So says Marcelo Hiratsuka, leading the forefront of Refinitiv’s global market strategy regarding Digital Identity technologies.
Please tell us a little bit more about who you are and your background.
My name is Marcelo Hiratsuka. I have worked within the field of banking and technologies for a long time.
Besides leading the forefront of Refinitiv global market strategy regarding Digital Identity technologies. I have experience with global banking and markets where my main objective is to empower Refinitiv customers to identify effective solutions that can ultimately differentiate from market competitors.
Prior to joining Refinitiv, I worked in Barclays, Morgan Stanley, Citigroup and HSBC managing multi-functional teams including technology, compliance and banking operations.
I’m also regularly authoring original and relevant articles related to digital identity and speaking at flagship summits events involving risk management, cost efficiency processes and technology.
What do you believe will be the main discussion point at this year’s conference SvD Bank summit and why?
An important point to focus on should revolve around guidance to get the global economy back on track. Any insight that could lead the attendants to create more business opportunities, improve their position in the market and beat the competition.
The COVID-19 aftermath has unprecedent implications that will reveal themselves sooner or later. Now it’s right time to get ahead of the competition by improving customer experience and seek process efficiency across the entire enterprise.
You will be providing insight into Digital Identity and e-KYC, what are examples of the consequences for banks not getting this right?
Simply put, they will cease existing.
The digital transformation is already here – those that are starting now, have little chance of survival.
For banks and all other financial institutions, the competition is even fiercer. Customers expect to bank, trade, invest right away. There’s absolutely no time for paperwork – everything must be instantaneous.
The rationale is trivial. The margins are getting thinner every day in every financial instrument, the only way to get a material profit is by achieving a significant volume of customers. And in order to do so, your e-KYC must be transparent and smooth. While meeting all regulatory requirements – that by the way, are getting more restricted day by day – the demand to achieve a simpler and straightforward process to open accounts and easy-to-invest is coming from customers – customers simply don’t accept inconsistent and bureaucratic procedures, and as a result immediately transfer their assets to competitors. All the sales efforts and marketing investment to get that customer is gone.
How has KYC and e-KYC awareness developed over time?
As I will briefly allude to in my presentation at the SvD Bank Summit I’ve managed KYC departments for several countries for major global banks. My daily work was to manage document requests, verify identities and approve/reject account applications based on the risk exposure of each financial product offered. I must admit, it was a terrible experience for our customers. At that time, they didn’t have any other option but to bank with us, but today, not just retail, but wholesale customers have many other options. That competition is excellent to the market, because it forces the financial institutions to seek improvements and most of the time, , the answer comes from technology. However, I’d strongly recommend to not just jump into the first vendor to implement your e-KYC solution. Experienced compliance folks agree that it’s not just about the technology but the reliability of the data and the resilience of support that a partnership can bring that will make the difference. Don’t get impressed just by a few technology tricks and artifacts – there’s still a strong requirement to keep the data and technology supported and updated by human beings. A factor that can only be delivered by a strong partner, a strong brand that will support your company on rainy days and won’t let you down.
In your presentation, you will talk about name efficient risk control as one important factor for business success, pls tell us more. What in particular is important and central when it comes to risk control?
Risk controls can be measured by its effectiveness, and that’s where most inexperienced risk managers aim, unfortunately. Most junior compliance officers, info security managers etc. tend to recommend controls that have an indisputable effectiveness, but they normally lack efficiency. Most of the time, they are not even commercially applicable given the financial product revenue.
So when it comes to risk control, I strongly recommend product teams to involve risk managers from the beginning before launching or relaunching any financial product. It will help to determine the viability of the financial products and the risk controls required.
How can banks stay two steps ahead of criminals in ensuring continued protection of Digital Identity and effective KYC?
Not a simple achievement. Criminals are not statically waiting for risk managers to move. They have a wide diversity of incentives and a lot of time to spend to perpetrate our systems.
Financial institutions should first understand criminals’ intentions and what incentivizes them so the investment on controls is focused and prioritized. Exposures will always exist and there’s no way to fix everything at the same time.
I’d recommend establishing a risk management strategy that protects the company’s flagship products first and align other control implementations along with priorities of the company. Obviously the three lines of defense have matured throughout the years and permeated by audit recommendations, they outline that key adjustments must be applied to keep a risk management strategy effective and efficient.
How do you see the potential challenges evolving over the next 5 or 10 years?
The challenges have evolved throughout the years, but keeping up with data and technology will become more and more challenging.
Those days when the internal IT team was enough to manage from strategy to support are gone. Most of the financial companies cannot afford or simply decide to not maintain a full-fledged internal IT team. The fragmentation can bring weakness to enterprises but can also build strong partnerships. Financial institutions that sometimes are seen as conservative have adapted to a certain extent to external partners. The trend will continue and demand banks to increasingly open and share their operations. Like a marriage in our daily lives, banks must trust their partners not just in the sunny days, but also when things go wrong. The challenge is solely to select the best partner.
In addition, regulatory compliance will get more intense and globalized. Whereas going forward, predominantly led by US and EU, other major markets will participate more in the regulatory landscape demanding protection of their consumers/citizens. An entropic environment won’t be a surprise and financial companies will need to carefully navigate throughout regulatory requirements if they want to reach cross boarding markets.
Listen to Marcelos presentation on how to structure your e-KYC to drive business opportunities at SvD Bank Summit 2021.