This is a transcription of our recent interview with Evgeny Likhoded, CEO and founder of ClauseMatch.
Boris: Hello ladies and gentlemen, and welcome to our interview with Evgeny Likhoded. Evgeny is a CEO and founder of ClauseMatch which provides financial institutions with the modern compliance platform to transform the regulatory change management process. Evgeny, thank you for you coming to our interview today.
Evgeny: Hi Boris, thank you for having me.
Boris: This is our second interview with Evgeny. For those who didn't listen to our first interview, I advise to go back and find one in our Risk Management Show podcast or on our site here. It was in the beginning of May last year. We saw high engagement on this episode and we are happy to invite Evgeny for the second interview.
Today we will do a deep dive into some of the major topics and what happened with ClauseMatch and how it developed from May.
We will talk about the important aspects such as work from home, about your Policy Portal and its impact on the market.
Evgeny, can you tell us a little bit what ClauseMatch has been up to since we spoke last year and what's something you or your team have recently achieved that you are really proud of?
Evgeny: Firstly, I have to mention that last year has been extremely challenging for many of us, not just from a company perspective, but also from a personal perspective - lockdowns and working from home and different circumstances and situations, I think put a toll on people, but from a ClauseMatch perspective, we actually have had a great year.
Last year we brought out a new module to our product, we also had a lot of engagements from a North American market from the US and Canada, and I think there were a number of reasons why our platform has been successful in that market, but also globally last year. When people went on the lockdowns and were working from home, there were a lot of challenges switching to that new mode of working, because obviously I think a lot of organizations had working from home policies, but they never dealt with everyone working from home.
We saw the rise of collaboration tools, we saw the rise of new tools being adopted very quickly and especially the tools which provide that transparency to work with people and how people can collaborate together when they're not in the same office.
On the compliance side we saw, especially in the US was a new guidance issued by the Department of Justice on compliance programs.
The Department of Justice is talking about the Compliance programs need to be dynamic, they need to be reviewed, they need to be communicated and not just be in a static way where, for example, you have a policy document, and then once a year it gets communicated. It needs to be dynamic. The entire Policy Management program has to be kept up to date, communicated regularly to the employees and companies need to measure engagement with their policies.
With today's tools, it's actually, either impossible or very difficult to comply with that guidance. So in June last year, we launched a new module of our product, the Policy Portal for employees.
Our main platform provides that ability to collaborate and work on documents in real time, and then collect feedback and approvals and track everything that happens around a development of the Policy document.
The new module provides is the following. Once the document is published and gets distributed out to the right employees, employees can engage with that new policy document. They get alerted when the new updates are issued. They can ask questions, they can also provide attestations, but most importantly will attract engagement with the documents from employees. And that has been a very successful product.
Boris: Interesting. Could you give us some examples based on your recent use case of a client where you were surprised by result, be it in a good or bad direction?
Evgeny: I would say we obviously had some negative news as well, a number of potential clients delay projects because of uncertainty on the market, but in the US we actually have the flurry of activity. There were four global financial institutions which we signed as clients last year from the US and Canada and the circle of actually bringing on our platform those global organizations has been much shorter than we have seen before. And that has been encouraging.
I think the reason for that is the business cases became easier to get approval for, especially in Compliance and in collaboration.
Boris: What is a commonly held belief in the Compliance space that you are strongly or even passionately disagree with, just to know your personal opinion.
Evgeny: Something that I disagree with? Well, I think there is a new wave and a revolution happenes in the Compliance space. And that revolution is underpinned by technology, which does bring modern tools to Compliance, but it requires empowerment for Compliance departments from the leadership.
And sometimes we still don't see that empowerment, and we don't see the ability for Compliance departments to actually bring technology into the organization. And that shows sometimes that there is less priority on streamlining compliance for your organization. But what we're seing is that more and more regulators are actually talking about Compliance being in the DNA of the organization and Compliance needs to be enforced, not just by the system of controls and monitoring, but also it needs to be in the DNA, in the culture, in the mission and vision of the company.
And in fact, we just had a great panel yesterday on this topic, and the fact that regulators are demanding that companies bring Compliance into their culture. But I think there is also the push from employees to actually have ethical companies because they want to work for ethical companies. They want to work for companies that do the right thing.
And there is that drive where people actually want to work at companies that have this in their mission.
Boris: So I'm wondering because your company is probably growing very rapidly. How are you keeping pace with managing it and what are the important KPIs you implementing, just to understand as a business owner or a founder to another founder?
Evgeny: We have aggressive or ambitious targets for this year. Last year, we have grown 130% and we also expanded to the US that's has been a really amazing to see. For this year we're looking to repeat our story of last year and more than double our revenues, but also we started hiring in the US, we're growing our operations there. We went from zero to 40% of the revenue coming from, from the US.
Another KPI is that last year we went from two and a half thousand users to over 160,000 users. So this year we want to bring our platform to a million users by the end of this year.
Boris: And you are able to be so flexible in one year to grow so fast?
Evgeny: Absolutely. Well, we're raising our next round now on the back of our success last year, and that round will help us to grow our commercial operations, but also more investment into R&D and machine learning, AI capabilities that we have, and obviously servicing customers around the globe, which we can do today, but we'll obviously prepare for a growth in the number of clients that we will have.
Boris: I know that the AI and ML was a real buzz that has been happening all these last years. What do you think are the most overrated technology trend and why people should stay away? Maybe not just jump on every trendy word, because I think the same ML/AI may be in different words where used a few years ago as predictive analytics, but now perhaps with more computer power it's called something else. Just to understand your opinion, how it transformed business.
Evgeny: I think, I’m probably the wrong person to ask whether there are overrated technologies out there, because I think technology is changing our lives extremely rapidly. And I think we underestimate what can be achieved in a very short period of time with the computer power and the developments in the AI industry. With the advancements of AI, for example, in the last 18 months, there were new models released by Google and Open AI, which have an unprecedented natural language processing capability.
So for example, Google's natural dialogue flow, which they released to the general public has actually been applied in the compliance space. And we had been experimenting with that technology and those algorithms and it's incredible what can be achieved today. But the advancements there will continue. So for example, today, if we have a big enough data set of your Compliance content, you are not just able to search for the content, but also you're able to ask questions and the machine is able to bring you meaningful answers from your Compliance content.
That's I guess the first thing which is already happening that can really release that burden from compliance officers and people who need to answer Compliance questions on daily basis. The second part, the second iteration of that will require a bigger dataset, but will allow the machines to actually have the ability to adapt to new changes.
And what I mean by that is, imagine that there is a change in regulation, and there is a policy document and a number of controls, which are related to that regulation. So the change in regulation can then drive the decision by a machine to actually suggest what would be the relevant changes in the policy documents, in the controls, which will be compliant with that regulation.
We're not there yet, but we are developing those types of capabilities whereby a machine is able to understand what would be a compliant new control or a compliant new policy in relation to that regulatory change.
Boris: Wow. That's really strong words for artificial intelligence. I'm doing a lot of interviews and in many of them we are talking about AI/ML.
Evgeny: Yes it's an exciting topic because we've done a lot of work with a couple of regulators so far. So one piece of work with Abu-Dhabi regulator, we actually took the entire regulatory rule book in financial services, we digitized it and then with machine learning we trained the AI algorithms to actually identify and tag individual sections in the regulation with the relevant teams, and also being able to identify obligations in the regulation.
The accuracy we achieved was over 90% of that exercise. This ultimately leads to the digital regulation, which will allow to publish regulations in a digital form, but also integrate and embed obligations from the regulations into their organization.
Boris: Is this in English or Arabic or both?
Evgeny: This is English.
Boris: This is very useful, maybe for our own perspective, as a social network for risk managers, as a Global Risk Community, what is your opinion on how can we contribute to this process of a better understanding of this complex world of risk and compliance?
Evgeny: I would say it's an exciting time to be in risk and compliance because the profession is definitely changing. The departments are changing and new technologies are being brought to the market and with implementation of those technologies, it doesn't just take away the administrative burden of today's highly manual work in so many of our compliance departments, but it also increases the job satisfaction.
It makes Compliance departments being viewed as business partners rather than a cost center, which often puts the break on what the business wants to do. And the use of technology by Compliance departments actually makes people within the organization, happy users of the Compliance content when they use the technology.
And with the adoption of our Portal, we have seen actually a feedback coming from users saying, this is so much better when I can find the exact information that I'm looking for. And I don't need to spend a lot of time to actually find that content or ask someone where that is.
Boris: Okay, fantastic. Thank you Evgeny for this interview, maybe I didn't ask you a question and you want to add something?
Evgeny: No, in closing, I would just like to say that this is an exciting time and I'm probably repeating myself, but this is an exciting time. And we're seeing that definitely the market is a lot more ready today for new technology and it's becoming easier for the senior management to embrace new compliance programs, to embrace technology in Compliance and Risk and to actually put that out to the top of the agenda for the organizations.
Boris: Fantastic. Thank you for your time and I wish you fantastic growth in the coming period and I hope to hear more interesting stories from you in the coming weeks.
Evgeny: Thank you very much. Boris.