Fintech

How Corlytics became part of the regulatory ecosystem

June 20, 2018 No Comments

Corlytics provides the evidence-based intelligence required by firms to achieve positive regulatory outcomes. The company constantly monitors regulatory activity around the globe and ensures that customers are kept up-to-date with the latest information they need to ensure they are well positioned to proactively manage risk.

Established in 2014, Corlytics helps clients across the financial services community to deal with the increased prominence of regulatory risk following the financial crash of 2008.

“Regulatory risk was always there, but it was very much in the background up until 2008,” says Corlytics Chief Operating Officer, John Keane.

“It rapidly rose in importance after that, and now there is a continuous stream of both new regulations and changes to existing regulations, which organisations might be unaware of.”

That represents a serious risk for banks and financial services businesses.

Cost of compliance

“Fines for breaches can be enormous and run to billions of dollars,” says Keane. “We are dealing with really big numbers, and the estimated annual cost of compliance to the banking sector alone also runs to billions of dollars.”

Regulatory risk is now as important as the other main risks managed by the sector.

“There are many risks to banks and financial institutions,” Keane notes. “Risks such as credit risk, foreign exchange risk, and equity risk are well modelled and well understood. Along came regulatory risk, and it now needs the same level of analysis and understanding as traditional financial risks.”

One difficulty faced by banks and financial institutions in dealing with regulatory risk is the language used to describe it.

Bridging the gap between banks and regulators

“Regulations are typically written by legal regulatory professionals. Interpretation comes down to the written word and people’s understanding of its meaning. Banks tend to be much more numerically driven and need a numbers-driven approach to analyse and quantify regulatory risks and their likely impact. What Corlytics does is bridge the gap between the two sides. We are here to help banks quantify and better understand regulatory risk. We work with regulators as well. For example, we work very closely with the Financial Conduct Authority in the UK, who are recognised as the thought leader in the regulatory space.”

In this sense, Corlytics regards itself as part of the regulatory ecosystem.

“We translate regulatory notices into a common format. We have technology that monitors regulatory content on a world-wide basis.  There are hundreds of regulatory notices issued every day around the world. We use a variety of artificial intelligence (AI) and other systems to help customers understand which notices are relevant to them. We have a global taxonomy that is applied on a consistent basis. It allows organisations to view content relevant to them in a standardised way and helps them anticipate when risks likely to arise, what the impacts might be, and how best to mitigate risks.”

The company’s target market is the world’s leading financial institutions.

“Ours is very much a global solution,” says Keane. “We have 38 people in our team headquartered in Dublin, with presences in London, New York, Boston, and Sydney. Our core market is the Tier 1 and Top Tier 2 Financial Services organisations. We are focused mainly on the US, the UK, and Europe but we are seeing a lot of interest from Asia – Hong Kong and Singapore, in particular. We are also attracting interest from Australia.”

Enterprise Ireland, the national export agency, has supported the company to make international connections.

“Enterprise Ireland adds significant value in helping us to grow internationally. They offer practical assistance, such as spaces for us to hold meetings in their excellent network of overseas offices. They make introductions between companies and executives at senior levels. At the recent MoneyConf event in Dublin, Enterprise Ireland held an event the day before, pairing up regtech and fintech firms with potential clients and partners. That is exactly the type of proactive assistance that is invaluable to companies such as Corlytics and their international partners.”

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