Every single one of Australia’s Big Four banks have failed to prevent money launderers abusing their services at various times in recent years. 

CBA was fined a record breaking $700 million for anti-money-laundering (AML) breaches in 2017 – a short-lived record that Westpac eclipsed with a $1.3 billion penalty in 2020. 

While fines like these can be eye watering, simply complying with (AML) laws is a considerable drain on the profits of all four listed banks

“Banking and finance are amongst the most regulated industries in the world,” said Anatoly Kirievsky, Lecturer in Finance at The University of New South Wales (UNSW). 

“A typical finance firm is subject to literally thousands of obligations. Without a systematic risk-based approach to these obligations, a corporation will inevitably walk into a crisis.”

Rather than a crisis, many organisations, particularly in the financial sector are turning to third-party RegTech providers. RegTech is an emerging industry that provides technology solutions for effective compliance with regulations like AML.  

Boston Consulting Group recently revealed that Australia is home to 80 of the 600 RegTech businesses in the world. More specifically they said we’re ‘punching above our weight’ sitting just behind the US and UK with the third most RegTechs in the world.

Kyckr is one of those Australian RegTechs that’s helping organisations like the Bank of Ireland to meet AML regulations. Kyckr provides know your customer (KYC) services that are also used by businesses for customer verification, staff onboarding and data cleansing.  

Knowing who you’re doing business with is a problem that’s not going away any time soon according to Oleg Chuprinin, Associate Professor at the School of Banking and Finance at UNSW Business School. In fact, with the increase of decentralised financing (DeFi), it’s likely to cause more businesses more headaches. 

“This is the most rapidly developing and most speculative area so far. Services leveraging the blockchain and related technologies can offer financial products and risk management solutions that are impossible in the classical financial system,” Chuprinin said.

Chuprinin predicts that early adopters of tech disruption in financial services will enjoy network effects that enable them to break ahead of the pack. They’ll take customers from competitors and legacy institutions.

“The likely impacts include broader market participation in funding and lending activities, less formal and rigid credit risk assessment tools, erosion of banks’ profits and automated risk management solutions,” Chuprinin said. 

UNSW’s 100% online Master of Financial Technology, gives finance and IT professionals the opportunity to outmanoeuvre their peers. One of the core units in the Master of Financial Technology focuses specifically on RegTech Applications for Banking and Finance.

Students develop an understanding of the types of requirements that apply to modern financial corporations and the nature of systems that address them. Not only can they prepare for a career in RegTech, but they’ll have the insights that could start up the next RegTech disruption.

“In a short period of time, students will develop both an intuitive and technical understanding of the key tension points between the old and emerging finance,” Chuprinin said. 

“They will learn how to evaluate opportunities and risks associated with some hotly debated new business models in funding and lending and make informed predictions about future market developments.”

Learn more about how you can develop the in-demand skills to respond to the technological revolution in finance with UNSW Online here.