LexisNexis: Cost of Financial Crime Compliance rises in APAC
The survey of compliance professionals identifies the factors affecting financial crime compliance and highlights spending trends, while also exploring the business impacts new regulations and challenges associated with the COVID-19 pandemic.
Across financial institutions in India, Indonesia, Philippines and Singapore, the annual projected cost of financial crime compliance is US$12.06bn for 2020, with India representing 46% of those costs. The largest year-on-year increases were felt by larger Filipino and Singaporean financial institutions.
All financial institutions faced unprecedented challenges last year, but firms that focus more of their compliance resources on technology realised both financial and process benefits. Those companies that had done more to transform and invest in digital invariably fared better, with improved risk management and more robust data. These firms were also protected somewhat from increases in compliance costs driven by regulatory needs.
For APAC financial firms that participated in the 2020 study, the cost of compliance was US$12.06bn, with India representing 46% of those costs.
Compliance Technology Reduces Costs
The report found that financial institutions that spent more on technology saw smaller compliance cost increases. The findings show that firms with above average compliance spend on technology are less challenged during the customer acquisition process.
"COVID-19 has undoubtedly impacted financial crime compliance operations and costs for financial institutions across the region," says Douglas Wolfson, director, financial crime compliance APAC for LexisNexis Risk Solutions.
"The pandemic compounded the current set of KYC (Know Your Customer), alert resolution and sanction screening challenges and contributes conclusively to significant cost increases among all banks. Additional regional and international regulations will continue to spur the need for greater internal controls and more comprehensive risk-management technology platforms that help ensure compliance and lessen financial crime compliance cost."
Most APAC financial firms expect COVID-19 to further impact compliance cost over the next 12 to 24 months, according to the report.
Compliance professionals report the pandemic has impacted on these issues:
- Customer risk profiling – 63%
- KYC for account on-boarding – 74%
- Sanctions screening – 75%
- Efficient resolution of alerts – 63%
- Positive identification of sanctioned entities or politically exposed persons (PEPs) – 58%
- Resource efficiencies – 65%
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.