Interview with Kevin McGuinness, lead of the Client Lifecycle Management practice at First Derivatives

Kevin McGuinness leads the Client Lifecycle Management practice at First Derivatives. He forms part of the Consulting leadership team, with direct responsibility for the Client Lifecycle Management (CLM) practice – Know Your Customer (KYC), Client Onboarding, Transaction Monitoring and Data Remediation services across the wider Anti Money Laundering (AML) agenda. At present, the firm has around 250 consultants in the CLM practice delivering programmes of work both on client sites and from its own near-shore delivery centre in Newry, Northern Ireland.

We spoke to McGuinness to hear how FD and its customers have been dealing with the changes and challenges thrown up by the Coronavirus pandemic, and the role agile technology plays in future-proofing the financial sector.

 

You’ve been working in the financial services sector for more than 15 years now, over which time the pace of change on the technology side has been relentless. What would you say have been the biggest changes in the sector in relation to the impact of technology?

I started off my career with RBS back in 2006. At that point, the controls around customer data and the framework around how you satisfy those regulations – to say they hadn’t even matured would be wrong. They hadn’t even emerged. When the financial crisis came in, there was just that drive for transparency. It meant everybody had to become much more savvy as to how you store client data, how you leverage that data to make sure that you’re only asking for the correct information and protecting the customer experience.

The result – KYC – initially and unfortunately became a storing house for a lot of non-compliant and unstructured data. Which many institutions struggled to cleanse, fix and remediate at a later date.

However, over the last couple of years, certainly in the reg / FinTech / AML / KYC space, there is good technology driving competitive advantage, giving you that single client view to mitigate the margin for error and the exposure to risk. It’s much more agile and much more mature.

 

As the Client Lifecycle Management practice lead, what does a typical day look like?

I’m not sure there is such a thing as a typical day, but a really enjoyable part of my role is overseeing the FD CLM Innovation Hub, where we build technology accelerators – essentially tools that automate the operational flow, which adds value by way of efficiencies across our ongoing KYC delivery programmes.

So if we engage with a client and in one particular quarter, they’re having struggles migrating data from one program to another, for example, we will seek to then build out accelerators that will help them for that particular piece of work.

It’s that part of my role which also allows me to overlap with Kx and the Kx Streaming Analytics platform, which is part of First Derivatives, where we have Surveillance tooling supporting banks with ongoing AML compliance. My role would be to identify where Kx could come to the fore and give the bank more compliance or more operational efficiency.

 

What are the current key challenges for your clients, and how have these changed as a result of the Covid-19 pandemic?

The most interesting one for me is the Irish bank that we’re speaking to at the moment. They have what they would class as being their corporate banking book. But when you get in under it, it’ll be farmers, shop owners, those small-to-medium size enterprises that make a society tick. They’re going through their low-risk corporate KYC book at the moment, and need to have it refreshed for regulatory purposes by the end of 2022.

So they’re in that cycle whereby you write out to your customers, they would bring requested information into the branches, whether it be a new passport or somebody who’s been added on to the Board of Directors – all of that activity would be face to face largely, which with the current Covid restrictions isn’t practical and isn’t safe. The Bank has to transform and FD are supporting them exploring and migrating existing technology that has been used successfully in capital markets like electronic ID&V.

 

Will 2021 look very different to how it would have been if we weren’t in the ‘new normal’? Can you see any surprises around the corner your customers might face?

I think the amount of change that has come their way over the past seven to eight months, and the fact that they’ve adapted to the new norm as well as they have done, tells me that the industry as a whole can pretty much go wherever it needs to be taken. I have more concerns with the regional retail banks. For people who may not be as comfortable and capable online, how can the banks utilise tutorials online to bring them up to speed with this new world of digital technology.

But I just hope there are no more curveballs coming the industry’s way.

 

How has technology evolved to support the collection of verified data and transaction monitoring? And how is this central to AML?

As the AML agenda evolves, it is very much transaction monitoring, it’s ensuring that somebody who’s set up an account hasn’t been manipulated and continues using facilities for its true nature and purpose. You could not do that without agile technology. The solutions that are in place at the moment are so sophisticated, that banks quite simply could not cope without it.

 

Kx’s integrated surveillance and supervision technology aggregates data across multiple sources and disparate formats. What does this offer customers?

Kx was designed over years of exposures to capital markets. The time taken to ingest, detect, alert and manage potential risks is business critical. As regulators require transparency around trading activity, our technology has the ability to very, very quickly reference previous trades, run data analysis on the industry, do natural language processing. We do our very best to identify bad actors and new trading activity that shouldn’t go undetected within the market.

Every single day of the week, we work in partnership with our clients to detect what the freshest threats may be, and then our team of data scientists will go back in and code an algorithm to pick up those anomalies, and to try and detect that faster and more efficiently.

When you’re doing your KYC reviews, our technology also has the ability to back-test every transaction almost instantaneously; anything that has been approved or mitigated as being non-risky in the past will not surface again for re-review. Those efficiencies within banks, the ability to get it right first time, reducing the number of false positives, are so important.

 

Kx is presenting at the Transform Finance Big Tech Virtual Event in February and at the Virtual AML & KYC Banking Summit for UK & Ireland in December. What’s in store for delegates attending that session?

Whether it’s face to face or virtual, getting together to understand common challenges and obstacles is so important – it offers us all the opportunity to cross pollinate our learnings and best practices.

We are also working on some exciting concepts on the Kx Surveillance side of the business around AML Back Testing and Cyber Security; I’ll make sure our data scientists have it ready for an exclusive demo.

 

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