Author: Melanie Lopes

There have been several moments in financial history where key decisions were made by dominant players, leaving smaller or less powerful participants feeling sidelined, similar to how smaller European nations felt after the Yalta conferences held at the end of World War II.

Bretton Woods in 1944, or more recently the Greek bailout in 2010 are other examples that come to mind. At Bretton Woods, the U.S. and the U.K. dominated discussions about the post-war financial system, leading to the creation of the IMF and the World Bank, as well as the establishment of the U.S. dollar as the world’s reserve currency.

Smaller countries had limited influence in shaping the system, and many felt they were expected to accept the rules set by the major powers. In the Greek bailout, Greece and other indebted southern European countries (Portugal, Spain, Italy) found themselves subjected to strict austerity measures imposed by the “Troika”—the European Commission, the European Central Bank, and the IMF. While these policies were presented as necessary financial discipline, many Greeks felt that they had little say in the negotiations. Germany, in particular, was dictating terms that prioritised financial stability over social and economic hardship.

At Reseo, we sometimes wonder whether the same feeling of powerlessness is present in many financial services institutions that handle AML/KYC verification processes. This feeling prevents them from fully digitalising these processes, and improving efficiency, risk mitigation and the experience of client service. We think that this sentiment, which we would call the Yalta-syndrome, is not a fatality because we have seen many innovative solutions brought to the industry to help automate and digitalise parts of the AML/KYC processes.

Reseo, operating as a go-anywhere digital corporate e-ID, is one of these solutions, next to various onboarding solutions adopted by many institutions. Equally, workflow management tools are utilised in the industry and AI and machine learning are plentiful. So, what is missing, causing many financial services companies to feel left behind?

In our view, the missing part is the ability to look at all these solutions in a holistic way, by implementing them in a collaborative and connected fashion rather than as individual solutions that are operating independently. Is this due to a tradition and culture of competitiveness, or a fixation on their own efficiency with losing sight of the bigger picture of the efficiency of the market and client services as a whole? Maybe, but seeing that the AML/KYC processing is still painfully inefficient and costly, there are reasons to believe that this paradigm no longer works. So, what then?

As an industry, we probably have to move from a position where we expect an omnipotent solution to address all issues attached to processing (for example procurement of AML KYC documents and data; verification and maintenance; risk assessment and reporting; and so forth, notwithstanding the quality of client service), to the recognition that bringing several solutions to work together can be addressing the processing inefficiency for all. We believe that the benefits of doing so far outweigh the cost of inertia.

For example, when we launched Reseo, we first designed our technology solution with a focus on fund investors and administrators alike, vastly improving their onboarding experience and efficiency. We then developed with Multifonds an API model that creates the possibility to interoperate with other technology solutions. As a next step, we have enhanced our model by collaborating with business processing providers aiming to further reduce duplication in the market. Is our approach unique? Maybe not, but it serves as an example of the change paradigm that the industry requires.

As we progress on our journey, we are certain that we will cross paths with other like-minded industry players, who are equally motivated to pull minds and resources together to get things done. Because the Yalta-syndrome is not a fatality.