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RegTech: a catalyst for change in compliance?

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Réka Wilson, Product Development Executive at Vaiie, has been helping businesses redefine and refocus their strategies towards digital innovation for over a decade.

Here, Réka discusses how 2021 has been a catalyst for change in the RegTech space, resulting in a transformation of traditional compliance and onboarding tools.

Digital innovation and transformation can significantly enhance the experience that employees have with essential, but sometimes time consuming, compliance tasks. RegTech Associates and the City of London Corporation said that 2021 has been labelled a critical year for RegTech, which is being seen as the ‘must-have’ solution to ensuring continued compliance in an efficient and cost-effective way. According to Deloitte, it is estimated that there are approximately 200 regulatory revisions made globally every day, which highlights the importance of the adaptable technology. This is especially relevant when confirming an individual’s identity, where they claim to live and combatting financial crime.

It’s not just who you are, it’s where you are

For many years, we have identified an address via a utility bill, this is mainly a process that is wedded in tradition. Businesses know where they stand with utility bills, and they understand what the regulators expect from them when identifying where a person claims they live. So, the reality is, why would anyone change that process? With wider access to more sophisticated technology, it becomes increasingly possible that official documents such as utility bills can be forged in order to disrupt established processes. This is where Vaiie Locate comes in.

What’s unique about Locate is its ability to verify the individual’s address through geolocation technologies. The data ensures the person sharing the address is at the address that’s being verified. Throughout this process Locate can audit every step, allowing for any anomalies or unusual activity to be pinpointed.

As a business, we will always maintain that the regulator’s requirements are a bare minimum by which a firm must adhere. This does not stop them from doing more should they wish, especially as this provides extra protection and reassurance to stakeholders and clients.

Drawing upon our postal heritage

Vaiie is part of the Jersey Post Group and with our postal heritage, we want to make use of our capabilities to do something truly innovative and beneficial. Vaiie Locate can send a letter and a tracking chip addressed to the customer at the address to be verified. Enclosed is a unique URL, code and that when input by the customer it geolocates the address and if required, starts an interactive electronic identity verification session.

This type of method is only the beginning and as a business, we have a significant advantage in being able to use our experience within the industry to produce best-in-class products.

Out with the old, in with the new

Everyone is protective of their identity, which is why it is essential that businesses need to be increasingly mindful when processing and assessing their clients’ identity in line with both GDPR and AML requirements.

In 2020, businesses had no choice but to start using digital identity verification tools to enable them to onboard clients remotely and efficiently. With less face-to-face verification, electronic identification tools have gained greater prominence and acceptance within the industry and their customers. From a user experience perspective, it gives them the flexibility to complete the process at a time that suits their busy schedules. This is where Vaiie Identify can help. It verifies a client’s identity in seconds using facial recognition, liveness checking and video capabilities.

Clients have a desire to verify their identity quickly and efficiently – whether verification is required for buying a house, a business or making an investment.

Financial service companies are the enabler and our role is to provide the technology to achieve this.

Integration is key

Customer experience and flexibility of choice is a key part of digital transformation. This ethos drove us to design Vaiie’s products as modules that can integrate with one another and external business systems.

Digital solutions that are user centred remove friction and enable customers to achieve their desired outcome quickly and easily. For example, someone’s address and identity can be verified in one session, which means they don’t have to provide a passport or go into the bank to get paperwork. It’s a seamless experience for the end user and the operator, with several clunky steps eliminated.

Historically, there have been several address verification barriers for clients across the globe, for example in Asia and the Middle East, addresses are largely PO Boxes and in places like Dubai, buildings are being built so fast that the land registry doesn’t get updated as frequently, or entries are submitted in different formats. There are clearly a few points of friction in the system, but with the help of technology, we can use tech to be faster and smarter. Ultimately, we’re innovators and a future exists where products use intelligent technology capabilities to do more than the human and paper process.

Regulating the regulators

There has been a higher demand from the financial sector for greater use of digital and intelligent tech tools. Financial companies welcome the change, however the regulatory requirements for businesses to make their own risk-based decision when it comes to the tech can be a procurement conundrum. The issue is with so many choices available in the market it is hard to know which one to choose and of course, regulators cannot be seen to endorse a particular company.

Eventually, we will reach a tipping point whereby a digital-first approach becomes the norm, and paper-based processes become secondary. There is no facial recognition with manual and paper-based processes, and with the vast amount of paperwork required, it takes considerably longer to verify someone.

For this tech-first approach to happen, all aspects of compliance must become tech positive, and while this won’t happen immediately, it’s a journey we will all have to go on together to continue to combat sophisticated and ever-changing criminal fraud.

The shift in usage of intelligent tech tools will result in greater efficiencies and cost savings for businesses. RegTech and the use of innovative tools can help address the current skills gap in compliance and help tackle financial crime, all while providing smoother processes for businesses and the end user. We are an industry that is wedded to traditional processes, but as innovators and problem solvers we can help deliver excellence in a quicker and more effective way that delivers value for our clients and improves their user experience.

Article first appeared in issue 109 of Connect Magazine.

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