Synechron launches RegTech programme for clients in financial services

26 April 2018 6 min. read

Following Accelerator programmes for Blockchain, InsurTech, and AI, international consulting and technology firm Synechron has now also made a foray into the RegTech realm. The firm’s RegTech Accelerator programme provides financial services players expertise and a range of tools & applications that increase efficiency in processes relating to regulatory compliance.

Since the outbreak of the financial crisis, regulators globally have introduced tighter controls of financial institutions in a bid to ensure that financial systems becomes more stable, and ideally, more effective as well. Among the large regulatory changes that have been introduced in recent years are Basel III, PSD2, MiFIDII, Anti-Money Laundering (AML), Know Your Customer (KYC) and IFRS9. These new regulations have come on top of the growing number of revisions and more stringent requirements for long standing regulation, such as GAAP (Generally Accepted Accounting Principles), SOX (Sarbanes-Oxley) or FRTB (Fundamental Review of the Trading Book).

As a result, the regulatory burden on financial institutions has taken a flight in recent years – for example, according to an analysis by The Boston Consulting Group, the number of individual regulatory changes that banks alone must track on a global scale has more than tripled since 2011, to an average of 200 revisions per day. Looking at the number of regulatory changes scheduled through the next few years, the trend is not expected to slow down. In fact, a recent Duff & Phelps survey among senior staff at asset managers, brokers and banks found that financial institutions' regulatory costs could more than double over the next five years. While firms today typically spend 4% of their total revenue on compliance, this number could rise to 10% by 2022. 

Technology can play a key role in boosting the efficiency of regulatory compliance, with technologies such as artificial intelligence, process mining, analytics or machine learning providing risk managers with the capabilities of not just managing the workflow more efficiently, but also improving activities that lower the overall regulatory compliance burden. “The focus on the total cost of compliance is high-priority for financial institutions, and technology is the best enabler to address this challenge”, said Faisal Husain, CEO of Synechron, an organisation that provides consulting and technology services to the financial services industry.

Synechron introducing RegTech

Organisations in the financial services sector however struggle with embracing the opportunities provided by technology, and to bridge the gap between technology and successful execution, Synechron has launched a set of programmes which build on RegTech – which stands for regulatory technology. The firm’s six RegTech Accelerators have been designed to address specific regulatory challenges, including solutions for the following regulations: Anti-Money Laundering (AML), Know Your Customer (KYC), Basel III, International Financial Reporting Standards (IFRS) 9, the Generally Accepted Accounting Principles (GAAP) and the Fundamental Review of the Trading Book (FRTB).

“Demand for smart solutions to regulatory challenges remains at an all-time high across the sector, and our Accelerator program is designed to help banks and insurers ramp up these efforts more quickly and efficiently as they move past a ‘check-the-box’ mentality regarding regulations, and look to innovative technologies to find creative solutions to addressing new and changing regulatory obligations,” commented Husain. Organisations that join the RegTech programme can, according to the firm, expect to benefit from “increased control through technology, which will allow for greater transparency, more efficiency, better data quality, and better overall management of risk and regulatory compliance.”

An overview of Synechron’s six RegTech Accelerators: 

  • Capital Walkforward Accelerator: With a combination of Machine Learning and Natural Language Generation (NLG), this Accelerator automates the variance calculation process, identifies influencing factors, and generates required commentary for manual validation and distribution. This assists firms in Basel requirements for Capital Numbers reports and improves efficiency as it is quicker and less error-prone than human processing.
  • Fundamental Review of the Trading Book (FRTB) Accelerator: This Accelerator automates FRTB calculations requiring the Standard Approach to modelling risk using a Spark-based data analytics platform, addressing the key areas – Sensitivity Based Approach, Default Risk Charge, and Residual Risk Add-on, offering a greater degree of control against using internal risk models.
  • KYC Remediation Accelerator: The KYC accelerator uses Optical Character Recognition (OCR) to scan documents and Natural Language Processing (NLP) to analyse the data, eliminating manual processes and ensuring companies are controlling and managing their KYC exposures.
  • Information Governance and Records Management Accelerator: This Accelerator addresses the inconsistencies in record keeping due to the high level of unstructured records banks are producing today, which are unsupported by the current manual processes used for traditional paper records, by applying automation to analysis, classification, and retention of unstructured documents for varying records management requirements using OCR and NLP to populate forms from the records data and create full audit trails.
  • Intelligent Controls Testing Accelerator: The intelligent Controls Testing Accelerator delivers an intelligent analytics platform boasting Data Science and Predictive Analytics to automate the current manual and tedious testing processes. This allows firms to trial its enterprise risk management systems, rather than rely on manual tests on the first line of defense (1LOD).
  • Accounting Standard Normalizer: Synechron’s Accelerator for Accounting Standards delivers a data analytics framework with a microservices architecture to input proprietary credit risk models and use real-time data to run calculations for global Expected Credit Loss (ECL) calculations. The Accelerator addresses the challenges global banks face with varying global accounting reporting standards, like the US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) 9.