In my latest Fintech Interview I feature another company in the RegTech space. Meet London based ClauseMatch.
The company’s cloud based software automates the process for banks to prove they comply with regulations. This is done through a centralised cloud based platform that uses artificial intelligence to piece together different bits of information from different parts of the business.
“We centralise information that helps banks show that they meet regulations,” said co-founder Evgeny Likhoded.
Working as lawyer at a bank Likhoded realised that enterprises were stuck in the 1990s when it came to sharing information that could help them prove they comply with regulations.
His passion for technology and his understanding of the problem helped shape the company he created.
“If you think about how banks have operated for many years and all the regulation that has come out, it is very difficult for them to show that they are complaint with a regulation,” he said. “This is partly because people work in silos. Information is spread across the organisation and it is not easily accessible and centralised.”
He was living the nightmare himself. But while working in the legal department at Morgan Stanley he became involved in a project to introduce collaboration between departments to support compliance efforts.
During this project he thought it could go further and believed a platform that can bring the knowledge from the entire company into one place and automate processes would help banks become compliant.
After getting support from another lawyer, as well as some capital and began work on a prototype, which was completed a year later. He then left Morgan Stanley and with his co-founder established ClauseMatch.
This is when the company approached the market for feedback and it quickly turned out the company should take a different approach. “Initially we thought that it would be most suited in legal departments at banks but this turned out to be very difficult because the legal profession is very conservative,” added Likhoded.
The process got ClauseMatch on the map, said Likhoded, and in 2014 it got selected to part of Barclays’ first Accelerator programme run by Tech Stars. “This put us in contact with Barclays staff and mentors and that is when we pivoted the product to address more use cases, not just legal. We started working with compliance and risk professionals from Barclays and later BBVA when we won a challenge it set.”
It was 2015 now and the platform moved towards automating compliance and risk processes. “We help with compliance documentation and we use natural language processing and machine learning to link documents to the regulations they address,” said Likhoded.
In 2016 Barclays Bank became the company’s first customer with a global roll out of its platform. Over 1000 people at Barclays are using it.
After the Barclays contract was done ClauseMatch grew quickly from having six staff to 15 by the end of 2016. “We needed more customer support, quality assurance and product people to support that contract.”
Today ClauseMatch has 43 staff.
“We then saw that we can work with big banks and know how to deploy into big banks
It now works with a number of large banks but can only talk about its relationship with Barclays. Likhoded said the company is about to sign a deal with a challenger bank. “It is not just for big companies but pretty much any regulated organisation,” said Likhoded.
The company, which is currently only in London, at Level 39 in Canary Wharf, is looking to expand into New York and Singapore.
While the company is up and running now it, like any startup journey, has faced difficult challenges.
Likhoded said raising money was the most difficult part of setting up and he said any founder of a startup needs stubborn determination to continue even if they run out of money.
He said there are hard times when founders might think of giving it all up and going back to a 9 to 5 job. “When a thought like this comes in your mind just think that if you didn’t exist the problem you are solving would still exist and someone at some point will come and try to address it, so why not you?”
Challenges continue but change for any growing business. The biggest challenge for ClauseMatch today is adjusting to the slower process involved with working with bigger customers
Technical staff is always a challenge and there is always a shortage of people in data science and front end developers because everyone is looking for them, according to Likhoded.
“There are thousands of startups in London competing for the same staff.” He said big banks are not really competition for staff despite the high salaries they offer. “We have not lost a single person to a big bank. The type of people we try to hire are those trying to escape the large corporate world.”
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