RegTech & Regulatory Reporting: Interview with Joanne Horgan, Chief Innovation Officer at Vizor

In the run up to our webinar ​​'Revolutionising Regulatory Reporting'​, delivered in partnership with ​​Vizor Software​, we had the pleasure of Interviewing Joanne Horgan, CIO at Vizor. We talk about why Vizor was founded, what sets them apart and the challenges within the regulatory reporting industry.

RegPac: Why was Vizor started back in 2000? RegTech and Suptech were not even buzzwords back then!

JH: Yes, I think the buzzwords haven’t been around that long, but the challenges of regulatory reporting have been. Some people see RegTech as a new thing but it isn’t really, just the term has become more common. Vizor was founded back in 2000, initially as a consulting company working with central banks and we found that there was no technology for supervisors to use for data collection. We were looking for a technology platform to help collect data from the industry in a more standardised way and there wasn’t really anything out there. That’s the challenge that we saw in the market.

RegPac: So solving the problem before it became mainstream in the tech world!

JH: Yes! Exactly!

RegPac: Vizor has been successful for the past 20 years, but what is the power behind that success and what challenges has Vizor also had to overcome in those years?

JH: Like a lot of companies, it has been a roller coaster. It’s been a long journey for us, we started as a really small firm in Dublin and we had some good initial growth before the financial crisis in 2008 which hit a lot of businesses pretty hard. The team that we have and the dedication they show to finding innovative solutions to help our customers was really what brought us through that time. I think that we also saw opportunities in those challenges and recognised the importance of operating on a global scale. Another driving factor is that we work very closely with our community of customers and see our relationship with them as more of a partnership.

RegPac: Just, expanding upon 2008, you said that the crisis was a challenge, but was it almost a blessing in disguise for Vizor with the amount of regulations that came out of it and increased focus on transparency and solutions around that?

JH: Yes, I think it definitely woke a lot of regulators up. The way they were collecting and using data was not efficient or automated enough. Our software platform evolved to help regulators introduce new data requirements in a quicker and more agile way. We also responded to the challenges in the industry by focusing on risk-based supervision and assessments. The post-financial crisis period introduced its own problems in the sense that the avalanche of new regulations and new reporting requirements caused a huge burden on the industry. In one way, our focus on increasing the efficiency and automation of data collection for regulators was solving one half of the problem which was good for us to be able to help with, but increased data requests caused a larger burden on the industry.

RegPac: From starting back in 2000, there has been a huge number of tech solution providers that have entered the market. How can a software company continue to thrive in this market?

JH: Focus on the customer problem. A tech company needs to be focused on the customer. Don’t just come up with a solution, don’t just go to market with a piece of new technology and try to find a problem for which to solve. Sometimes it happens, but real innovation is when you find a match between a problem and a solution, and can demonstrate an impact with that. If you just focus on one or the other, you’re not going to be successful. My advice would be to make sure, especially in the industry we’re in (financial regulation and financial industry), that you show that you understand the business problems as well as the tech. You have to be really interested in understanding the end-to-end lifecycle that your customer has.

RegPac: We referenced 2008 as being a watershed moment for supervisory technology but can you envisage the virus having a similar effect or further pushing firms to seek software tech solutions?

JH: Yes! I heard a joke recently, where a CEO asks another CEO who drove digital transformation in his company, and he replies “COVID 19”. I think the initial focus for a lot of people, not just in the financial services or RegTech industries, has been to make sure the business can continue to operate. Secondly, firms have to look at whether they have the software solutions to allow them to react to some of the new reporting requirements that have now been imposed in relation to COVID 19. We are seeing new SME loans and government assistance being offered via banks, which will need to be reported on. Regulators have to balance the need to rush through availability of credit with making sure it’s being done in a safe way, in a way that’s looking out for risks. So, it is undoubtedly pushing people towards digital transformation, whether that’s in regulatory reporting or just in their ways of working. Previously relied upon processes, which may have been manual, just don’t scale and will not work in the long run.

RegPac: With that, what kind of specific technologies may firms be looking to deploy? What is going to be the focus for firms in terms of the tech solutions they adopt?

JH: I think a lot of firms who would have been slow to move to the cloud, for example, will now move their data off their own premises. We have seen examples amongst our customers, that there is some data they just can’t access off-site. From an infrastructure point of view, the move to the cloud has been a little bit slow in the financial services industry compared to other industries, so I think the acceptance of the cloud as a secure platform is going to be key. Other technologies that have a lot of relevance in RegTech are artificial intelligence, robotic process automation, big data and APIs, but I think the technology has to come after you have sorted out the data swamp that a lot of banks and financial institutions seem to be dealing with. I think a focus on using technology to support data governance, standards and modelling should come first.

RegPac: So the focus is going to be on the data-aggregation side of things and the data-management and from there, once that is kind of sorted, that forms the building blocks for future technology.

JH: Yes.

RegPac: The APAC market itself is very different from that of Europe where you see some homogenised legislation but obviously, in Asia, different countries, different rules... can technology be the solution for banks and financial institutions as a whole to be able to report into one system which can then be applicable to multiple jurisdictions?

JH: Yes, I think it makes it challenging and even in Europe, it’s interesting. In the EU we have standardised data models but you still can have quite a lot of ‘flavours’ of that in different countries; but it’s definitely helpful when you have a particular legislation or data model which is applied consistently among a number of countries. When talking about APAC, there are a lot of levels of maturity in different countries, in terms of the type of data they collect or the type of data they’re seeking from firms, which makes it challenging. There are solutions with AI where you can text mine legislation and you can try to determine, in a more automated way, what your obligations are and what you need to report but again it really depends on the quality of the description that you’re getting from the regulators.

RegPac: ​So you almost get a chicken and the egg situation where you need one i.e. well-defined models for the other i.e. new technology?

JH: Yes. It’s definitely possible to have a relatively generic data model that a firm defines itself, that they can then use to feed lots of different reporting requirements. However, a lot of the mapping from that generic data model to the data models of each different jurisdiction is still very manual and costly. To really drive efficiency and to help firms move towards more automated reporting or more technical solutions, I think there are things that regulators need to do themselves such as legislative consistency and machine-readable data models.

RegPac: Vizor, having been set up in 2000, is coming up to its 20th birthday. What have been the biggest changes in this 20 years in terms of regulatory reporting? Is it simply the amount that you do have to report? Is it the granularity that you have to report or the vast differences in the amount of elements you do need to report?

JH: I think the biggest change we’ve seen is definitely the demand by regulators for more granular data. Typically, when we started many years ago, we might have seen regulators making changes in their reporting requirements once or twice a year, and then maybe they went to quarterly, and now what we see is regulators really want to be able to send out requests for data, or get data in a much faster way. I think that’s probably the biggest change in terms of volume and frequency from the regulators themselves in what they are demanding. Also, looking at the type of data being requested we are seeing a lot more duplication and crossover in the use of data. We have two business units in Vizor – regulatory reporting and tax. We mainly deal with global exchange of information on the tax side for FATCA and CRS data where we’re seeing consolidation globally. For example, beneficial ownership information is collected by multiple agencies as it is used for risk assessment, tax purposes, AML/CFT etc. Regulators are looking at a firm from multiple points of view - risk, financial, compliance, accountability - they can no longer be separated. I think what we’re seeing is that there will be more consolidation in regulatory standards and data models along with the move towards more granular data. So rather than having three different regulators collecting similar data, maybe we look at just one collection of that data used for different purposes and shared amongst government agencies for example. It might take another 20 years, but there definitely has been a change towards looking at data in a more consistent and consolidated way.

RegPac: ​Are we then going to see over the next years, greater seamlessness between the regulator and the regulated, in terms of the real-time access to readable data and also the fact that firms can, in real-time, internalise new regulation so there isn’t this constant back and forth between the regulator and the bank?

JH: I think that’s a good way to sum it up. When you look at this whole area in comparison to the way technology has been used in other industries, it still seems quite old-fashioned in the way that some of the communication happens (via PDFs/letters etc.). I think that increased transparency and machine-readable reporting requirements are needed so banks clearly understand what it is the regulator is looking for. That will help firms bring in more automation and reduce some of the ‘noise’. In the RegTech space, I also see a risk at the moment where banks don’t want to end up with 10 different RegTech solutions. There will be a move towards multi-purpose platforms; whether that is multiple solutions that can integrate in a seamless way via APIs or where we start seeing more consolidation of solutions where you have different parts of compliance and regulatory reporting coming together. I think that’s the way it’ll go.

RegPac: Thank you very much Joanne for your time and for these fascinating insights!

To go deeper into these issues and listen to the expertise of Joanne live along with other panelists, please register for our webinar on the 4th June at 5pm (SGT)​​ here​.