Alexander Tsigutkin, group chief executive officer of AxiomSL, a data and technology firm that provides enterprise-wide solutions for regulatory reporting, talks about the opportunities in the industry and the application and potential of blockchain in regulation.
Alexander Tsigutkin: So we’ve been in this business of regulatory and risk reporting and infrastructure for the past quarter of a century. But particularly, over the last decade, since the financial challenges and problems of 2008, the whole world has been very much focused on how do we establish a better, safer system to avoid mistakes of the past. So, we’ve been in the forefront of the regulatory sort of say tsunami, and helping financial institutions globally, in Asia Pacific especially, as well as of course United States, has been the big undertaker of the new regulations starting with Dodd-Frank, and many of the stresses and things like that. So, we have seen how financial institutions have invested over the last decade so heavily into establishing a sound regulatory infrastructure, which draw a lot of the IT investment, a lot of their risk management investment, and a lot of their overall competitive and best practice, investment to these best practices to establish a greater transparency, disclosure. So, because of this investment, we see that the next few years, I will not look forward to ten years, let’s talk about two to three years…
Yes, so the opportunities are, in the area of establishing a much better data infrastructure to remove the silos. Many institutions think of new regulations as just another problem for us, they should much be looking at it more holistically because what you can envision those regulations that you need, the infrastructure that you need for Basel III. The infrastructure that you need for your treasury, for liquidity and or infrastructure that you need to deal with a new requirement let say, MAS in Singapore or APRA in Australia these new requirements are not totally separate in the silos from others that were there. And if you put a good infrastructure for sourcing the data, for aggregating information and reporting, you can leverage the same investment for anything that will make, first of all, less expensive to comply but also most efficient for your organisation globally.
So some of the approaches of course which I described a little bit earlier that you can use source data one time and use it for many purposes. So that’s removing the silos. You don’t have to repeat the processes over and over. On the other hand, there are some new evolving technologies that become available such as, clouds capabilities where certain institutions do not need to have a separate investment into infrastructure, they can just cabin to some of the newer technologies to achieve the compliance and, of course, these services that come with these: the manage services and everything else to do cloud...
...API’s into existing taxonomy approach where you get from regulators a certain taxonomy and if your technology is adaptable to these taxonomies, when the regulator makes some changes which will be inevitable, you don’t need to rebuild everything, you can just ingest the roles and you apply it to your underline data infrastructure.
I believe so, I believe so. This is where AxiomSL particularly invest into this collaboration across to different solutions, point solution, because we have a very solid platform that takes care of sourcing the information, aggregating the information, and reporting. So, in addition to regulatory coverage and solutions that we provide, a number of those newcomers in fintech and regtech space could also benefit from the same platform, from the same data because, as I said before, a lot of directed requirements are based on the same granular information that are needed for day-to-day compliance and regulations that we’re already doing for the banks. So, why not take advantage of the flexibility of Axiom technology and Axiom SL platform and create many of the APIs that we already have created to the core banking systems and to others to take advantage of that and have point solutions working together.
So, today Axiom SL has really achieved great success with Tier-1 big level financial institutions as well as to financial institutions like banks and asset managers locally in different regions. In APAC, we’ve done a great job in Asia Pacific particularly; a great job in bringing our technology to the big European institutions as well as local institutions in Singapore, in Hong Kong, in Japan, as well as Australia. We’re looking to expand this horizon and make our technology truly, some of the new innovation such as cloud, available to help institutions to cope with the new disruptive requirements like MAS 6-10 as well as APRA; and also be able to help not only big institutions but have the capabilities for the smaller institution who don’t have the same amount of assets to spend as the Tier-1 institutions. So, we’ve done a lot of work with local banks. There are a number of them who you can find on our websites but also it’s a community. We established a great community both with the regulators as well as the actual financial institutions, where we meet regularly and update them on what’s the new in regulations. Not only in Asia but around the world as you know this business is becoming a trend, so there are certain things travelling from different regions to Asia, others from Asia to other places. So, it’s really an opportunity for a global leader like us to help financial institutions to minimise the cost and to keep the best practices in place.
So, of course, regulators monitoring it very carefully. There’s a lot of controversy involved in that. For us, Axiom SL is looking into blockchain as the source of information for the future and when the blockchain becomes acceptable to the community and the regulators will be there to utilise blockchain technology and hyperledger as the input, one of the sources or perhaps this source of the information to be applicable to risk and regulations as well as the GRC, the entire GRC space. So, this is where blockchain would be useful in the future but it’s too early right now.
Yes. The regulations, even when the blockchain reaches its maturity, the regulatory potential and regtech is not going away. In fact, for now, it’s probably going to accelerate regulation rather than make it go away.