Wayne Johnson from Encompass Corporation is here today to answer our questions.
Next generation KYC software for banking, finance, legal and accountancy
Our questions are in bold.
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Who are you and what’s your background?
Born and raised in Sydney, Australia, from the outset my fascination has been with the technology and the information industry. I founded my first company while I was still studying computer science at university; I employed a few fellow students on a government contract that we had won. After a stint in commercial IT management I founded Software Associates when I was 24, growing the company to 60 staff with offices in the Australia, USA and Hong Kong. Our main focus was enterprise integration; we successfully built and deployed major applications including telecommunications billing, Internet banking and corporate wide customer care for major banks, insurers and telecommunications companies.
Aside from Tech, I’ve also strayed to the dark side of finance and engaged in some property development, structured finance and private equity deals. But nothing compares to the satisfaction you get in building something from nothing that impacts an industry or changes the way things work.
Outside of work I love boating and spending time with my adult kids, when they let me.
What is your job title and what are your general responsibilities?
I’m the co-founder and CEO of Encompass Corporation. I’m responsible for day-to-day operational management, fiduciary controls, general management, HR as well as overseeing product development and technology. A growing company, I’m also involved in indentifying overseas business opportunities that will enable us to realise our goal of international growth.
All start-ups are an experiment, even if you don’t want to admit that to investors. The key thing is continually testing and validating your teams’ ideas with customers and making changes where you need to. This means hiring people who are smarter than you, then making sure you listen to them. Creating an environment where anyone can challenge an issue. But this only works if everyone has bought into the same vision (admittedly, a very overused term). Vision is really just ‘Why’. Why are we doing this? Why does it matter? If you understand ‘Why’ and it actually matters, it’s amazing how many people will have better ways to get there than you.
Can you give us an overview of your business?
Driven by the belief that the best decisions are made when people understand the full picture, we develop technology to automate Know Your Customer (KYC) policies and ensure adherence to Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) regulations in financial, legal and accounting businesses.
Currently we have two products:
• Encompass Confirm for banking and finance KYC
• Encompass Verify for legal and accountancy KYC
Our software employs powerful analytic algorithms to match multiple records and merge these to create a consolidated view. By connecting to trusted sources of information including government registers, commercial providers of information, and credit agencies, our technology instantly aggregates and cross-refers information from over a dozen of the world’s major data providers in real time, enabling KYC checks and onboarding processes to be completed more than 10 times faster and with far lower costs and error rates than manual processes.
Founded in Australia in 2012 and launched in Glasgow in 2015 we now employ more than 50 staff of which over 30 are in the UK.
Tell us how you are funded.
We have been fortunate to attract a very supportive group of shareholders both in Australia and the UK. Our launch in Glasgow in 2015 was supported by Regional Selective Assistance Support from Scottish Enterprise. Last year we secured £1.8 million in funding from Scottish Investment Bank as part of a £3.6m co-investment with Adcock Private Equity Group. To date we have raised over £15m in capital and R&D funding.
Why did you start the company? To solve what problems?
For any startup up to be successful you have to be clear on the problem you want to solve. For my business partner Roger Carson and I, identifying that problem was easy: Encompass was founded after we were defrauded in a property investment. If we’d had the full picture on the people and companies involved, then this loss would never have happened – and that brought home to us the power of having the right information for the right sources easily accessible. Encompass was founded to ensure the same couldn’t happen to others.
Our research suggests most major international banks are spending between £700m and £1bn annually on financial crime compliance. As one commentator noted ‘too big to fail’ has resulted in regulations that are ‘too complex to manage’. Our software enables businesses to meet this increasingly complex regulatory environment. One such is the European Union’s Fourth Anti-Money Directive (AML 4), which must be implemented by 26 June this year. This directive includes fundamental changes to existing procedures with potentially far reaching implications for business. Our software platform is designed to enable professionals to meet the demands of AML4.
Who are your target customers? What’s your revenue model?
Our target customers come from the banking, finance, legal and accountancy sectors.
Leading law firm GunnerCooke, is a good example of how we help customers: one lawyer reported how he had spent three hours searching records at Companies House to build an understanding of the history of an individual who was serving as a director at a company in liquidation. Encompass Verify enabled him to undertake the exact same search in just 30 seconds, the resulting visual analytics showing the same directors involvement in many failed companies. Additionally, the analytics also included information that the lawyer had initially missed. Not only had three hours of a lawyers’ time been reduced to 30 seconds, but the result also included a significant improvement in accuracy.
Our revenue model is designed to make it easy for customers to maximise the value they get from our products. We don’t charge any margin for the key data that is used or consumed through our platform. Just a simple monthly fee that matches the way a customer budget works. Automation opens up a world of possibilities
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
Despite all the problems besetting the Banking sector, if I had a magic wand I would wave it at the political sector first.
What is your message for the larger players in the Finance industry?
CIO’s know that internal development projects fail more than they succeed, that the cost of change is often way too high for the business benefit. Even if they are deployed, the cost to evolve and maintain in-house platforms becomes prohibitive over time. There is a world of great technology out there that can run critical business functions. The new more agile players are turning to Fintech and Regtech vendors for core operational platforms to gain market share. And it’s working. CIO’s need to stop thinking in multi-year planning cycles and move towards more agile processes and change the way they procure, integrate and deploy solutions. Otherwise the powerbase that CIO’s have enjoyed in the past will continue to erode. Business will increasingly bypass traditional IT and Procurement to deploy solutions that demonstrate immediate business benefit.
What phone are you carrying and why?
Actually I carry two iphones, one for each hemisphere. It’s a pity Apple don’t have dual SIM card phones.
Where do you get your industry news from?
Bobsguide, FinExtra, FinTech Times, Tech City News
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Yessi Bello Perez @yessibelloperez Young up and coming reporter from Tech City News. Great mix of humour & industry insight
Karla Friede @KarlaFriede Good for highlighting those must-read articles with a particular focus on women in tech – something we encourage
Oliver Bussmann @obussmann One of the most influential voices in Fintech.
Can you suggest the name of an Angel Investor or VC that might be interested in being profiled?
Scottish Investment Bank, Adcock Equity or Maven Capital.
What’s the best FinTech product or service you’ve seen recently?
Actually there is some really great machine learning and AI tech coming out, but what I really like are things that make my personal and business life simpler like OFX and TransferWise for currency exchange.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
The regulators know that the cost of compliance is just too high, and it is increasing. Either the Regtech industry succeeds in lowering the impact of regulation costs on the business or the economy will suffer the flow on effects. FCA will tell you that even they are concerned by the burden of cost placed on companies by the current regulations. Short of the new US President Repealing Dodd Frank and host of other regulations, The obvious prediction is we will see a number of new unicorns rise up out of the Regtech sector to become global players in the market.
One of the trends we have seen is the rapid creation of new brands – companies that have dislodged the traditional relationship that institutions have with customers. This is set to continue.
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