Paving the way for compliance across regulated industries: Interview with Evgeny Likhoded, CEO & Founder of Clausematch
By Edlyn Cardoza
2020, a year no one is going to forget. It was quite a difficult year for many companies and people everywhere. Financial institutions had to drastically transform and change their services to make sure that they could operate successfully. With their employees working remotely and their consumers avoiding visiting the banks for safety purposes, 2020 pushed people to go digital. This posed quite a challenge for compliance processes at financial institutions.
With compliance teams remotely working, banks had to ensure that their staff had all the right tools at their disposal to do their jobs well. This also brought along new compliance challenges. Hence, in the aftermath of the pandemic, RegTech was one of the few industries that flourished. 2020 set a new record for the total amount of investment deployed into the sector. According to Muinmos, the global RegTech investment garnered $8.3 billion, right from $7.2 billion in 2019.
A group of companies in the RegTech industry use Cloud computing technology via SaaS to help companies or businesses comply with regulations less expensively and efficiently. Clausematch is one such company that is paving the way for compliance by digitizing regulatory adherence in financial institutions. Clausematch is a RegTech firm enabling heavily regulated organizations and other regulated entities to run their businesses safely and meet compliance obligations. Clausematch provides end-to-end policy management and regulatory compliance solutions through its AI-powered platform, helping organizations to navigate the compliance lifecycle.
IBS Intelligence sat down with Evgeny Likhoded, Founder & CEO of Clausematch, to discuss the importance of RegTech in the financial services industry and the company’s future plans.
Could you give us an overview of your service offering and client base?
Our mission is to help companies operate safely in regulated markets and bring compliant products to the market. And what I mean by that is that many regulated financial institutions, and any other regulated company, today are struggling with regulatory change workflow and with communication of regulatory obligations to employees. So, Clausematch’s platform helps automate that manual workflow around identifying and implementing regulatory obligations into the internal policy management workflow within the organization.
Our client base is primarily made of financial services institutions, insurance companies, and tier-one global banks. We have about six global tier-one financial institutions as clients, and we work with FinTech companies, Payment companies and quite a few insurance companies.
How is Clausematch unique to the rest of the RegTech companies in the market?
With Clausematch, we built the technology which allows to collaborate and work on compliance content in real-time. So, that means that you don’t need to send around word documents, emails to get the reviews of, for example, policies, procedures or regulatory documents. All of that is done through the platform. We also built natural language processing and AI algorithms that helped map and connect different data types across the platform. For example, our clients can map regulatory obligations to internal policy and procedures, so they can show to the regulators which regulatory obligations are addressed by which policies and procedures internally within the organization, and how these are compliant with regular applications and how they’re communicated to employees.
You recently participated in the FinTech Innovation Lab in New York and London. What are some of the achievements of that experience?
We were part of the FinTech Innovation Lab in London and New York, which helped us work with tier one banks and gave us access to the US market. These are large, global deployments it gave us access to the US market. We’ve established in the US, opening an office there where we have a team of 6 people servicing our US clients. We have big plans for the US market, and we’re growing that team very quickly. We’re very excited about that market because it’s huge and also heavily regulated.
Has the shift to digitization helped in the rapid adaptation of RegTech services by companies?
The shift to digitization helped in two ways. One, internally within the organizations, a lot of projects got pushed forward and on top of the priority list, especially in compliance departments, where suddenly it became impossible to work together remotely, so all the types of collaboration software has been much easier to get the business case approved for that type of software. The other push was from regulators because regulators started looking more into compliance systems and compliance processes within organizations and then demanded more transparency and visibility on how compliance programs operate within organizations. For example, last year, The Department of Justice in the US issued new guidance on compliance programs, which talks specifically about compliance programs not being manual and static anymore and how they need to be managed dynamically. That means companies will need software to help them manage compliance content.
How has the journey been from being a start-up in 2012 to being selected by several top companies, winning multiple prestigious industry awards, and recently being shortlisted for RegTech Insight Awards 2021 – US?
It’s been quite a journey! It took a while to build the platform because the technology we’re using and real-time collaboration are not that simple to create. We managed to get a lot of industry input into our AI models, which helped us train models on the compliance and regulatory content, bringing uniqueness to the platform. I think that’s why many organizations chose us. For example, Barclays were our first client. With Barclays, we worked very closely to help them centralize and establish a global policy management platform that now every employee has access to in one central location. That gave us credibility with tier one institutions. We’ve noticed that compliance teams haven’t previously bought much technology. But now, we see compliance teams onboarding new future-looking technology, which helped us establish ourselves because the company’s mission and vision resonate with compliance teams.
What is the way forward for Clausematch? What should your clients be looking forward to in the future? Especially in the US?
We’re trying to help our clients look at compliance not as a burden but as a competitive advantage. Or, you know, make compliance transparent and simple rather than something that you’re always thinking “Am I compliant or not?” because it’s very hard to understand all of the regulatory obligations which apply to you as an institution and make sure that everything that the company does is compliant with those regulations. Our mission is to help with that.
We’re working not just with regulated organizations and not just with banks and other regulated institutions, but we’re also working with regulators. We recently started helping regulators publish regulations digitally, and, in a 10-year view, ultimately, regulations will be digital. They will be published in a digital structured form, and we are working with regulators who are helping to get to that future faster. Updates will be published via the API. It will be simpler to comply when you know exactly which regulatory rule and even which regulation paragraph has changed.
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