encompass: Providing Real-Time Data Access to Better Know Your Customer (KYC)

  • 17 April 2018
  • Expert Insights

This post is part of our new Future of Finance series which interviews the leading founders and executives who are on the front lines of the industry to get a better understanding of what problems the industry is facing, what trends are taking place, and what the future looks like.

The following is an interview we recently had with Wayne Johnson, Co-Founder & CEO of encompass corporation.

1. What’s the history of encompass? Where and how did you begin?

WJ: For any startup up to be successful you have to be clear on the problem you want to solve. For myself and Co-Founder Roger Carson identifying that problem was easy: encompass was founded after we were defrauded in a property investment. If we’d had the full picture on the people and companies involved, then this loss would never have happened – and that brought home the power of having the right information from the right sources in an easily digestible format. We founded encompass to make this possible.

encompass was founded in 2012 in Sydney, Australia, and we expanded to Glasgow in the UK in 2015. A year later, we pivoted from working with fraud and debt recovery specialists to Know Your Customer (KYC) customer onboarding for regulated firms in the professional, legal and financial services sectors. Today encompass has teams in Sydney, Glasgow, London and Hong Kong.

2. What specific problem does encompass solve? How do you solve it?

WJ: When financial institutions take on new customers they have to conduct due diligence on that individual or entity to ensure they are who they say they are, and to understand any potential risks that customer may pose, including money laundering, terrorist financing or fraud. This is known as Know Your Customer (KYC), and has become an increasingly onerous and expensive activity over the last decade.

Our research suggests most major international banks are spending between £700m and £1bn annually on financial crime compliance. Over the years, regulation has become more stringent requiring banks to perform more robust and frequent KYC on their customers. To keep up banks hired legions of compliance analysts to manually conduct this work, but this situation has become unsustainable and regulated firms are now looking for technology to drive efficiency and effectiveness.

A key challenge when conducting KYC is gathering and analysing the information and news needed to truly understand a customer. This currently involves compliance analysts accessing a wide range of sources globally from publicly available corporate registries and regulators, to premium sources of company or regulatory data and negative news. Analysts will search these various sources for relevant information, and analyse this to piece together a picture of that customer and to identify any potential risks. As a manual and repetitive task this is ripe for automation, and that’s where encompass steps in.

The encompass platform links to over 30 free and premium data providers and registries, allowing our customers access to the full picture, fast. By automating the information gathering and analysis process we save our customers hours of manual work.  

Video: An Overview of Encompass KYC Software

3. What’s the future of finance?

Prediction #1: I believe that the regulatory landscape will continue to evolve at pace, placing an increasing burden on compliance teams. Anti-Money Laundering (AML) regulation was recently strengthened in Europe with the introduction of the 4th EU Money Laundering Directive (AMLD4) in 2017, but AMLD5 and 6 are already under discussion. Similarly, in the US, The Financial Crimes Enforcement Network (FinCEN) is strengthening customer due diligence requirements for regulated firms under the Bank Secrecy Act. The deadline for firms to comply is May 2018. This pace of regulatory change is something we are witnessing across the globe.

Prediction #2: Increasing regulation causes a significant issue for financial institutions when it comes to customer experience. As consumers, we have come to expect instant and seamless access to a range of services, and with the rise of challenger banks and alternative financial services, this is now the same when it comes to banking. Thomson Reuters reported last year that the average onboarding time for a bank was 30 days, and this in no way matches consumer expectation. To remain competitive, traditional financial institutions will have to embrace technology to drive efficiency in their operations.

Prediction #3: When it comes to technology, I believe that financial institutions will pick the low hanging fruit, and first look to automate repetitive processes that require low levels of skill, such as the KYC information gathering process. Robotic process automation (RPA) and artificial intelligence (AI) are already changing the face of compliance in this respect. Where financial institutions were in the past throwing people at the problem they are now investing in RPA, machine learning and AI both improve efficiency and maximise effectiveness.

4. What are the top 3 technology trends you’re seeing in finance?

WJ: Specifically in terms of KYC the three key technology trends we see are:

Trend #1: Replacing manual processes with robotic process automation and machine learning. This benefits financial institutions by eradicating hours wasted on low-skilled activities; cutting costs as technology can be scaled to handle increased requirements; and improving the quality of KYC by providing compliance teams with the most comprehensive and accurate picture of a customer.

Trend #2: Increasing use of artificial intelligence. Financial institutions have been interested in the use of AI for a long time, with many dipping their toes into the water by investing in new, innovative companies or creating incubators. We are now seeing this technology coming to the fore in various areas of banks, for example, monitoring, identifying and flagging up anomalies in normal customer behaviour that may signify criminal activity.

Trend #3: Driving value from core banking systems. Banks and other financial service firms have invested heavily in systems such as Customer Lifecycle Management platforms, but as yet, many are not yet realising their full value. Data provides the oil to these engines, and encompass works with many firms to seamlessly connect their core systems to the relevant data sources and to automate information and news discovery.

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6. Why is the finance industry ripe for disruption?

WJ: What we have seen over the last ten or so years has been unprecedented for banks. They face a perfect storm of increasing regulation, decreasing profits, and skills shortages in key areas, and that is focusing minds on new approaches to traditional problems. Of course, the answer is to use existing and future technologies to ensure that costs are lowered without compromising regulatory compliance or customer experience.

About Wayne Johnson

In 2012, Wayne Johnson co-founded encompass corporation, a SaaS business driven by the belief that the best decisions are made when people understand the full picture. As CEO of encompass, Wayne has lead the  creation of the company’s Know Your Customer (KYC) automation software for the banking, finance, legal and accountancy sectors.

Wayne has a knack for building successful businesses with a balance of technical depth and commercial experience. He has strong expertise in international product distribution and technological innovation and has applied that to encompass corporation to achieve significant success in Australia and the UK.

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