Cashing in on the regulation opportunity

It has often been said that one person’s problem is another’s business opportunity. That has certainly proven to be the case for companies like Fenergo, AQMetrics, Sedicii, Corlytics and the growing band of Irish companies which are solving regulatory problems for banks, financial institutions, and a range of other customers around the world.

Fenergo is Ireland’s first fintech unicorn – a privately owned company worth in excess of $1 billion. Founded in 2009 it solves a range of client onboarding, know your customer, and financial crime risk problems for its customers.

AQMetrics enables its clients around the world to streamline and automate their risk, compliance and regulatory reporting; Waterford-based Sedicci verifies identity data between two organisations without exposing the underlying data; while Corlytics is a world leader in regulatory risk intelligence.

These dynamic Irish firms have been joined by a host of international innovators including Canadian electronic identity and address verification specialist Trulioo. The company’s arrival in Ireland was very much the result of a happy accident according to senior vice president identity solutions Garient Evans.

“Our company is headquartered in Vancouver and there is a long-standing visa programme between Ireland and Canada and long history of Irish students coming to work in Vancouver,” says Evans.

“We happened to have a really trusted Irish colleague in Vancouver whose visa ran out, but we couldn’t afford to lose him. He moved back to Ireland and continued to work for us. Over time, his workload grew, and we added more people in Dublin and we now have about 50 people there.

“To cover the world, you can’t do it from the west coast of North America. We need a foothold in Ireland to serve our customers in EMEA. We now have all functions of the business based in Dublin. It’s proven to be a tremendous source of talent for Trulioo, particularly regtech talent.”

Founded 10 years ago, Trulioo has grown to become one of the world’s leaders in identity verification.

“Ten years ago, there was still the hypothesis that the internet was anonymous, and that people could surf the web and interact with social media using pseudonyms. The internet has allowed people to live their lives remotely and virtually, but they need their identities verified in order to participate in the digital economy.”

There is typically an onboarding or registration process required to open an account with banks and other service providers while businesses also have to go through verification processes if they are to accept payments through Mastercard or Visa or other platforms. Trulioo provides those verification services for its clients.

“What makes Trulioo special is our global reach,” Evans adds. “We cover 194 countries and territories and have 400 data sources. If an international company has to verify businesses and individuals in 80 countries it could take years.

“Trulioo can do it for them with one contract and one API (application programming interface). If a bank or e-commerce retailer wants to verify customers or service providers in dozens of countries, we can do it in days with one contract.”

And the regtech sector is likely to continue to grow.

“There are approximately 50 small regtech firms and some larger ones in Ireland at present,” says Assistant Professor Richard McGee, academic director of the MSc in Financial Data Science in the UCD School of Business.

“They focus on specific things that funds, investment managers, tax practitioners and so on need to do. The more complexity in regulations the more companies have to do, and they are more likely to buy software that will do it for them. There are also emerging markets in regions like Asia-Pacific with complex regulatory systems that are fuelling demand. And there are data regulations like GDPR as well.”

And the regtech sector could soon face its own regulatory headaches.

“There are now EU proposals for the regulation of AI,” McGee adds.

“Fintech companies themselves will have to look at regulation of what they provide. For example, a machine learning algorithm could be learning prejudices and discriminating against people as a result. They will outsource that to the professional services firms who are setting up departments to specialise in fintech regulation. All these new areas of regulation will create new opportunities for the regtech sector.”