

CU

S

CO

LL

AB

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I

ON

IV. TO CONCLUDE

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V. QUESTIONS ?

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