Regtech Silent Eight fights finance crime with HSBC
Part of the bank’s ongoing commitment to developing industry-leading compliance operations, it has brought Silent Eight onboard to streamline manual processes and statistics models, increase efficiency and decrease risk.
Currently available in over 150 global markets and operating from its additional global hubs in New York, London and Warsaw, Silent Eight is among the most promising regtechs entities worldwide.
Enhancing security processes
The company uses what it calls a “faultless KYC process” that leverages cutting edge linguistics capabilities and AI (artificial intelligence) to provide accurate name, entity and transaction alert solving. Silent Eight’s solutions are capable of scanning petabytes of data and providing a fully-rounded rationale for decision-making.
In practice, the process follows the same operational logic of a trained analyst, only with greater speed and precision.
“Given the growth in alert volumes, and unpredictable spikes driven by global volatility, we saw an opportunity with Silent Eight that would give us the ability to close alerts quickly and accurately,” commented Matt Brown, Group Head of Compliance Services at HSBC.
“Silent Eight’s business case was extremely compelling,” added Ben Rayner, Global Head of AML and Sanctions Screening. “We have chosen their solution as we believe it will provide significant business benefits across all our success metrics.”
Eliminating financial crime
Following an undefined trial period, whereupon the performance of Silent Eight’s solution will be assessed for its suitability, the bank will integrate the technology within its existing infrastructure.
“We’re delighted to find a partner that shares our focus on eliminating financial crime,” said Martin Markiewicz, CEO and Co-Founder of Silent Eight.
“HSBC’s dedication to this project is just one aspect of their tireless commitment to improvement, and to helping drive AI innovation across the industry. We’re proud to partner with them on their mission to make the world safer.”
Lloyds Bank fined by FCA for misleading insurance customers
In many ways a continuation of the Financial Conduct Authority’s (FCA) quest to eliminate ‘price walking’ from insurance, Lloyds Banking Group has been heavily penalised for seemingly misinforming their customers.
Specifically, nine million home insurance policyholders were contacted and encouraged to renew for the chance of getting ‘competitive prices’. Furthermore, approximately 500,000 customers were promised ‘loyalty discounts’. According to the FCA, both claims were unfounded and false.
The £90mn fine leveled at Lloyds is the largest since Standard Chartered Bank was ordered to pay £102mn in 2019 for breaching money laundering regulations.
It remains purely speculative about how volitional this error in communication was. Nevertheless Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, stated the institution would not tolerate any situation with the capacity to harm customers.
“Firms must ensure their communications with customers are clear, fair and not misleading. [Lloyds] failed to ensure that this was the case.”
The bank had largely started to remove phrases like ‘competitive prices’ from its official communications since 2009. However, the FCA found that renewal forms still included such wordings as late as 2017.
Since the renewal prices offered were likely to be higher than those offered to new customers, or even if the policyholder switched provider, Lloyds was in fact deceiving the recipients of these communications.
Battling against insurance price walking
According to reports, 87% of customers offered the aforementioned ‘deals’ renewed. Although the FCA will not be ordering Lloyds to reimburse them, the bank itself has paid out £13.6mn to 350,000 customers by way of compensation.
“We’re sorry that we got this wrong. We’ve written and made payment to those customers affected by the discount issue and they don’t need to take any further action,” said a spokesperson from Lloyds.
“We thank the FCA for bringing this matter to our attention and since then we’ve made significant improvements to our processes and how we communicate with customers.”
As the battle to end insurance price walking continues, companies must be careful to establish a new relationship with their customers.
With instances like California auto insurers overcharging $5.5bn during the pandemic still fresh, the public’s perception of the traditional industry could quickly sour and contribute towards its decline in favour of digital-first competitors.
To recover, incumbent insurers will need to price their policies more fairly, make cover management easier, incorporate tech-based solutions where appropriate, and consider customer loyalty as a prize and not a right