ALT/AVE is a London-based RegTech company using Distributed Ledger Technology to reduce costs and combat the under-reported paper waste problem faced by financial institutions by offering a secure and sustainable digital solution for distributing highly regulated documents to their customers. When implemented, its solution will result in significant cost savings and a 95% reduction in paper usage and at least a 25g decrease in CO2e per document compared to postal delivery.
With the current digital alternatives proving insecure or not fit-for-purpose (and the financial services sector is currently estimated to distribute 5.2bn pieces of paper at a cost of GB£1.7bn a year, equivalent to 2.4 million trees), ALT/AVE’s Distributed Ledger Technology, docStribute, enables banks and other financial institutions to meet the strict regulatory requirements set out by the Financial Conduct Authority on how these documents must be distributed, without relying on paper.
Christopher is both founder and CEO of ALT/AVE. Prior to founding ALT/AVE, Christopher led digital transformation programmes at HSBC, where he digitalised the company’s customer communication infrastructure for retail banking customers across branch, call centre, and online channels. Christopher has worked with many senior product and regulatory stakeholders in various financial institutions to develop content and software solutions that facilitate e-correspondence with customers. Alongside many financial institutions, Christopher has also previously worked with some of the world’s leading brands, including Castrol, Coca-Cola, Adidas, and McDonald’s.
What are your views and insights on the use of RegTech today in wealth management?
Wealth management is a complex line of work – we know this at ALT/AVE; it’s our background. Chief among them is how to communicate key information to partners and customers and how to meet regulatory requirements in operating territories. These challenges are ones that we find ourselves coming up against them time and time again.
Old problems they may be, but they remain current as the sector finds itself up against a rapidly evolving regulatory landscape. New challenges are frequently posed by the regulators, and the cost of compliance is high. There is little to no margin for error when dealing in compliance as missing requirements is a high stakes matter like no other. That’s why new technology has been developed to enable the sector to stay one step ahead.
RegTech stands to solve these old problems with new and evolving technology. Distributed Ledger Technology is a revolutionary means of transmitting and storing information whilst protecting sensitive data, providing individuals with access to permitted information and data sets. For example, our product, docStribute, uses Distributed Ledger Technology to communicate information to customers. At the same time, it jumps over the many hurdles set in place by the Financial Conduct Authority.
This is a rather direct application; however, there are wider net positives for the wealth management sector should it opt to embrace RegTech in daily operations. At ALT/AVE, we have identified several main areas where our product improves the user experience.
Applying RegTech Distributed Ledger Technology in our case reduces costs through streamlining existing processes and mitigates the need for complex and expensive digital journeys. An extension of this benefit is reducing the environmental impact of a body of work through lower emissions via fewer digital or physical journeys. Technology stands to also mitigate the risk of non-compliance and, at the same time, reduce cybercrime by fewer attachments being shared, in the process reducing malware attacks. Concurrently, employee efficiency and customer experience will each receive an uplift through streamlined processes.
In our experience, the key areas of focus should be where RegTech operators can identify problems to which their skill sets can be of use. Take ALT/AVE, for example; our backgrounds are in banking and wealth management, and in communicating tightly regulated information to customers. Therefore we know that waste paper is a massive issue – the retail banking sector accounts for an average customer paper volume of 482 million per year – and we deployed our knowledge in developing a solution.
Building on this line of thought, the opportunities are boundless. As RegTech is a very young industry – with its tools and applications in a constant state of development – wealth management stands to benefit enormously via early adoption. Through onboarding these new technological solutions, wealth management as a sector has the opportunity to shape the RegTech ecosystem whilst harnessing its massive potential.
What solution(s) does your company offer the market and how do they help wealth management firms manage their risk and compliance obligations in a better way?
ALT/AVE has developed a product called docStribute, which, using Distributed Ledger Technology, enables banks and other financial institutions to safely and securely deliver heavily regulated documents to customers via email, providing a cost-effective and sustainable alternative to paper communication
Although there have been numerous advancements in financial technology in recent decades, many facets remain outdated and inefficient. It is a legal requirement set out by the Financial Conduct Authority in 2009 that “a firm must provide or make available to a banking customer appropriate information about a retail banking service and any deposit made in relation to that retail banking service:
- in good time;
- in an appropriate medium;
- and in easily understandable language and in a clear and comprehensible form”
However, due to heavy regulations surrounding the method of delivery, there is currently no easy way for financial institutions to digitally distribute these documents to customers. Sending documents in the body of an email, while not prohibited, is not favourable. For example, when sending documents as attachments, it can lead to corruption of data, increased likelihood of bouncebacks, or having an email marked as ‘spam,’ in addition to creating a vector through which malware can be propagated. Supplying documents as attachments can also allow the receiver to alter the text. To avoid this, many institutions resort to sending paper copies to the customer so as to ensure compliance. Not only is this costly, but it results in masses of paper waste with an environmental impact. According to a 2018 EY report, in 2017, financial services companies sent 5.2 billion paper documents to their customers in the post, representing an extremely significant and underreported environmental issue.
A development in the financial communications space has been the increase in the use of portals for customers to access information about holdings and investments. We have seen companies transition to portals – spending money on the infrastructure, as well as wider costs on the maintenance and continued development of such systems – and yet, still having to send paper files to customers in the place of the portals performing their role adequately.
That said, portals have been a great addition to the banking space and they are an especially welcome addition in improving customer experience. A more positive experience leads to better engagement with a service provider, and a more informed customer.
However, alarmingly for customers, some firms can alter documents within these portals, which raises serious concerns about the immutability of the medium. Two other issues to contend with are drop offs in customer engagement and ensuring the communication is prepared for migration to a new platform. Ultimately, portals are a net positive for financial services but they should not be burdened with regulatory responsibility.
This is where docStribute comes into play, as it can co-exist with the present portal system, whilst resolving regulatory issues and future-proofing the communication.
docStribute utilises a decentralised public network known as Hedera Hashgraph, a secure, shared database that everyone can read from and write to, and a faster, more secure alternative to blockchain. Hashgraph enables all participants within a given network to access their own identical copy of an asset while ensuring that the content cannot be altered in any way.
Using docStribute, financial institutions can send secure links via emails that direct the recipient to a digital version of the document in their web browser, which can then be downloaded if requested. docStribute streamlines the way in which these institutions communicate with customers, enabling them to utilize ALT/AVE’s ecosystem to send important financial documents quickly, securely, and, most importantly, meet regulatory requirements. This streamlined solution increases employee efficiency by improving productivity and freeing resources for value-added tasks, as well as offering customers a vastly improved customer journey.
Awareness surrounding corporate sustainability efforts has been heightened dramatically in the past decade, and ALT/AVE is working hard to support banks and other financial institutions in their efforts to fight climate change. Such initiatives include Bankers for NetZero, an initiative bringing together banks, businesses, and regulators to enable them to successfully support their clients, accelerate the transition to net-zero, and deliver on the UK government’s ambitions for addressing climate change.
Through the use of docStribute, ALT/AVE is helping to reduce the industry’s reliance on paper. Once set up, docStribute will reduce paper usage by 95%, accounting for a 5% bounce back rate where the best alternative is to distribute documents in the mail. For institutions that want to make clever savings, minimizing unnecessary paper use is a smart step to take. docStribute will reduce costs by up to 70% when utilized across a business network. In real terms, this presents a previously untapped set of savings that will count each and every quarter. Beyond the financial boost, adoption of docStribute will result in a comparative reduction of at least 25g of CO2e per delivery, where postal deliveries are estimated to result in upwards of 29g of CO2e per item compared with 4g of CO2e for docStribute emails.
Find out more about docStribute by watching our brief product video here.