PassFort - Lucky coffees and notes on napkins

5 years ago, a conversation about anonymity in blockchain over a cup of coffee turned into a discussion about the commercial applications for this kind of technology in the compliance space. And PassFort was born.

Posted by: 
Henry Irish
  |  
Nov 3, 2020

Compliance is a slightly odd tech space to fall into, but Donald and I started working together because of a fortuitous coffee we went for about five and a half years ago. It's a cliché but we ended up doodling ideas on napkins and taking a business forward from there.

PassFort is a meld of our two skill sets. I was talking to someone about anonymity in blockchain as it was something I'd been interested in when I was at university doing my Masters. Donald was listening and started talking about the commercial applications for that kind of technology in the compliance space.

We dabbled by looking at compliance issues in the blockchain space, but quickly we realised that while blockchain was the cool new FinTech kid on the block, actually the same problems extended across the entire industry, not just in blockchain. Compliance software hadn’t caught the technical revolution in the same way other business technologies had.

There was a massive opportunity and we went for it based on our backgrounds – me, as an engineer and problem-solver, Donald as a financial services professional who had in fact tried to build a compliance system at a previous start-up where he came up against roadblocks that weren't surmountable.

This set the scene for us trying to solve a RegTech problem together.

PassFort in the first instance

In the first instance, we approached creation of the PassFort platform as two people with a limited background in compliance. I’m very much an engineer, so I solved it like an engineer would solve any problem - looking at the regulations, saying we need A, B and C, and building something that did A, B and C.

This didn’t have any appreciation for the nuance in regulation though, things like risk and making sure processes are appropriate to the rest of the company - understanding the different ways that can fall apart!

The first solution we put together was pretty simple. Basically, it was an engineer's view of the regulation. If you do this check, this check and this check then you get a result. Everything since then has been learning why that simplistic model doesn't work, understanding all the places it will fall over and then developing software to handle them.

In terms of the value we were trying to sell at the beginning, that hasn't changed substantially. We wanted to create a digital compliance solution for regulated businesses starting out or those operationalising their compliance functions. We were and still are applying technology to compliance processes to digitally transform them; making them scalable, flexible and more efficient for regulated firms.

In terms of the difference between our solution now and then, it's been about finding out all the different ways compliance is a difficult problem to solve with technology. That's why we've got a sophisticated and much more powerful solution now.

Building from the customer up

Everything we have learnt and are learning comes from our customers. From the very beginning, any time we thought we had delivered a solution to a problem, we'd take it to clients and discover a bunch of minor or major issues with that. And that's the agile process we work to. It’s tight iteration cycles that help build the right product for those customers.

We might sit down as engineers and try to guestimate (I mean engineer) what we thought was the right solution to the problem as we understood it, but it's only when something is presented to a client you understand what problem you're really trying to solve and the amount of variability there is in how people approach things.

Variability comes from all over the place with compliance. It comes from a client’s business requirements, from their industry, the people that work in the business, it comes from risk appetite and jurisdictions. The only way you can really get a feel for that and understand it properly and then understand the right solution is by talking to clients.

Evolving RegTech for evolving businesses

RegTech is becoming competitive, but it's still a relatively nascent market. What sets PassFort apart is how the product scales with a client’s business.

PassFort has been deployed into very small start-ups; people who sell one product in one jurisdiction to a small number of customers. And it's good for that purpose.

But one of the best things about the solution we've architected is we also capture the other end of the market - the hyper-complex, well established businesses operating globally who have complex product lines with complex customers, and hundreds of thousands of those customers.

PassFort can help businesses go through their maturation process. It can start simple and then iterate to become the solution it needs to be, then it’s always right for that customer's’ compliance processes.

Getting compliance “right” isn’t something that happens once; it needs to happen many times over many year, and we enable customers to do that.

And what of the next 5 years?

PassFort is a complete compliance solution, not a point solution. It’s a loss for us every time a compliance analyst has to go out of PassFort to do their job. We have built KYC and KYB as first-class citizens in the platform. Onboarding a company or onboarding an individual are very similar and we have tried to keep them as consistent as possible and that feeds through to the features we're building right now and will continue to focus on.

It’s been exciting to have worked on more complex, global compliance deployments already and the solution scales very effectively. The next area of focus for us will be one of completeness around the onboarding process.

We've focused so far on compliance and AML, but there are lots of parallel elements to onboarding that the compliance function needs to complete and these would be well served in the product. Everything from US FATCA compliance to fraud detection to credit risk. Bringing all parts of the onboarding decision into PassFort is where we are are headed next with customer lifecycle management.

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If you would like to talk to us about your compliance processes and how PassFort could help you with digital transformation, please get in touch. We would love to hear from you!

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