This is a transcript of our interview with Evgeny Likhoded, CEO and founder of ClauseMatch.
You can watch the original video interview here
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, can you tell me a short story about ClauseMatch and why there was a need for your solution?
Evgeny: Well Boris, the short story about ClauseMatch was that we started ClauseMatch as a platform that would allow employees, allow people in compliance to work in a modern way on compliance documentation. And what I mean by compliance documentation is the process of creating a policy document which is complient with regulation and communicating that policy document to employees, is actually an extremely complex process within an organization.
Given that there are a lot of regulatory changes which are happening all the time on constant basis in relation to banks, there needed to be a central platform which will allow to manage that regulatory change process, creation of policies and procedures which are complied and then communicating them to employees in order to show to regulators and others that they have addressed the obligations.
Boris: Alright, can you explain what ClauseMatch offers to industry? How it differs from other compliance software providers? And what are some examples of your customers’ user cases?
Evgeny: I’ll give an example of number of banks and how they use the platform today. So the primary essential point for us when we start to work with organizations, we help to centralize the policy management life cycle and bring it to the highest maturity level of managing policies in a centralized way, communicating them to employees, keeping the audit trail of every change, every decision, every approval made on every policy change and then mapping those changes to regulatory obligations which are applicable to the bank.
So essentially what they end up with is a modern platform to manage policies in real time. Every update is tracked, every comment and every change is tracked, and then mapping it in a very granular level down to a paragraph on that the policy to the specific obligation in a regulation or an interpretation of that regulation by the bank at the granular level as well.
So essentially our client ends up with the picture where they have all of the regulatory obligations documented and managed, all the regulatory alerts managed as well in relation to regulation. And all of them are mapped to the policies and procedures, which are always up to date and then communicated to employees.
Boris: Alright, so on your website I saw a very nice reference from Barclays, “ClauseMatch helped us tackle challenges which a major GRC vendor we worked with couldn’t overcome.” First of all, congratulations on that nice note. We have spoken to many GRC vendors during these years and I wonder whether you can share with us some examples of what worked for you guys as opposed to these established GRC vendors in this particular example?
Evgeny: Well, one thing which always works for us is that we use modern technologies which provides real life collaboration. Especially in today’s world, especially now, when people are working remote and people are working from different places. It’s important for the platform to provide a way to collaborate in real time, to be updated and to see the single version of the truth of the document for example that they’re working on. And you don’t see those types of technologies used by incumbents.
I think the second part is that the use of artificial intelligence in a product, because if you try to think about how many regulatory obligations I have as a global bank, how many policies procedures I have and how many control I have in the risk system. And the relationships between them, there are millions of relationships that potentially can be there and it’s impossible for a person or a department to manage them in a dynamic way, so artificial intelligence helps there.
And I think the final point is our typical implementation, global rollout for a major global bank takes months not years. It takes 4 to 6 months to actually, from the signature of the contract to being here, and that is a significant advantage over the incumbent vendors as we’ve seen.
Boris: Alright, so we are currently in the midst of a major crisis, the most disruptive period to our society in our piece-time history. The impact on the public and the healthcare system is devastating, and our economy is facing the prospect of recession much deeper and more painful than in the crash of 2008. What do you see as the biggest challenge for compliance and risk managers during this time?
Evgeny: I think this time is extremely challenging and I think it hits all of us. Not just from the companies point of view but also personally, it’s definitely a difficult time. But in terms of just challenges and compliance and that what we’ve seen so far, one is the pace of change and the pace of having to make those changes internally.
On business continuity plans, on resilience plans, on coming back to work plans, we have to start thinking about those as well. They are now changing daily, and remember that global banks and global organizations have impact in every country which are affecting them differently.
It’s very difficult to keep track of them, but also to communicate to employees in those countries what they are supposed to do. It’s challenging to keep pace with these changes, so that’s one change.
The second challenge is that compliance officers don’t have tools traditionally. And now everyone has gone into remote and without any tools which helps them to centralize that communication between them, when they’re working, when they’re coming up with content, when they’re doing tasks. It’s challenging to keep track of who’s doing what and the flow of communication, so that’s the second challenge we’ve seen.
And the third challenge, those organizations who didn’t have a full work from home strategy, now have to accelerate all their projects that are in communications domain and that are in collaboration domain. I think a lot of organizations are finding that for example implementation of those projects can’t be accelerated, because suddenly companies that provide communication services, provide collaboration services are doing implementation for every organizations out there and don’t have the resources to do that.
Boris: To continue with your observation I think that digitalization of compliance and risk was a major trend even before the Covid crisis and what we see now is that this trend that’s just accelerating during this crisis. And people are working from home, organizations become more decentralized in their locations, and how they serve their customers, their rising pace and scope of policy, compliance and procedure changes happening daily or weekly. So risk and compliance issues become very important. Can you share with us what you see on your side about this trend? What are your tips for risk managers to stay the course?
Evgeny: Well I think we have definitely seen acceleration and decentralization initiatives within organizations so while we’ve seen a lot of software vendors had their projects delayed or cancelled, we actually had a number of clients which are accelerating the implementation and I would say right now any idea is a good idea. There are no bad ideas in a crisis because anything is better than staying frozen, that’s one thing and the other thing is bringing another relation at a much faster pace.
Thinking about new business models, reinventing products and services or just reinventing processes. This is the time when big leaps are made and actually all of the successful companies of today have done that in the last crisis, they have double down on innovation, they have reimagined how they do things and they have implemented different way of working.
Boris: Okay, my last question is something related to our community, what do you think Global Risk Community can contribute to the process of better understanding of this complex world of risk?
Evgeny: I think there could be a lot more collaboration within the industry. What I mean by collaboration is we‘re advocating for regulators to collaborate and regulators do have a different way of working as well and a different way of publishing rules and updating all of the regulated market participants but I think there could be a lot more collaboration within the industry between risk and compliance profession as well in terms of creating more innovation on data sharing, which is not competitive for banks in risk and compliance area, for using artificial intelligence and trade models on a much bigger data set between those institutions.
Because I think I’ve got a theory that if we had all the regulatory documents in one place and we had all of the controls in one place and all the policy and procedures in one place and compared them between all of their organizations and run artificial intelligence and natural language processing on top of this data set, we could very quickly train the model which could be able to identify gaps and actually suggest what does compliance look like with a particular regulatory document. But in today’s world without a massive collaboration push I think it’s pretty much impossible to do.
Boris: Thank you, it was a very special interview and very interesting to learn about your perspective. I wish you a great success with your future growth plans and I hope that our members will find this interview very useful.
Evgeny: Thank you very much Boris.