Since the global financial crisis, banks world over has made significant investments to remediate and comply with regulatory changes by hiring thousands of compliance officers. However, with the constantly expanding volumes of regulations, manual compliance processes fail to keep up with the regulatory expectations. Under the mounting pressure to become more accountable and transparent, financial institutions are increasingly opening up to regtech—technology that automates regulatory compliance.
Of late, regtech has been gaining favorable momentum in the industry as it promises better data insights while eliminating risks, time-consuming processes, and costly headcount. According to an estimate by Juniper Research, automation of regulatory requirements could save a large bank $1.2 billion per annum. The report also states that regtech is all set to rise from $10.6 billion in 2017 to $76.3 billion in 2022, unfolding enormous opportunities for regtech solution providers. Given the current circumstances, regtech-startup Capnovum is fast emerging as the agent of change for banks that are in dire need of digitization.
Capnovum is stirring disruption with its cognitive compliance management platform that leverages artificial intelligence to identify and understand the impact of regulatory information and updates. The platform provides an up-to-date repository of regulations and regulatory news that empowers financial institutions to manage compliance and resource utilization across jurisdictions while reducing dependence on management consultants. “We follow an automated approach to capture regulatory information on a local and supranational level, and cover more than 150 regulatory frameworks in over 70 countries,” states Niclas Nilsson, Founder and CEO, Capnovum.
Over the course of three years, the company has built and trained advanced algorithms that enable institutions to derive meaningful compliance insights. The Capnovum platform not only eliminates the cumbersome task of manually collecting, interpreting, and creating reports but all data insights are provided instantly to a user via an application program interface (API) or through an online platform. "Needless to say this creates an opening for huge cost savings, risk mitigation, and improved timeliness and quality,” adds Nilsson.
We follow an automated approach to capture regulatory information on a local and supranational level, and cover more than 150 regulatory frameworks in over 70 countries
While some banks today take up to six weeks to produce a quality compliance report, Nilsson sees this as a downside. With Capnovum, banks can accelerate decision-making to stay well ahead of the competition, as the platform allows clients to discover regulations applicable to their business in seconds. In case of any regulatory change or update, Capnovum provides an impact assessment of the resources that are likely to be affected, enabling companies to take timely and necessary measures."Moreover we not only offer a complete picture for compliance but also capture all changes related to trading, operations, product development, and marketing,”adds Nilsson.
In addition, the platform comes with built-in asset-based project management office (PMO) tools such as decision logs and monitoring frameworks. Highlighting the importance of automated monitoring, Nilsson gives an example of a client who suffered huge losses because they were working with invalid market estimation. “At the onset of their project, the market was expected to grow at 20 percent per year. However, the client failed to keep track of the validity of the assumption, and was completely unaware that the market had instead dropped by 50 percent, owing to a regulatory change,” he explains. Only in the fourth year, did the client realize that the market had moved away from the initial figurative. What makes the Capnovum platform stand out is that it can be set up to automatically monitor all assumptions and in case of any change, a user is promptly notified.
In the days ahead, Capnovum plans on expanding their footprint into Malaysia and UAE, with a particular focus on the Islamic financial markets. Backed by his 20 years of industry experience, and history in Islamic finance, Nilsson has made notable contributions in this space. His distinct insights on Islamic finance will be featured in the forthcoming 'The RegTECH Book,’ a volume comprising the works of subject matter experts on financial technology. Nilsson is also gaining significant momentum in the industry for his exclusive work on a framework for 'Islamic Regtech,' having already pioneered the discipline as a prominent voice at Regtech MENA, Dubai, IFN Forum Asia, Kuala Lumpur, and Cloud Expo Asia, Hong Kong, this year.“Islamic RegTech requires a keen understanding of Sharia-compliant product sets, and a couple of specific sub-disciplines, to benefit fully from conventional RegTech solutions,” explains Nilsson.
At present, Capnovum is evolving their platform’s Islamic Finance lens, which aims to compare the regulatory treatment of Sharia-compliant products to that of conventional products, and across jurisdictions. The company was chosen to be featured in the November 2017 issue of IFN Fintech for creditable efforts to increase transparency across Islamic financial markets, and their innovation is all set to revolutionize major Islamic finance hubs in the Middle East, Southeast Asia, and across the globe.
In addition to their trailblazing position in conventional RegTech, Capnovum is carving a niche in Islamic RegTech and it can be said with conviction that currently not many leaders or companies in the market hold the expertise that Capnovum does.