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Why financial institutions in APAC are turning to Irish regtech

Irish regulatory technology is in demand across Asia Pacific, where demand for compliance and risk solutions has never been greater

Irish regtech providers are experiencing unprecedented growth across APAC.

“Covid has been an accelerant,” explains Scott Patterson, Enterprise Ireland’s Senior Market Advisor Fintech Australia & New Zealand, based in Melbourne.

The pandemic has forced many financial services organisations in the region to increase investment in digitisation, both to facilitate customer onboarding and to satisfy growing regulatory pressure for robust compliance and risk controls.

The combination of escalating cybersecurity costs, decreasing revenues and increased regulatory pressures has resulted in a “paradigm shift”, says Patterson.

It started in Australia in 2019, with the launch of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry.

The following year Hong Kong’s Monetary Authority (HKMA) declared its intention for Hong Kong to operate as a centre for regtech excellence. In April of this year the Monetary Authority of Singapore (MAS) announced its new regtech grant scheme to promote the adoption of technology for risk management and compliance in financial institutions.

“Covid-19 has created a burning platform for digital transformation across the industry,” explains Patterson.

“It was a catalyst for organisations to fast-track the transition from legacy risk processes and systems to Cloud based regtech platforms flexible enough to meet the expectations of local regulatory frameworks, while also future-proofing against the ever-evolving regulatory landscape.”

Irish ingredients for regtech innovation

That so many of these organisations turned to Ireland’s regtech solutions providers is no surprise. “Irish regtechs have proven experience of resolving the kind of risk and compliance issues that are only now being faced by companies across APAC,” he explains.

Enterprise Ireland is the world’s most active seed investor in technology companies and has a portfolio of more than 40 client companies in the regtech space.

Its strength in the field is the result of a number of factors, including the fact that Ireland is both a major international financial services sector and the global technology hub of choice for the strategic business activities of some of the world’s top ICT companies.

It is also the Data Capital of Europe, with leading data-rich companies such as Apple, Google, Microsoft, Facebook, LinkedIn, Twitter and Airbnb all servicing Europe from Ireland.

Given Europe’s position as the global leader in regulatory and compliance standards, from open banking to data protection, allied to Enterprise Ireland’s active investment in innovative technology-driven start-ups, it has all provided fertile conditions for Ireland to develop its world class regtech cluster.

World class

Many of these companies are now powering across APAC. Fenergo, an Irish regtech ‘unicorn’ and the industry No.1 provider of CLM software solutions for financial institutions, has supported each of Australia’s leading banks with regulatory onboarding issues.

Vizor Software, a global leader in supervisory technology, provides industry-wide reporting support, partnering with the Australian Prudential Regulatory Authority (APRA).

Daon is a world-leading mobile authentication and biometrics company working with leading financial digital banks such as TONIK in the Philippines and Mox in Hong Kong. Its biometrics and identity assurance software has been deployed by Australia Post.

MCO (MyComplianceOffice) works with financial firms across APAC as they navigate increased regulatory pressures, growing level of enforcement actions and rising compliance costs, helping them to automate conduct-risk management for more effective compliance and greater efficiencies.

Know Your Customer, with offices in Hong Kong, Singapore and Shanghai, has quickly established a reputation for excellence for solutions which strengthen KYC and KYB compliance while providing exceptional client onboarding.

Not alone are Irish Regtech’s such as Corlytics, Circit, Cerebreon, Sedicii and DX Compliance who are all quickly gaining international traction. Today more than 20 Irish Regtech’s appear in the Deloitte RegTech Universe 2021.

They have won some of the most prestigious global awards too, including the Regtech Insight Awards 2020, in which MCO won Best Vendor Solution for Managing Conduct Risk and Fenergo won Best KYC Software for Client On-Boarding.

At the Central Banking Global Regtech Awards 2020, Vizor won Global Technology Partner, following on from its success as winner of the Global Regtech Provider award the previous year.

Adding value

“But it’s not just about service provision or functionality,” points out Scott Patterson. “Some of these companies have gone on to become industry influencers.”

Fenergo has, for example, created an active APAC community of leading Australian Financial Service organisations. What it refers to as “compliance by design” is a powerful collaborative initiative that mutualises the effort and cost of compliance for all involved.

“This allows tiers two and three financial institutions surety that their approach to AML/KYC, combating financial crime, and counter terrorist financing, is the same as that of tier-one institutions,” he explains.

“It’s a perfect example of the way in which Irish regtechs are not just providing effective solutions but helping to set the standard around the regulatory environment in APAC.”

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