accenture strategy day

Accenture Strategy DayRegTech: The Path To Innovation

Presented by

N J (John) KarantzisB.E. LL.M M.Ent FIEAust EurIng CPEng AdjManaging Director, iSignthis Ltd (ASX:ISX)

Case Study : iSignthis Ltd (ASX : ISX)

We are an ASX listed Regtech, offering payments and identity (listed March 2015).

iSignthis offers services globally to AML Regulated and non regulated online merchants, encompassing:

• Cloud delivery (AWS)

• Cyber security (PCI DSS & ISO)

• Risk and Compliance Services (RegTech)

• FinTech solutions (Payments)

• IDVaaS, KYCaaS and SCAaaS

• Digital resources are infinite, based on intellectual capital

• Economic scarcity exists through IP protection regimes, patents, design, copyright.

• Success depends up on :o a range of creative and useful arts interacting to create the Intellectual capital o IP protection regime, especially our patents in US, EU (PT), AU, SG, NZ, ZA with CN, KO, HK,

BR etc pending.o Continuous invention with innovation (3 new patent family’s filed in last 6 months)o scale / take-up through either demand growth or regulated growtho OTT philosophy with almost zero capital infrastructure.

iSignthis Relies On The Digital Economy

• Unregulated digital services success most recently based upon the Silicon Valley VC approach, driven by a large domestic US economy, mass marketing and generic (global) propositions.

• Regulated sector growth requires focused innovation, localized approach + specialized services > leading to online AML regulated sector services, including Fintech, and Regtech

• Many regulated sector businesses have extreme difficulty in porting their business model to online, due to regulatory requirements and/or impact on customer experience.

Regulated vs Unregulated Economy

• Traditional FI’s >> moving to greater use of technology.

And…

• Fintech is displacing traditional FI’s providers: o financial services, o banking / lending / crowdfundingo remittances / p2p paymentso C2b b2b payments, o eWallets/mWallets, o Securities/FX/Binaries/CFD’s /trading, o wagering / gambling

Regulated Growth?

• FinTech gives rise to a requirement for RegTech

• Fusion of skills to provide support to Compliance solutions o Identity (KYC), o Monitoring, o Analytics, o Reporting, o Audit,o Legals

o Networks/rails/securityo Back office systems for compliance audits (AML, Securities Exchange Reporting,

liquidity)

RegTech

• Multiple vendors• Different vendor mix in each country• Information fragmentation• Compliance challenges• Manual processes, with ‘follow the sun’ localised

team normally required.• High costs• Long processing delays with complex customer

onboarding processes• High customer abandonment

ISX replaces the fragmented process via a single API to present a single unified solution, spanning operations across all countries in which our prospective customers are likely to operate. Our services can be bundled or offered standalone.

Existing solutions: a fragmented process

ISX solutions

What Does a Fintech & RegTech Back Office Look Like?

@iSignthis, we started with a problem➥Which lead to invention (patents) ➥which in turn created an excludable business concept (paydentity™ )

We then innovated to create our product suite, by focusing on• Our Competitive advantages • Alignment to Regulatory requirements (and engaged with regulators and regulators and more

regulators…..)• Customer’s requirements• Customer value proposition

To create and execute a business model, whilst being mindful of the above factors and looking for further problems to solve

The Path To Innovation : How did iSignthis do it?

Video Games StoreProblem =

Card Not Present fraud

Public Consultations + Regulator engagement

Patented process Paydentity

Customers1

2

3

Anti-fraud tool

What Problem Needed To Be Solved?

vFinancial Services

• Virtual card issuer• Card acquiring

institution

vFinTech

• SCA• Payment vault• Payment gateway

vRegTech

• KYCaas (compliance)• Transaction

monitoring analytics (risk)

All of these rate highly on the GCI in the Fintech elements + have high competency / native English.

Fintech Frontrunners

New York (United States)

London (U.K.)

Singapore (Asia)

Tel Aviv (Israel)

Future Fintech Frontrunners

Oslo (Norway)

Amsterdam (Netherlands)

Copenhagen (Denmark)

Stockholm (Sweden)

Helsinki (Finland)

Fintech Hubs: Now and Upcoming

Global Competitiveness Index (GCI)

Pillar 1. Institutions

Pillar 2. Infrastructure

Pillar 3. Macroeconomic environment

Pillar 4. Health and primary education

Pillar 5. Higher education and training

Pillar 6. Goods market efficiency

Pillar 7. Labor market efficiency Pillar 8. Financial market development

Pillar 9. Technology readiness

Pillar 10. Market size

Pillar 11. Business sophistication

Pillar 12. Innovation

Innovation & sophistication factors

subindex

Efficiency enhancers subindex

Basic requirements subindex

Key for factor-driveneconomies

Key for efficiency-driven

economies

Key for innovation-driven

economies

Fintech Ready Economies

Albania Bosnia and Herzegovina Bulgaria Cape VerdeChina Colombia Dominican Republic Ecuador El Salvador Georgia GuatemalaGuyana Indonesia JamaicaJordan Macedonia, FYR Mauritius Montenegro Namibia Paraguay Peru Romania Serbia South Africa Suriname SwazilandThailand Timor-Leste TunisiaUkraine

Argentina Barbados Brazil Chile Costa Rica Estonia Hungary KazakhstanLatviaLebanonLithuaniaMalaysiaMexico Oman Panama Poland Russian Federation SeychellesSlovak Republic Turkey Uruguay

AustraliaAustria BahrainBelgium Canada Cyprus Czech Republic Denmark Finland France Germany GreeceHong Kong SARIcelandIreland Israel Italy Japan Korea, Rep. Luxembourg Malta Netherlands New Zealand Norway Portugal Puerto Rico Qatar Singapore Slovenia Spain Sweden Switzerland Taiwan, China Trinidad and Tobago United Arab Emirates United Kingdom United States

Stage 2: Efficiency-driven (31 economies)

Transition from stage 2 to stage 3(22 economies)

Stage 3: Innovation-driven(37 economies)

Source : The World Economic Forum, The Global Competitiveness Report 2013–2014

World Economic Forum : GCI

Source : The World Economic Forum, The Global Competitiveness Report 2013–2014

Australia # 21 Singapore #2Denmark #15Israel #27 Cyprus #58

So, Why Not Australia?

Customer ease Lower

costLower friction

Remote onboarding

“Last Century” Experian or ‘GBG’ style static, database search/match (UK, US, AU + a few more)

“Early Last Century “ Face to face checks Certified / Notarised: posted/uploaded documents*

• No dynamic means to include customer on request if not already a historic customer of a credit reporting agency.

• Requires cross check of other databases.• Typical coverage less than 60% of online applicants• Failure of database check leads merchants to revert

back to last century face to face checks or notarised documents

• Pay on attempt – not linked to success

• We are the new player on the KYC scene• The incumbents are using last century technology, which

has serious limitations in terms of coverage, accuracy and conversion rates

• ISX has significant capability advantages in these and other areas, in addition to our regulatory convergent ‘paydentity’ service

• EU’s 4th AML Directive (enforced legislation) now specifically encompasses the gaming/wagering sector and comes in to force 26th June 2017

• Pay on payment success – linked to our customers’ success

Global

Manual

Local

Automated

Automated

Identity Is Our Core: KYC

iSignthis Service Availability

[email protected]

Paydentity Core A better way

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Paydentity Authenticated PSD2 made easy

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Paydentity Verified 4AMLD automated

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Paydentity Protect Reverse chargebacks

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