We kick off Series Three of StreetsTalksTo with a fascinating delve into the world of financial crime compliance with Alan Paterson and Kelly Burgess of Plenitude Consulting, the Financial Crime, Risk and Compliance consultancy.
We explore the high level challenges facing the industry as well as the important granular considerations as clients navigate their financial crime compliance obligations. We discover how RegSight – a cloud-based obligations register – is making an impact on the industry by allowing financial institutions to conduct a detailed and systematic gap analysis of their policies, procedures, and standards and address these in a highly efficient way. We discuss their favourite piece of regulation… and so much more!
Plenitude offers advisory, transformation services and cloud-based RegTech subscription products. They are key contributors and supporters of UK Finance and are currently working on a joint paper understanding and evaluating the risks associated with crypto assets.
Alan is the founder of Plenitude and has a proven track record in successfully delivering complex and business critical programmes with specific expertise in Financial Crime Compliance (FCC) transformation. He has provided advisory services and played key delivery roles on some of the most complex and critical FCC transformations in the industry, working with global banking, insurance and asset management firms. He started his career at Accenture and has over 20 years consulting experience in Financial Services. His client coverage includes HSBC Plc, BNP Paribas, Deutsche Bank, Investec Plc, Credit Suisse, Royal Bank of Scotland, Barclays Plc, Aviva, National Australia Bank Europe and Zurich Financial Services. His FCC transformation experience covers HSBC, Credit Suisse, Deutsche Bank, Aviva and AXA where he has undertaken senior advisory and delivery roles on multi-year programmes working with Heads of Financial Crime and CEO’s. Alan is passionate about employing the best talent in the market to help our clients meet their regulatory obligations and reduce their financial crime risk exposure, while continuing Plenitude’s success.
Kelly is a Senior Executive with 15 years consulting experience, specialising in leading and managing Financial Crime Compliance transformation within the banking and asset management sectors. Kelly started her career at a big four consulting firm and spent 6 years in the performance and technology consulting arm delivering advisory and assurance engagements across clients in the life & pensions, retail banking and investment sectors. Kelly has worked with leading financial institutions including HSBC, Santander, Deutsche Bank, Barclays, Citi Bank, Standard Life Investment, Royal Bank of Scotland, National Australia Group, Standard Life Assurance Company, Swiss Re, HSBC, Aberdeen Asset Management and Martin Currie Investment.
Julia: Hello. My name is Julia Streets, and welcome to the podcast series StreetsTalksTo. In each episode, I interview leaders from some of the most influential firms, bodies and initiatives in the financial services industry. On each episode we explore what’s at the very forefront of innovation and change. We think about the challenges facing their clients and also the industry at large. And we uncover the opportunities that exist both today and as we look ahead. We hope you enjoy the series, which you can find on all good podcast channels. All the episodes are listed on our website, streetsconsulting.com. You can find the episodes using the hashtag #streetstalksto. Thank you for listening and welcome to StreetsTalksTo Plenitude.
Let me tell you a bit about Plenitude. They are the financial crime risk and compliance specialists, offering advisory transformation services and innovative cloud-based RegTech subscription products. Their focus is firmly on addressing the legal, regulatory, reputational and social imperative for financial institutions to take diligent and rigorous steps to mitigate financial crime risk. Their clients are a broad range of firms. Think about retail, corporate, investment banking, insurance, investment management, and it’s all about helping them to meet their regulatory obligations and reduce their financial crime risk exposure.
Think about that, but also think beyond. Think payments, think crypto. I’m really looking forward to this discussion, and today I’m delighted to be joined by Alan Paterson, Founder and Managing Director, and Kelly Burgess, who’s a Senior Executive. Let me tell you about Alan. Alan is the founder of Plenitude and has a proven track record in successfully delivering complex and business-critical programs with specific expertise in financial crime compliance transformation. He’s provided advisory services and played key delivery roles on some of the most complex and critical transformations in the industry, working with global banks, insurance and asset management firms. Alan, wonderful you can join us.
Alan: Thank you very much for the introduction, Julia. Pleasure to be here, and thank you for having me today.
Julia: I can’t tell you I’m so looking forward to this discussion. It feels so of its time right now, looking forward to that. I’m delighted that today you’re joined by Kelly Burgess, who is a senior executive at Plenitude. She has more than 15 years of consulting experience. She specialised in leading and managing financial crime compliance transformation, again, within banking and asset management. She started her career at one of the big four consulting firms, and has spent six years in performance and technology consulting, delivering advisory and assurance engagements across clients in life and pensions, retail banking and investment sectors. Kelly, great to have you on the show. Thanks for joining us.
Kelly: Great to be here, Julia, thanks for speaking with us.
Julia: As always, when we have guests on the show I always prefer rather than get into Plenitude and what you’re doing right now, we will get into that. But I’m much more interested at the very beginning to understand what your clients are thinking about right now. Alan, can I come to you first of all? What is it that’s keeping your clients awake at night right now?
Alan: Well, I think, firstly, it would be remiss of me not to acknowledge COVID. Clearly, that has been front and center on everyone’s mind over the last year outside of the challenge of the day job. Whether that’s concerns about families’ health, job prospects, “Will I have a job in the future?” I think it has taken up a lot of head space for everyone. As a firm, I think we’ve been blessed in that COVID has had a minimal impact to the business. However, we’re very sensitive to the devastating impact it’s had on some individuals and across the wider the business community. There’s obviously light at the end of the tunnel now. We’ve got the vaccination program, the restrictions are lifting. So, I think clients and all of us are becoming much more focused on the future rather than the here and now. And obviously some of the issues that they face in their respective roles.
Fundamentally, our clients main concern is, “Are we meeting our financial crime compliance obligations?” Not only meeting them, “But are we meeting them effectively and efficiently?” I think this has become even more important given the senior manager’s regime, and of course, the personal accountability and exposure that many of us and our clients face. Of course, this is against the backdrop of the evolving and complex regulations and incredible cost pressure that all financial institutions are facing at the moment. I think the dominant thing for me at the moment is how can we drive better financial crime risk management outcomes, while at the same time managing cost effectively? Of course, sometimes there are conflicting objectives. As a firm, we’re very much focused on this theme, and of course, we can talk you through in a little bit more detail, some of the work that we’re doing on the call.
Julia: Wonderful. Kelly, there we talk about some of the complexities and the background are obviously challenging market conditions are one of them. But I mentioned in the opening about your experience in technology consulting as well, and there’s this relentless drive towards digitalisation. I’d love to hear from you when you’re talking to clients, what are they particularly thinking about right now?
Kelly: What we’re seeing from our clients is the restart of some of their strategic technology programs, for instance, digitisation of some of their traditional manual processes, or in person processes such as identification and verification documentation. We’ve seen a lot of innovation and products coming onto the market on how customers can present their documentation, or present themselves in a digital way.
Julia: The world is never static, so, when we think about organizations tackling their internal digitalisation journey, plus also, as you were saying, the whole people returning to business in many ways. But also, let’s not forget, Alan, that in the backdrop of this, we’ve got some government stability, but we’re still going through Brexit, or we’re still operating on an international landscape as well. What are your clients particularly thinking about as they look beyond their own organisation?
Alan: Well, clearly Brexit was the biggest event at the start of the year. As part of our work we actually identified around 50 new statutory instruments in 17 new guidance documents. Which impacted UK legal obligations and regulations. Most of them impacted the sanction regime, but others impacted the money laundering via transfer regulations and asset fees. As a firm we were very much focused on assessing these changes as part of our RegSight offering so that we can update clients. But I think the wider industry challenge has been understanding these new, or amended obligations, in terms of practically how to apply those to our policy, procedure framework and wider sale financial training compliance controls.
Julia: Kelly, the FCA have given clients a degree of latitude throughout COVID. Alan was saying at the beginning of the episode about that. But I gather that, that’s all changing. Yet, the regulatory obligations are consistent while the world is still adjusting. What sort of experiences are your clients having about how they navigate the gap between the two?
Kelly: Yes, absolutely, you’re correct. So, what the FCA did in May, 2020, was to issue guidance to firms in the midst of the pandemic, acknowledging the operational challenges they faced. Their staff were working from home, their customer channels were disrupted. What they specifically provided guidance on, which was very helpful, was not to reduce, or change their risk appetite in the face of COVID, and in the face of the impact of COVID. But to take a view on reasonably reprioritising, or delaying activities that would usually be in a BAU environment, such as their customer due diligence processes, such as their alert management. So, what they asked for was not for you to change your threshold, or change your trigger points of risk, but to change the way that you were prioritising how to deal with those alerts, how to deal with those operational impacts.
Julia: One of my favourite things about the conversation about financial crime compliance is that on some levels we’re talking, as you say on a quite a granular basis, about identity customer due diligence, as in know your client, anti money laundering. On a higher level, we’re talking about some really big concepts. The natural one people have been talking about has been the increase of cybersecurity, for example. But financial crime compliance plays an even higher role in society, beyond the banks as well. Can you just talk to us a bit about when we talk about financial crime compliance, what do we mean? Kelly, can I come to you first?
Kelly: At its heart, financial crime is the concealment and movement of the proceeds of crime or assets. What we talk about can seem very technical at times, but you’ll see it in the news every day, every week. That can be anything from fraud, which may impact yourself, your family, your vulnerable members of society, right through to drug trafficking, human trafficking, terrorist financing. It’s very tangible. It’s a real life risk. We just talk about it in different ways, depending on the media, or the forum.
Julia: Alan, I would say in your introduction that you’re talking to organisations about the reputational risks that they face when tackling some of these macro high level concerns as well. Is this what they’re talking to you about in terms of concern about the reputational damage at this very high level?
Alan: Absolutely. As Kelly outlined, not only is it a reputational, it’s a social imperative for it now. I think if you look back over recent years with enforcement actions, but certainly with the larger banks, you will have seen the negative press. That has a very detrimental impact in terms of investor confidence and ultimately share price. It’s absolutely essential that financial institutions do take financial crime compliance seriously, because it can have a very negative effect, or impact on the perception of the institution.
Julia: There are so many conversations I have either at conferences or talking to guests on the podcasts and various events that I’m involved with, where this question about trust comes up all the time. It feels like this very much plays into, do you trust the brand? If you know that they are all over their financial crime compliance obligations. And also, not just meeting them but properly managing them. I’m really intrigued. I want to get into the technology, Alan, you were talking about a project called RegSight. I’m really keen to hear a bit more about what it is you’re doing to help clients tackle this? I mentioned, this is all very cloud enabled, and light to deliver, etc. Talk us through what it is you’re offering to clients that help tackle these enormous problems.
Alan: The backdrop is we’ve been providing what we call obligations management services for four years now. Which is essentially providing our clients with a comprehensive list of financial crime compliance laws, regulations, and guidance. However, a lot of these solutions are very manual, it’s done in Excel, and there’s a whole host of usability issues. We thought there must be a better way of doing that, and that was really the genesis of RegSight. RegSight is a cloud-based obligations register. It provides an end to end solution across obligations identification, which we provide, that allows a finance institution to then conduct a very detailed and systematic gap analysis of their policies, procedures, and standards, back to the relevant obligations. Then on an ongoing basis, we conduct the horizon scanning. So, if there’s any changes to laws, regulations, and guidance, we update RegSight that provides a notification to clients. Just to mention the complexity and effort, Julia, we now have a team of six dedicated individuals, and there’s well over 200 sources that we need to check on a monthly basis.
Essentially, we have provided a much more powerful technology solution, which provides many more features and functionality than you would typically get. But more fundamentally it’s about providing senior financial trained compliance professionals with assurance that they are meeting their financial crime obligations, not only within financial crime compliance, but also within the business. There’s also use cases for audit teams and legal departments as well. We’re quite excited about the product. We launched it early part of this year, we’ve seen a lot of demand and interest in the product. We’ve had quite a number of new sales and we’ve got, probably, six or seven big financial institutions trialling it at the moment. The final point I would make, Julia, is there’s a very strong business case for deploying RegSight. Clearly, to undertake this work internally can be expensive, whether it’s developing a register, or maintaining it on an ongoing basis.
Coming back to this cost theme of how can financial institutions reduce costs? RegSight enables them to do that, and on average, we believe the cost reduction is around 60 to 70% less from deploying RegSight, versus undertaking the activity internally.
Kelly: That’s a really good point, Alan. What we are seeing is across the board in our financial institutions, a huge cost pressure at the moment, and a huge demand to utilise resources effectively. With a product like RegSight and using that technology, be able to free up those SMEs, that real subject matter experts in their field to work on their day job, and managing financial crime on a day-to-day basis in their institution. But also, work on the challenges that specific institution, or the opportunities that specific institution have.
Julia: It is about unlocking the opportunity as much as the discussion is about driving costs down, but it’s about unlocking those opportunities as well. It feels incredibly timely. It’s a slightly odd question. This is a question I ask all our guests, which is, and this is the world you inhabit. I’m looking forward to the answer. If there were a piece of regulation that you particularly pay attention to, that you particularly enjoy right now, what might that be? Alan, let me come to you first of all.
Alan: Well, that’s a good question, Julia. I can’t say I’ve got a favourite piece of regulation or legislation. What I would say is the UK has a very mature regulatory framework. I think we’re very fortunate to have a fairly prescriptive set of regulations, support and guidance. For example, we have the money laundering regulations. We have the JMLSG, our Joint Money Laundering Steering Group guidance, which provides guidance on the practical application of regulations. We also have the FCA’s financial crime guide, which is a fantastic resource in terms of, again, providing guidance and practical advice on how to file a requirement. That also includes good and bad practice. We walk across many other jurisdictions and we don’t always see that level of specificity and quality in terms of the guidance that’s available.
Julia: It’s incredible, isn’t it? Because, if you wind back, probably, 10/15 years ago, I’m not sure people would necessarily have given the same compliment to the regulator about their diligence in the way that they’re regulating. And when I’m talking to people around the world, this comes up a lot, which is very much seen as best practice. And as I was mentioning earlier about, It really blows me away, about the encoding of the regulation as well, as firms are looking to conduct their business on a cross-border basis, the importance of being able to get harmony and some control over other jurisdictions that are perhaps less organised as well. Really fascinating. So, come on, Kelly, I’m going to ask you the same question. What’s your favourite piece of regulation right now?
Kelly: Alan, touched upon it earlier in the discussion about one of the items that we always advise our clients is in order for these controlled environments that we help them implement and define to be effective, is the need accountability at a senior level. The senior managers and certification regime is one of my favourites if I can say that. It provides prescribed responsibilities and accountabilities for those senior leaders of our organisations on their conduct risk, and how to manage risk within their organisation.
Julia: Accountability is ultimately the driving message that I think everybody in the industry feels like they’ve woken up to, whether it’s around culture, or whether it’s around working with third parties and bringing in vendors. But it’s also the recognition that all of this sits firmly on their shoulders as well. Fascinating. Listen, everybody, I hope you’re enjoying this conversation as much as I am. My name is Julia Streets. This is StreetsTalksTo Plenitude. And I’m joined by Alan Paterson and Kelly Burgess from Plenitude as well. You could find the episode on streetsconsulting.com with the hashtag #streetstalksto. As we go into the last phases, I can’t believe how time canters by on these podcasts. I’m really keen to hear what’s coming up, not only for you, but also for your clients as well? Think about the road ahead. I alluded to the world of payments, the world of crypto. I know these are all areas that you’re looking at. Alan, let me come to you first of all, as you’re looking ahead, what are you particularly thinking about at the moment?
Alan: On a personal level, I am very much looking forward to spending some time with friends and family coming out of lockdown, as I’m sure many of the listeners are too. In terms of my role at Plenitude, I’m very much focused at the moment on the execution of our business strategy. There’s a number of components to that, which of course includes further development of the RegTech products. We are looking to expand into new sectors with our consulting and advisory services, in particular crypto. As you know, Julia, this is a hot topic at the moment, just given the exponential growth of crypto assets. Also, the adoption of crypto, not only the retail investors, but also institutional clients. Where we see the opportunity is there is still a lack of maturity around the regulatory framework. And this is an area that we are continuing to invest in at the moment, and indeed we’re leading various industry initiatives, one of which is through UK Finance. We’re quite excited by that area on the basis it’s evolving. As I say there’s a general lack of maturity at the moment, which always creates opportunity.
Beyond that, continuing to support UK Finance, we are taking a lead role on the development of the economic crime plan. There’s also some other industry initiatives that we are involved in from an insurance perspective. Lastly, our people strategy. We have an amazing team at Plenitude of very experienced industry professionals. However, we’re always looking to further develop them, not only in terms of their technical skills, but some of the softer skills, which makes a great consultant.
Julia: Well, it’s wonderful to watch your growth to go from strength, to strength, to strength, and actually it’s really comforting to know that you have a seat at the table. Particularly as people are figuring out before the regulation comes. When we’re thinking about crypto, and there are so many dynamics, as you say it’s a fast maturing market, but with a lot to figure out around standardisation, let alone the regulation. It is great to hear that you’re involved in those discussions and long may that continue as well. Just pushing beyond that, Kelly, just from your point of view of talking to clients, what are they particularly thinking about as they look ahead?
Kelly: They’re looking at new and emerging risks as well as implementing their current strategies. One of the items, and Alan touched upon this earlier in the call, is crypto assets. We’re working with UK Finance on a joint paper understanding and evaluating the risks associated with crypto assets. What are the risk typologies? What needs to change practically in an organisation? So, these are the types of questions that organisations are asking themselves, and how we’re trying to support them with that thought leadership. Getting ahead of where the regulator may go in the next round of regulation or updates, in order to prepare our clients for changes that may come their way and be more proactive.
We touched upon cost pressure earlier in the call. We’re seeing investment in technology, but also cost pressure from an operational perspective. There’s this very fine balance that needs to be struck between the onboarding and the utilisation of those technology solutions with the operational capacity, and the ability of organisations to support that level of change. That’s a really fine balance that we see a lot of our clients struggling with, and sometimes the pendulum swinging in the wrong direction. That’s where we come in and we assist and help those looking forward.
Julia: I have to tell you it’s really a fantastic conversation, because if you think about it, really in a fairly short period of time, we’ve not only explored the granular considerations that clients are navigating their way through in terms of getting on top of their financial crime compliance today. But also, thinking about the path ahead with these emerging asset classes and developments. But also, thinking to the highest level about why financial crime compliance matters. We think about terrorist financing, think about drug trafficking, human trafficking. These are all really, really important and critical issues that banks are having to tackle in terms of their reputation, and their market position as well. Thank you both so much. Alan, it’s been great to have you on the show. Thank you for all your thoughts.
Alan: A pleasure, Julia. Thank you very much.
Julia: Kelly, thank you very much for joining us today.
Kelly: You’re welcome. Good to speak with you, Julia.
Julia: So, if you want to know how to find out more about Plenitude go to their website, which is plenitudeconsulting.com. You can also, obviously, find them on Twitter and on LinkedIn. And thank you for tuning in to StreetsTalksTo. I’ve been Julia Streets, StreetsTalksTo Plenitude. Thanks for listening.
Kieron: This episode of StreetsTalksTo was produced by me, Kieron Yates, on behalf of Streets Consulting Limited. Streets Consulting is a business development, marketing, communications consultancy that’s focused on helping Fintechs from the smallest startup companies to some of the world’s largest global organisations. Everybody’s trying to innovate and everybody’s trying to grow. You can find this episode on Streetsconsulting.com and using the hashtag #StreetsTalksTo. We can be found on LinkedIn and on Twitter at @StreetsConsult. Thanks for listening.