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On RegTech with Karen Malzard from ANZ

Tuesday 2 May 2017

Karen Malzard, Head of Risk, Superannuation and Insurance , ANZ talking on the panel at the the launch of the Regtech Association.

Karen Malzard is the Head of Risk, Superannuation and Insurance at ANZ. Recently, and with ANZ keen to make use of regulatory technology to assist with their regulatory priorities, Malzard attended the launch of the new Regtech Association and spoke to GRC Professional about her thoughts on the issue.

While the Association might be new, the idea of using technology to improve risk and compliance processes is not. Before RegTech, for example, there was legal-tech, which arose during the dot-com bubble era.

“We have a commenced a ‘proof of concept’ process with Red Marker,” Malzard told GRC Professional. “They have a piece of software called Artemis, a natural language reader. We are excited about that because it is able to read our website content and run analyses against a whole a lot of compliance obligations—whether actual legislations or regulatory guides, or notices issued by ASIC [Australian Securities and Investments Commission]. Red Marker then give us data that shows where Artemis believes we haven’t been compliant.”

Malzard added that ANZ is working with Matt Symmons, Director of Red Marker, and also director of the new association, to help educate Artemis on what is compliant.

“We are expecting to see a whole lot of false positives, and obviously, it will be quite conservative in what it tells us is non-compliant,” she said. “But as we feed back into that, it will learn. The advantage of using a RegTech company like Red Marker is that, firstly, we can do ‘proof of concept’ and do it really quite quickly and cheaply, and get in there and have a go.

“Secondly, Matt’s also working with our competitors. So, we are all going to feed in, and we are all going to help towards educating. And, while we couldn’t necessarily sit down with one of our competitors and work on this together, by having Red Marker there, helping to collaborate the information, we all can educate the system and help it grow smarter, faster,” Malzard explained.
Another advantage to Artemis, according to Malzard, is its ability to sift through large amounts of data, quickly. And, with one of ANZ websites running to 3,500 pages, it is a taxing activity to ensure each page is up-to-date with compliance regulations. Ultimately, therefore, the aim goes beyond efficiency; it’s about achieving better outcomes.

“Some of the tools on which the RegTech are working means they will be able to look at whole populations,” Malzard said. “Whereas, if we do it manually, we have to use sample data, pick samples and make decisions based on that. “

Thus the focus can be on developing the intelligence of the software, rather than just on choosing the sample.
 

How did you choose your RegTech product?
“We looked at where we’ve got some challenges, and we looked at where either the legislation is changing or where we are having to put more resources on-board, and asked ourselves, ‘Is there  a better way?’” Malzard explained. “Then, we moved from there to asking the question: who can help provide this?”

 “The fact that risk is getting involved with RegTech almost seems like a contradiction in terms,” Malzard said. “However, the risk function is realising that we are now facing a world of more compliance, of more scrutiny. At this stage, it’s about trial and error; we’ve gotten to a point where we are comfortable to do proof of concepts and see if it’s going to work, and we are comfortable that it initially might not work.”
 

What are the risks?
“We worked both with the vendor and our own internal security people to be able to contain the risks to something we found acceptable,” she said. “And ultimately, the investment in RegTech is something that needs to be done for any organisation that wants to be able to keep up with the changing risk landscape.”