David Sudbury is an industry veteran, having built the financial services business for Honda in Canada. After 30 years, Sudbury took early retirement, joining some notable companies as an advisory board director. However, last year, Sudbury decided to enter the big bad world of technology and finance again, as CEO of RegTech company Securefact. RFi Group’s Sarah Hollinshead interviewed Sudbury to discover more about the company that lured him back into the workplace and its position within the growing RegTech environment.
What is your ultimate goal in your position as CEO of Securefact?
My goal is to transform Securefact from a service provider for registry services to a fully-fledged RegTech; solving regulatory compliance problems and creating technology solutions for our finance service customers.
"Our focus is to be the subject matter experts in financial service regulation and create technology solutions that help our customers solve their digital onboarding problems."
And to make it so that, from start to finish, you can plug our products right into that process.
We can help customers meet the FINTRAC requirements for anti-money laundering and anti-terrorism, whilst also creating a frictionless experience that moves beyond the standard 3-4 weeks into digital onboarding in 15 minutes. It is a journey in progress and we are having some very good success.
Does your offering work across all types of products within the financial institutions portfolio?
Yes, and it is all customisable according to the brand, plugging into their existing portal or website. We perform the back-office work to complete the attestation. This includes addressing the KYC questions for risk management purposes, and then reporting back beneficial ownership, matched against government registry data. The overall aim is for the financial institutions to have a complete picture of the ownership structure of the entity, which of course the regulators require.
We hope that this is a repeatable process, in a digital manner, that provides rich data for financial institutions. Finally, and very importantly, it is fully auditable, so when the auditor does show up, you have the confidence that you have met the requirements, and don’t run the risk of fines or penalties.
What is RegTech to you, and how does it fit in with the FinTech landscape?
Fintech is really about applying technology to solve financial services problems for customers. Millennials and Gen Z customers will equate to more than 50% of the potential customers out there by 2020, according to research. They also represent huge buying power; data from the United States suggests almost $5 trillion dollars in purchasing power. So, fintech really is looking at applying digital solutions to meet that perspective demand, filling a gap that traditional banking has not been able to address. Of course, now there are FinTech partnerships and innovation labs set up for traditional financial institutions to be able to fit into this changing demand.
"Regtech in Canada represents potentially a 200-million-dollar industry."
RegTech is merely a subset of that. Regtech in Canada represents potentially a 200 million dollar industry because financial service companies need solutions to address the evolving regulations that they are obligated to follow. And so simply, RegTech is creating a technology solution that allows for a very standardised way of dealing with things, that is fully auditable and meets the requirements of the regulators. If you look at the amount of money banks are spending on compliance, it is huge. So why not drive efficiency and effectiveness in that area?
Are you hoping for a holistic digital onboarding solution?
That is the holy grail. And for us, both from an individual and a commercial point of view, our role as we see it, is verify, authenticate and detect fraud. That is what we are working towards, finding solutions that answer those questions for the financial institutions so that they can proceed with the rest of their onboarding process in confidence. Beyond that, into credit decisioning and the other parts of it, we are actively engaged with partners, for example we are working with a fintech that specialises in small business lending and uses advanced algorithms for credit decision purposes. So, we can work through partnerships to provide broader and more integrated solutions for financial institutions.
In a more digital world, would you say there is more or less anonymity for the consumer?
I think school is out. My guess is it is moving towards. Non face-to-face digital experiences, where you don’t have that human interaction, is being adopted, but I don’t think as quickly as people believe it to be at this stage.
"Non face-to-face digital experiences, where you don’t have that human interaction, is being adopted, but I don’t think as quickly as people believe it to be at this stage."
If I can use the analogy of the automobile industry; as a consumer, you can do all your research, all your pricing decisioning, choose the model and the make you want, but you still want to go into the dealership and take a test drive. I think we are still in that stage, but it could move quite quickly too.
What are some of the challenges you face?
One is regulatory guidance. Is often descriptive, not prescriptive, and it leaves things open to interpretation. When you’re building software, you need a sense of certainty. Sometimes, we are fortunate because we are an agile shop and we are constantly sprinting and evolving our product. But being a small shop, it is challenging to deal with large financial institutions who really need that certainty of big scale. We are making headway and are involved with several Canadian banks.
Do you believe that regulators are doing enough to keep up with the pace of change in the market?
We talk to the regulators and I think they are recognising the pace of change. They are much more active in listening, questioning and being engaged than ever before, and that is a good thing. It is challenging for the government to make changes quickly but within the regulatory companies we deal with, they recognise how quickly the digital transformation is occurring and that they have to keep pace. Overall, I am encouraged with the way our conversations have gone.
And looking to other markets?
Europe is definitely one to watch. If you look at the EU and what they are doing with e-signature and creating standards for all the EU members, they are more advanced than Canada at this stage.
What drives you in your role at Securefact?
As a company, we have a culture where we believe we are trying to build a strong foundation for the future. We are a group of 40 people, having fun, enjoy what we are doing and looking forward to further success down the road.
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