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The Connector Podcast - FinanceX #12 - Navigating the Convergence of Finance, Technology, and Global Regulation
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The financial landscape is undergoing dramatic transformation. From Asia's strategic pivot toward Europe to revolutionary approaches in fighting financial crime, every aspect of finance is being reimagined through technology.
At the heart of this evolution is a fascinating shift in global financial partnerships. Asian institutions are increasingly looking to Europe rather than the US, seeking stability and complementary strengths. This creates a powerful synergy: Asia's cutting-edge digital solutions and agility combined with Europe's robust regulatory frameworks and risk management expertise. Projects like Singapore's collaboration with the European Investment Bank on DeFi for bonds showcase how these partnerships are driving innovation.
Meanwhile, financial crime fighters are gaining powerful new tools. The groundbreaking AML-TREX initiative represents the first universal "language" for describing money laundering techniques in a machine-readable format. By mapping criminal tactics in a structured way, this open-source knowledge graph enables standardized detection methods that could transform how we combat the estimated $2 trillion laundered annually.
The Digital Operational Resilience Act (DORA) marks another pivotal change, bringing technology providers directly under EU financial regulation. For tech companies serving financial institutions, this necessitates a fundamental shift in operations – from incident reporting to resilience testing – creating both challenges and competitive opportunities.
Perhaps most revolutionary is the transformation in digital identity. India's comprehensive approach has demonstrated astonishing results: 1.35 billion Aadhaar IDs enabling direct government payments that have saved $3.48 trillion by eliminating fraudulent recipients. Video KYC and digital document storage have slashed costs by 90% while enhancing security. Similarly, the EU's electronic ID initiative promises stronger protection against sophisticated AI fraud, which could otherwise cause billions in losses.
These developments aren't just technological – they represent a strategic reimagining of finance itself. Forward-thinking organizations now view compliance not as a cost center but as a foundation for growth and innovation. Balancing these transformative technologies with necessary safeguards presents challenges, but also unprecedented opportunities to create a more efficient, inclusive, and secure financial ecosystem.
What role will you play in shaping this digital financial future?
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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com
#FinTech #RegTech #Scaleup #WealthTech
Introduction to Global Finance Shifts
Speaker 1Welcome to the Deep Dive . We're here to unpack some of the biggest shifts happening right now and today . Well , it's all about the financial world .
Speaker 2Which is just constantly moving , isn't it ? Especially with all the technology coming through .
Speaker 1Totally . It feels like you blink and something new has happened . So keeping informed it's tough .
Speaker 2It really is . That's why we've pulled together quite a range of sources for this .
Speaker 1Yeah , we've got industry reports , regulatory stuff , even some firsthand accounts . The aim today is really to sift through it all .
Speaker 2Yeah , and pull out the key insights right , Especially where tech rules and , you know , actual innovation collide in financial services .
Speaker 1Exactly . We want to make sense of why these big changes are happening . Give some clarity .
Speaker 2Absolutely , and we've got some fascinating areas lined up . We do , we're going to look at how Europe and Asia are sort of bridging the gap in financial innovation and this idea of a universal language for fighting financial crime . That sounds pretty significant .
Speaker 1It does , Plus how lending to small and medium businesses is changing .
Speaker 2And we can't ignore new regulations like Doro what that actually means on the ground .
Speaker 1Right and how AI is being used strategically in reg tech .
Speaker 2Plus that digital identity revolution , especially what's happening in India . It's quite a mix of perspectives we're drawing on .
Europe-Asia Financial Collaboration
Speaker 1OK , let's kick off with that Europe-Asia connection . Then it seems Asian finance firms are looking more towards Europe now , maybe less towards the US .
Speaker 2Yeah , that's a key insight coming through . There seems to be a strategic shift , geopolitics , economic changes . They're pushing Asian institutions and fintechs to see Europe as well , a more stable and strategically vital partner right now .
Speaker 1Okay , stability makes sense in the current climate . And there's a tech angle too , isn't there ? Asia's often seen as super agile with digital stuff .
Speaker 2Precisely Asia often leapfrogged older tech right . Yeah , so they have these very nimble digitally native solutions .
Speaker 1Whereas Europe has the established regulatory frameworks , the risk management side .
Speaker 2Exactly Deep experience there . So you get this interesting complementarity . Like Asia brings the cutting edge tech , europe brings the robust rulebook .
Speaker 1So it's combining speed with safety in a way . The sources mentioned three main drivers for this collaboration working well . First one was economic stability in Europe , mentioning DORA .
Speaker 2Yes , europe's relative economic stability is definitely a draw , and having clear rules like DORA , the Digital Operational Resilience Act , actually adds to that appeal . It gives a predictable environment to operate in .
Speaker 1Okay , and the second driver was that tech complementarity we just talked about , the innovation meets established rules idea .
Speaker 2Right Asia's agility meets Europe's mature regulatory scene . It means new ideas can be tested and scaled within a , let's say , safer sandbox . You potentially get a more robust end product .
Speaker 1Makes sense . And the third reason Europe moving towards a more unified fintech approach across the continent .
Speaker 2Yeah , that's crucial . Europe used to be quite fragmented , country by country . Now there's more of a push for a single market feel . That makes it much easier for firms , including those from Asia , to scale up across the region .
Speaker 1And technology adoption within Europe itself . There is that all in on AI report . Some interesting numbers there .
Speaker 2Oh , definitely it found something like 82% of top European institutions have AI projects running .
Speaker 1Wow , 82% . What are they focusing on ?
Speaker 2Mostly fraud detection , compliance , making sure they follow the rules and automating tasks . Yeah , banking is leading the charge , apparently , with around 60 initiatives .
Speaker 1And generative AI is popping up too .
Speaker 2Yeah , that's growing Companies like Klarna AXA . They're exploring what Gen AI can do .
Speaker 1But it's not all smooth sailing , is it ? There are hurdles in this Europe-Asia linkup . One mentioned was European firms needing to keep control over tech . They outsource again . Referencing Doar .
Speaker 2That's a big one . You use third-party tech , which is great for innovation , but you have to maintain oversight and control , especially for critical functions . Doar really hammers that home manager . Third-party risk .
Speaker 1And for the European fintechs themselves , the challenge is becoming truly pan-European , not just big in one country .
Speaker 2Exactly Going from a national champion to a continent-wide player . That takes different strategy , different scale .
Speaker 1The sources mentioned a connector role being important here . What's that about ?
Speaker 2Think of it as bridging the gaps . Someone or something that helps connect different markets , encourages collaboration , helps smooth out that pan-European growth . It's about making the whole system work together better .
Speaker 1And Europe could maybe learn from Asia's approach , things like sandboxes , public-private partnerships .
Speaker 2Definitely . Asia often has these quite dynamic collaborative setups , regulatory sandboxes . Let you test new ideas safely . Stronger links between government and industry can speed things up . Europe could potentially benefit from more of that .
Speaker 1Can we make this collaboration more real . There were specific examples given right Fintech , web3 .
Speaker 2Yeah , some good ones . Project Guardian , that's Singapore's MAS and the European Investment Bank looking at DeFi for bonds Pretty cutting edge .
Speaker 1DeFi for bonds .
Speaker 2Then there's R3 , working with Japan's SBI holdings on the quarter blockchain platform and Swift testing central bank digital currencies CBDCs with the Hong Kong Monetary Authority for cross-border payments .
Speaker 1Those are definitely major projects . So , wrapping this section up , europe really could become a central hub for global financial innovation .
Speaker 2The potential is certainly there . It's well positioned , yeah , but it needs that proactive engagement , building those partnerships and really committing to both tech and resilience Right .
Speaker 1OK , let's switch gears . This idea of a universal language for financial crime that sounds ambitious but maybe really
Universal Language for Financial Crime
Speaker 1needed .
Speaker 2Oh , it's desperately needed . The scale of money laundering is just staggering . Un estimates put it somewhere between $800 billion and maybe $2 trillion a year $2 trillion .
Speaker 1That's hard to even comprehend and that fuels all sorts of awful stuff .
Speaker 2Presumably Exactly , it's the lifeblood of organized crime , terrorism financing , you name it .
Speaker 1So why haven't we had a universal way to talk about it before ? What were the roadblocks ?
Speaker 2Several things really . Often a gap between the big ideas , the concepts , and what people actually do day to day in compliance . Okay , Plus , different banks , different regulators . They often have their own ways of defining risk , their own approaches very fragmented . Siloed almost yeah . And a lot of the official reports on how criminals launder money , the typologies they're written as text , not structured data . Hard for smaller firms , especially to turn that into practical detection rules .
Speaker 1That sounds incredibly inefficient . So AMLTRX , this new initiative , aims to fix that . What is it basically ?
Speaker 2It's quite clever . Actually , it's a free , open source knowledge graph . Think of it like a structured map of how financial crime works . A knowledge graph and it's inspired by cybersecurity . You know the adversarial kill chain idea , mapping out attack stages .
Speaker 1Ah , right , to understand the process .
Speaker 2Exactly , aml-trex tries to do that for money laundering .
Speaker 1Yeah .
Speaker 2Create a standard , transparent way to describe the tactics , the techniques , everything . The goal is to unify the whole AML world .
Speaker 1And it's based on a lot of existing knowledge . Sources mention analyzing over 1,400 documents .
Speaker 2That's right . A huge analysis of public sources FATF guidance , egmont group papers , regulatory reports gives us a solid foundation .
Speaker 1Can you break down the structure ? How does it map things out ?
Speaker 2Sure , it starts with tactics , the big goals like getting dirty money into the system . Okay . Then techniques , to specific ways they do it , like structuring cash deposits below reporting limits or using shell companies that's good . Structuring cash deposits below reporting limits or using shell companies , that's great . Then sub-techniques , even finer details and , crucially , indicators the red flags you might actually see in the data linked back to data sources like transaction logs or KYC info .
Speaker 1So it connects the high-level strategy to the low-level data points .
Speaker 2Precisely , and it also includes things like mitigations , what you can do about it , plus actors , risks , services and products involved , even the value instruments used , like cash or crypto . It's pretty comprehensive .
Speaker 1What makes AML-TRIX special ? What are its core principles ?
Speaker 2Well , first , it is the first AML-specific knowledge graph like this . It consolidates info from key bodies like FATF big advantage . Second , because it's machine readable , it bridges compliance know-how and tech . Think better AI training , data , smarter detection .
Speaker 1Right Computers can understand it .
Speaker 2Exactly . Third , it's free and collaborative . The community can help build and refine it . And lastly , it's applying proven ideas from fields like cyber to AML .
Speaker 1And it's getting noticed , Regulators like the Central Bank of Ireland , the BIS . They're interested .
Speaker 2Yes , that's a really positive sign . Getting attention from bodies like that suggests it has real potential . Being showcased at the BIS Innovation Hub Challenge is a big deal too .
Speaker 1OK , so from that global framework initiative , let's zoom into the banks themselves , the fin crime fighters , as the sources called
Banks as Fin Crime Fighters
Speaker 1them . It sounds like they're on the front lines of a constantly shifting battle .
Speaker 2Absolutely . It's like a continuous arms race . The criminals get more sophisticated , using coordinated scams , synthetic identities , fake people , basically Right Social engineering , and now even Gen AI deep fakes to trick people or systems . It's getting really advanced .
Speaker 1So the bank teams can't just react anymore . They have to be proactive , anticipating the next move .
Speaker 2Exactly . Defense now is all about being ahead of the game , using AI and machine learning to scan for weird patterns , learn normal customer behavior , spot anomalies in real time , catching things before they blow up .
Speaker 1And generative AI . It's a weird one , isn't ? It Helps the criminals , but also helps the banks fight back .
Speaker 2It's fascinating that dual use . Criminals use it for better phishing realistic fakes but banks are using it too . How so Well ? One source mentioned a big bang cutting case resolution time by 30% using Gen AI . Another uses it to simulate attacks , find weak spots Wow . And you combine Gen AI with things like behavioral biometrics how you type , how you move your mouse and device intelligence It'd become a powerful defense toolkit .
Speaker 1These fin crime teams sound like they need a real mix of skills , not just finance people .
Speaker 2Definitely skills not just finance people . Definitely you need data scientists , compliance experts who know the rules , cyber specialists , frontline analysts who see the trends first and , crucially , they need to work together , seamlessly break down those silos , as Conrad Kropinski from Aon Bank emphasized .
Speaker 1And that collaboration has to go beyond just one bank's walls right .
Speaker 2Oh for sure , Criminals collaborate , so defenders have to as well . Sharing intel between banks working with telcos on things like SIM swap fraud , plugging into vendor ecosystems for specialized tools .
Speaker 1Especially now with open banking and embedded finance . Everything's connected .
Speaker 2Exactly . A good bank isn't just protecting itself , it's protecting the whole network .
Speaker 1It's part of Looking ahead , AI built fake identities , deep fake videos . The threats seem quite sci-fi almost . How do banks prepare ?
Speaker 2It requires anticipating , simulating attacks , building resilience right into the systems , Things like scoring risk before a transaction happens , strong mutual authentication , continuous checks on identity during a session . Resilience by design , really .
Speaker 1Okay , let's shift focus again Peer-to-peer
P2P Lending Risks and Regulations
Speaker 1lending . P2p Sources talk about its potential higher returns helping SMEs , but also big risks , especially with unlicensed platforms .
Speaker 2Yeah , P2P has grown a lot . It can be attractive , offering investors different options and giving smaller businesses much-needed funding outside traditional banks .
Speaker 1But the unlicensed ones . That's where the danger lies .
Speaker 2That's the main concern . Yes , If a platform isn't licensed , it often lacks basic safeguards no proper rules for handling your money , maybe weak or no checks on borrowers , lack of transparency .
Speaker 1And if it goes wrong , if the platform misuses funds or just collapses ?
Speaker 2Investors often have very little recourse . It's incredibly risky .
Speaker 1The stats from Latvia you mentioned seemed pretty stark .
Speaker 2They really were . Millions lost to fraud linked to unregulated entities and the numbers are climbing 5.6 million in 2023 , already 2.7 million in the first half of 2024 . It shows the real world damage .
Speaker 1So regulation isn't just red tape here , it's essential protection .
Speaker 2Absolutely . It sets standards for conduct risk management transparency . It builds a safer environment for everyone involved .
Speaker 1And strong anti-money laundering rules are part of that on regulated platforms , KYC and all that .
Speaker 2Definitely Regulated platforms have to do proper customer due diligence CDD know who their customers are . Kyc monitor transactions . Work with authorities .
Speaker 1Verifying identity source of funds .
Speaker 2Exactly , plus things like sanction screening , checking against lists of restricted individuals or entities . It's all part of the package .
Speaker 1And investor money is kept separate on licensed platforms .
Speaker 2That's a key protection . Client funds should be segregated from the platform's own . Money . Plus , traceable transactions , regular audits , it adds layers of security and accountability .
Speaker 1It's good to see the industry collaborating too , like that alliance in Latvia working on AML and investor protection .
Speaker 2Yeah , that kind of self-policing and standard raising within the regulated sector is really positive , builds trust .
Speaker 1So the clear message for listeners is stick to licensed platforms .
Speaker 2Pretty much as Justine Berkova from Demidem Investments put it you want peace of mind that your money is safe and compliant . Choosing licensed is the way to minimize risk and avoid accidentally funding illegal stuff .
Speaker 1Okay , let's talk DOR-R , the Digital Operational Resilience Act , Coming
DORA and Tech Provider Compliance
Speaker 1into force soon . Big implications for tech providers serving finance .
Speaker 2Yes , january 17th 2025 is the date and it's a game changer . It pulls ICT providers , information and communication technology suppliers , directly under the umbrella of EU financial regulation .
Speaker 1So tech companies that maybe weren't directly regulated before now are If they provide key services to financial firms .
Speaker 2yes , and those deemed critical ICT providers could even face direct supervision from the European supervisory authorities . That's new territory for many .
Speaker 1How does that change things for banks choosing tech vendors ?
Speaker 2It adds new layers to vendor selection . It's not just about the tech specs or the price anymore . Banks now have to scrutinize a provider's transparency , their resilience capabilities , how they manage risk throughout their own supply chain .
Speaker 1So the ICT providers have to constantly prove they're compliant . That could shake up the market .
Speaker 2It could well do . Providers who can't meet these standards might struggle . We could see some consolidation favoring those who are demonstrably resilient and compliant .
Speaker 1Can you clarify what counts as an ICT service under DOR and give some examples of how providers need to adapt ?
Speaker 2Sure Broadly . It's digital or data services using ICT systems . Excludes old school phone lines . There are actually 19 specific types S-classes .
Speaker 1Okay and adaptations .
Speaker 2Big ones include incident reporting . Providers need to help their bank clients meet their reporting deadlines for major incidents , sometimes within hours . Tight deadline Very . Also , the register of information Providers have to supply detailed info about their services , subcontractors , where data is stored , etc .
Speaker 1Transparency .
Speaker 2Exactly and resilience testing Exactly and resilience testing . Providers will have to participate in their clients' testing programs Think penetration tests , vulnerability scans or run their own robust tests .
Speaker 1Sounds like it requires more than just ticking boxes A real cultural shift within these tech companies .
Speaker 2Absolutely . Resilience needs to be baked into everything they do , part of the company culture , not just an add-on .
Speaker 1So Doar raises the bar significantly , but for those ICT providers ready to step up , it could actually be an opportunity .
Speaker 2Precisely . If you embrace it , demonstrate that resilience , it becomes a competitive advantage . It builds trust with clients .
Speaker 1Let's pivot to AI and
AI Applications in RegTech
Speaker 1reg tech . Lots of buzz , but how do businesses actually start using it smartly ?
Speaker 2Yeah , it's easy to get lost in the hype . The key is a practical , user-focused approach . Remember , AI is basically about teaching computers to think like humans , finding patterns in data to make decisions . It's a tool , not magic .
Speaker 1And there are different kinds of AI being used in red tech .
Speaker 2Right , you've got predictive AI , forecasting , risk flagging , suspicious transactions , generative AI , creating things like reports , policies , maybe even synthetic data for testing .
Speaker 1Like chat , gpt , but for compliance , sort of yeah .
Speaker 2And then agentic AI systems that can understand their environment and actually take action to manage risks , more autonomous .
Speaker 1AI obviously has strengths processing huge amounts of data , spotting patterns but limitations too .
Speaker 2Definitely Its biggest strength is handling massive data sets far faster than humans , but it's only as good as the data it's trained on Garbage in garbage out . It can struggle with completely new situations it hasn't seen before , and the black box problem not always knowing why it made a decision is a real issue , especially in regulated areas where you need explainability .
Speaker 1So AI will get smarter , more integrated , but ethics are crucial .
Speaker 2Hugely important . Transparency , fairness , avoiding bias , privacy , accountability , safety these have to be front and center as AI becomes more powerful . In regtech .
Speaker 1For a business thinking about AI and regtech . What's the very first step ?
Speaker 2Understand your own needs . Seriously ask what are our biggest compliance headaches ? Where are we inefficient ? What are our long-term goals ? How could existing tools be better ? Don't start with the tech . Start with the problem .
Speaker 1And before jumping to buy new AI tools , maybe look at what you already have .
Speaker 2Exactly Maximize what you've got . Are there features in your current systems ? You're not using Upgrades available . Can things be integrated better ? Is more training needed ? Squeeze the value out first .
Speaker 1Okay , but if you do decide you need a new AI tool , what should you consider ?
Speaker 2Lots of things . How will it integrate with your existing systems ? What about data quality and migration ? Will you need to change your processes ? What training is involved ? And , crucially , is it scalable ? Will it grow with you ?
Speaker 1And it's not set and forget right . Ai needs ongoing attention .
Speaker 2Absolutely not . You need continuous monitoring , checking its performance , recalibrating the models , testing and always , always , expert human oversight . Ai is a powerful assistant , not a replacement for judgment .
Speaker 1That leads nicely into compliance foundations . The source is stress . Compliance isn't just a chore anymore , it's strategic for growth .
Speaker 2That's a huge mindset shift , but it's true . Regulations are expanding everywhere . But if you build smart compliance frameworks , it can actually enable growth . How ? So you can unlock new markets faster , speed up customer onboarding , reduce risks
LEI: Global Identity for Financial Transparency
Speaker 2that could derail you and build that vital trust with customers and regulators .
Speaker 1And customer due diligence . Cdd is the starting point Knowing your customer .
Speaker 2It's block number one Understanding who you're dealing with , verifying identity KYC for individuals , kyb for businesses , and assessing risk using a risk-based approach . So you focus effort where it's needed most . Tech can automate a lot of the verification now and it needs to be integrated right , not just scoring that updates , transaction monitoring , looking for red flags , handling regulatory reporting , managing cases when issues arise . If you have separate tools for everything , it gets messy .
Speaker 1What are the downsides of fragmented tools ?
Speaker 2Inefficiency , basically Wasted effort , things falling through the cracks . Higher compliance risk , and it just doesn't scale as you grow . The compliance tech market is changing fast too . Risk , and it just doesn't scale as you grow .
Speaker 1The compliance tech market is changing fast too , with AI and machine learning coming in , oh yeah .
Speaker 2We're seeing AI used for predictive risk models , better document verification , analyzing user behavior for anomalies , making reporting more dynamic . When you choose a vendor , you need one that's committed to keeping up with these changes . So compliance , done right , can actually be a business development tool . Absolutely , Think about it . Faster time to market because your onboarding is smooth . Easier expansion into new regions because you have compliant processes . A stronger brand because you're seen as trustworthy , More operational resilience it all helps you grow .
Speaker 1So the message is view compliance as a foundation for success , not just a cost .
Speaker 2That's it . Look for end-to-end platforms that can grow with you . Flexibility and good support are crucial .
Speaker 1Okay , let's talk about the LEI , the Legal Entity Identifier . Sources highlighted it as a tool against financial crime and for transparency . What is it for anyone unfamiliar ?
Speaker 2Sure . The LEI is basically a unique 20-character code , like a global ID card for legal entities involved in financial transactions .
Speaker 1Like companies , funds , etc .
Speaker 2Exactly . It came out of the 2008 crisis because regulators realized they couldn't easily see who was exposed to whom . The Financial Stability Board pushed for it and GLEI oversees it globally . It's the only regulatory-mandated global ID system for entities .
Speaker 1It started as a regulatory thing , but now businesses see value in it too .
Speaker 2It's evolved , Initially driven by rules like Dodd-Frank and EOR , the whole no LEI , no trade idea . But now firms realize it helps efficiency . One standard ID simplifies things . It builds cross-border trust . Helps make smarter decisions with reliable data .
Speaker 1And it's widely used . How many LEIs are out there ?
Speaker 2Over 2.8 million globally now , and there are more than 300 regulations worldwide that either require or promote its use .
Speaker 1Wow , for what kinds of things ?
Speaker 2All sorts Payments , data standardization , kyc , kyb , credit checks , even ESG reporting now and definitely sanctioned screening .
Speaker 1How does it specifically help fight financial crime , especially in cross-border payments ? That's a huge area .
Speaker 2Well , with cross-border payments projected to hit $250 trillion soon . Fragmented ID systems are a big vulnerability . The LEI helps because it's global , the data is verified and updated , it's neutral , the data is free , it follows ISO standards , has quality checks , you can challenge data errors and it's becoming interoperable with other IDs and business registries . Plus , big bodies like the FSB , bis , fatf , wolfsburg Group all support it and countries like India and the UK are mandating it for certain payments .
Speaker 1And there's something called the Verifiable LEI , the VLEI . What's that ?
Speaker 2That's the next step . Really , it's a way to have digitally verifiable credentials for organizations and their representatives online . Think of it as bridging the trust gap in digital interactions .
Speaker 1So it could make online KYC or sanctions checks , much easier and more secure .
Speaker 2Potentially yes . If regulators widely adopted , it could streamline a lot of processes and cut costs , while increasing trust .
Speaker 1Okay , finally , let's talk about India's digital KYC
India's Digital KYC Revolution
Speaker 1revolution . Sources called it a visionary blueprint . Sounds impressive .
Speaker 2It really is . India has been at the forefront of using digital identity to transform things like onboarding , compliance , but also financial inclusion and trust .
Speaker 1What's the foundation ?
Speaker 2It's built on the Jam Trinity , yonthon bank accounts for everyone , the Aadhaar unique ID system and widespread mobile connectivity , plus what they call digital public infrastructure . The scale is massive over half a billion Yonthon accounts , 1.35 billion Aadhaar IDs .
Speaker 1And that's had real impact , like on government payments .
Speaker 2Huge impact Over $28 trillion transferred directly to beneficiaries , saving the government around $3.48 trillion just by eliminating fake or duplicate recipients . Shows the power of accurate digital ID .
Speaker 1And KYC itself has been transformed Video . Kyc digital locker .
Speaker 2Completely Video . Kyc took off , especially during the pandemic Big cost savings up to 90% . Digital locker lets people store and share verified digital documents . Billions of documents accessed replacing paper .
Speaker 1Wow .
Speaker 2And on our face . Authentication is being used billions of times for contactless verification by hundreds of organizations .
Speaker 1And it's not just banking . Digiotra for airports EKYC set to .
Speaker 2Exactly . It shows the versatility . Digiotra cuts airport queues . Ekyc Setu is like a single gateway for different authentication methods again cutting onboarding costs , improving fraud detection across sectors .
Speaker 1And other countries are noticing , taking inspiration .
Speaker 2Yes , countries in Asia , africa , latin America are looking at similar models . The World Bank , undp , are referencing India's approach , and India has also brought in data protection laws the DPP Act , focusing on privacy .
Speaker 1So what can the rest of the world learn from India's experience ?
Speaker 2Key principles A few things stand out An infrastructure-first approach . Build the digital rails first . Using regulatory sandboxes to test innovation safely , like the RBI Innovation Hub . Having a clear consent mechanism for data sharing . And promoting open APIs for interoperability .
Speaker 1So it's more than just tech . It's a governance approach treating digital ID as a public good .
Speaker 2That seems to be the core idea . The big question now is how other countries can adapt and localize these principles for their own contexts .
Speaker 1Which brings us almost full circle to electronic IDs . Eids Sounds like the next wave after digital KYC .
Speaker 2Yeah , eids seem like the next step , though maybe still early days compared to things like liveness checks , but they promise streamlined onboarding , easier cross-border compliance and , importantly , better defense against AI-driven fraud .
Speaker 1That AI fraud threat keeps coming up . Deloitte predicted huge losses .
Speaker 2Billions yeah , $40 billion in the US by 2027 due to generative AI fraud . Eids are seen as a stronger defense .
Speaker 1How are they ? Stronger , more secure , better privacy .
Speaker 2They're harder to fake than physical IDs . They help prove you're dealing with a real human online and they can be more private . You only share the data needed for that specific interaction and often the data stays locally on your device , not stored centrally in the cloud like scans of plastic IDs .
Speaker 1So less risk of massive data breaches or misuse .
Speaker 2That's the idea . Plus , they're designed for cross-border use , like within the EU already . They're not just a digital copy of a plastic card . They're a new , more secure solution .
Speaker 1And the EU's IDS 2.0 law is pushing this forward , mandating acceptance by 2026 .
Speaker 2That's a major driver . Regulated businesses in the EU will have to accept these digital wallets . It adds complexity initially , though , because different countries are rolling them out at different speeds and there might be multiple providers . Businesses need to handle both old and new systems for a while .
Speaker 1Poland was mentioned as an early success story .
Speaker 2Yeah , they implemented a comprehensive EID system quite early , even before the EU mandate , and they've seen benefits Faster onboarding , better fraud prevention , more customer trust , giving businesses there a bit of an edge . It shows what's possible .
Speaker 1So the takeaway is embracing EIDs early is probably smart for businesses relying on KY Sample , especially with AI fraud growing .
Speaker 2It looks that way . For future proofing against sophisticated fraud , strong IID verification seems like the best path forward
Closing Thoughts on Financial Innovation
Speaker 2right now .
Speaker 1Well , that was certainly a deep dive . We've covered so much ground , from global finance links to regulations like DORA , fighting in crime , the rise of AI and this whole digital identity transformation .
Speaker 2It really highlights how interconnected everything is , doesn't it ? Global finance , tech advancements , the need for smart regulation , the evolving nature of crime and how we prove who we are online it all feeds into each other .
Speaker 1Definitely and , understanding these trends , it feels essential now .
Speaker 2Understanding these trends . It feels essential now , whether you're , you know , prepping for a meeting , just trying to stay current , or even if you're just curious about how the financial world is being reshaped . And it was interesting seeing the different angles Europe and Asia collaborating , india building this huge digital infrastructure , the push for universal standards like MLARIX and the LEI Different approaches , but all driving change .
Speaker 1We really hope this exploration gave you some valuable takeaways and things to think about .
Speaker 2And maybe a final thought to leave you with as Keck races ahead how do we strike that right balance , the balance between encouraging innovation and ensuring we have the regulatory oversight needed for trust and security in this digital financial world ? What role might you or your organization play in shaping that future ?