Digitising Regulatory Compliance for SMEs – Chionh Chye Kit

Chionh Chye Kit is the Co-Founder and Managing Director of Cynopsis Solutions – a RegTech startup providng AML/CTF solutions on the cloud targeted at SMEs. He shares his interesting journey on how his business pivoted to serve the SMEs especially the rapidly growing FinTech startups, and more.

Tell me a little bit about yourself.

I’m the Co-Founder and Managing Director of Cynopsis Solutions, a RegTech startup based in Singapore. I also operate a complementary Compliance consultancy service, CCK Solutions. Prior to these business ventures, I have close to 20 years of financial and capital markets experience in Asia gained largely from working in Macquarie Group and ING Bank. My last role with Macquarie was Managing Director and Joint Regional Head of Compliance, Asia. I started my career in an external audit role with PricewaterhouseCoopers specialising in the audit of financial services providers.

I am also engaged by International Compliance Training Academy (ICTA), Institute of Singapore Chartered Accountants (ISCA) and Chartered Secretaries Institute of Singapore (CSIS) as a lecturer and trainer in their various certifications and trainings in governance, risk & compliance and AML/CTF.

What is your business venture about?

Cynopsis Solutions is a RegTech startup founded in 2014 in Singapore. We focus on AML/CTF software to automate the manual process and digitise the analogue documentation. We hire locally and develop most of our products in Singapore. Our Software-as-a-Service (SaaS) products are deployed in the cloud with Amazon Web Services using industrial strength encryption, security technology and architecture design to ensure confidentiality and privacy of data is well segregated and protected.

The unique proposition of combining our deep regulatory and Compliance expertise with smart use of functional technologies allows us to offer very cost effective AML/CTF solutions to smaller and medium size financial institutions, professional services companies as well as FinTech startups. We believe that good and reliable Compliance software does not need to be expensive nor does it need to be imported. We have the expertise locally.

What is your mission at the outset?

When we started Cynopsis in 2014, our initial idea was to help do the “plumbing” (technologically speaking) for banks and insurance companies because we are aware of the inefficiencies and manual processes in these organisations with many legacy systems. However, we were quick to realise that as a startup, we cannot afford to have long sales cycle with the big boys. We also cannot build vapour-ware and expect people to just believe in us. More importantly, we needed to generate cash quickly in order to sustain our operation.

Hence, we shifted our focus to the under-served market of small and medium size financial institutions and professional services companies. These companies typically under-invested in technology and lack Compliance resources. In addition, the last 2 years saw an exponential increase in number of FinTech startups in Singapore and we identified this segment as a fantastic opportunity for us to provide cost effective institutional level Compliance solution tapping on functional technologies that people can understand and use.

How did you get your idea or concept for the business?

It’s really a combination of various things.

Firstly, because we have worked in the financial sector for a long time and understand the various pain points in the AML/CTF space. We know that large banks are simply throwing bodies and money at the problem over the last several years. This approach is not sustainable or effective even with deep pockets as they continue to receive regulatory penalties around the world. Some have realised this and started to scale back Compliance hiring.

Secondly, on the other side of the spectrum, smaller financial institutions are facing difficulties in attracting and retaining good Compliance Officers but more importantly, they have limited budget for non-front office spend. It doesn’t help that AML/CTF requirements became more stringent over the years and seem to be getting tougher in the future.

Thirdly, the FinTech revolution in Singapore over the last 2 years created a lot of demand for RegTech products because most FinTech startups do not want to do Compliance in the old traditional bank-like ways.

Finally, the raising of AML/CTF bar for the designated non-financial businesses and professions (DNFBPs) in 2015 helped to propel our drive to build a cost effective full case management tool that ticks many of the AML/CTF regulatory boxes in respect of know-your-customer (KYC) for the industry.

It’s all about timing and opportunity too.

What is unique about your business?

I think the unique combination of our deep regulatory and Compliance experiences with the choice of modern functional technologies is very attractive to small and medium financial institutions, FinTech startups as well as professional services providers. They do not see us as the regular IT/software vendor but as a trusted adviser in helping them better comply with AML/CTF requirements using technology.

If you ask anyone who is familiar with AML/CTF requirements regarding solutions available in the market, I believe 9 out of 10 will tell you that it is the commercial screening database vendors. But what they don’t tell you is the large amount of manual work and analogue documentation that goes on behind the scene. This may include printing the search results, reviewing and documenting false positives as well as creating a meaningful risk assessment documentation, audit trail and time stamping of work done. That’s a heck of manual work involved! We are agnostic to screening databases but we do work with 2 providers, Dow Jones and C6 Intelligence, where we believe their datasets are world class. We see this as an important part of KYC but definitely not its entirety.

Therefore, our value-add and our simple proposition of automating the manual and digitising the analogue makes us unique.

Who do you sell to and how do you get customers?

As said earlier, our current and target client base is quite wide and we focus on the lower segment of the market. In other words, we don’t chase after banks and big organisations. We are very proud to say that since we started selling our flagship AML/CTF product, Artemis in July 2015, we have more than 100 B2B customers with over 600 users on various versions of Artemis. They come from fund management, financial advisers, remittance companies, FinTech startups, trust companies, money changers, pawnbrokers, corporate services providers, accountants and lawyers.

Why will customers stay or do repeat business with you?

As of now, our customer retention rate is close to 100%. We believe in honesty and integrity. We deliver what we say on the tin and we believe that it will serve us well in the long run. We don’t over-promise and under-deliver. We are very grateful for the early adopters and believers of our products and we continuously improve our offering to serve them better.

Given our strong understanding of global Financial Action Task Force (FATF) requirements as well as local rules in each sector, we ensure that our product continue to meet these requirements and therefore help our clients get over the regulatory line better so that they can concentrate on their business. Furthermore, Artemis is a full-cycle case management tool that helps our customers automate and digitise the 3 key pillars of AML/CTF – Risk-Based Approach; Record Keeping; and Screening.

What have been the biggest obstacles?

Initially, the biggest obstacle for us was to stay focused and to build a product that fits the market ie. ability to use technology to solve a problem and get paid. There are many good-to-have ideas around but finding something that people want and will pay for is challenging. The other big challenge is to find and hire more good people. Because we are in a rather specialised field, it is not easy to find people who know and understand the subject matter, let alone to be able to sell the products that we build.

If you had one piece of advice to someone just starting out, what would it be?

Starting out a business is easy. Making it work is the difficult part. Everything starts with an idea but idea doesn’t make you any money. So the speed and ability to convert an idea into something that people can see, touch and feel is paramount. Simply put, execution is everything.

Do you have any final thoughts?

Although it is a tough journey, I believe that people can be more adventurous in exploring a road less travelled – be an entrepreneur. If you have a great idea to use technology to solve a problem that you are aware of, go talk to friends, mentors, industry players to validate your idea and try it out. There are many good people in the ecosystem. Singapore FinTech Association is one such example.

Who is your biggest inspiration or drive to do what you are doing?

My biggest driver coming into office every morning is that I know we are helping the under-served market and raising their regulatory Compliance standards. I call it promoting Regulatory Inclusion although I know that if given a choice, they rather be excluded from regulation. Unfortunately, life is not always a bed of roses.

What’s next for you and for Cynopsis?

As a relatively new RegTech startup and in fact, one of the very few operational ones here in Singapore, we believe the opportunity is fantastic for Cynopsis to become an established and trusted Singapore-brand and even able to grow our business regionally. We have 3 live RegTech SaaS products in the market right now and are exploring 2 more. One to redefine Compliance processes and the other to create better visibility and access to records. We will be experimenting with artificial intelligence and blockchain for these 2 new products. Stay tuned.

Chia Hock Lai

Chia Hock Lai

Chia Hock Lai is passionate about how technology is disrupting the way financial services are being delivered to consumers and businesses, and in the process making the financial system more efficient and inclusive.

Hock Lai has 18 years of experience in the financial industry, having performed roles in both business and technology. He graduated from the National University of Singapore (Real Estate), Nanyang Technological University (Infocomm Technology) and Nanyang Polytechnic (Fund Management & Administration).

He is also a Fellow of the Singapore University of Social Science, advisor to FinTech Startups and mentor to student FinTech projects.
Chia Hock Lai
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