©
Market Update and Vendor Landscape

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KYC Solutions, 2022

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dChartis Research is the leading provider of
research and analysis on the global market forrisk technology. It is part of Infopro Digital, whichowns market-leading brands such as Risk andWatersTechnology. Chartis’ goal is to support
enterprises as they drive business performancethrough improved risk management, corporate
governance and compliance, and to help clientsmake informed technology and business decisions
by providing in-depth analysis and actionableadvice on virtually all aspects of risk technology.
Areas of expertise include:• Credit risk.
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anti-fraud and anti-money laundering.
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• Regulatory requirements.
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• Asset management.

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In

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Page 2 of 26

05 OCT 2022

Authors
Phil Mackenzie and Ahmad Kataf

Market Quadrants Report

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Jump to: Market
MarketMarketupdate
updateupdate | Vendor
VendorVendorlandscapelandscapelandscape | Chartis
ChartisChartisRiskTech
RiskTech
RiskTechQuadrant
Quadrant
Quadrant®®®
andandandtables
tablestables | Methodology
Methodology
Methodology

Executive summary

The macro themes in the Know Your Customer (KYC) solutions market in 2022
are cost saving and efficiency, and include the following sub-themes:

Automation. Having automated relatively simple, repetitive tasks, financial
institutions are now tackling more complex processes, including customer due
diligence, transaction monitoring and remediation processes. This has led ®to astronger focus on flexible workflow capabilities and different automation
techniques, including no-code/low-code approaches, rules definition and robotic
process automation (RPA).

MarketlandscapeChartis RiskTech
Quadrant
Greateruse ofupdate
artificialVendor
intelligence(AI). Regulators
have become
moreandrelaxedtablesabout
Methodology
the use of advanced AI and statistics within KYC processes, andhave even actively encouraged it through forums and sandboxing events, where
regulators can see how well technological solutions work in a live setting.
Alongside this, however, institutions are considering more significant use ofmodel risk and benchmarking methods to ensure that AI techniques operate
within a contained and comprehensible framework.

©

In

More ways of testing KYC. Along with statistical benchmarking, financial
institutions are considering a greater variety of ways to quantify the success (orfailure) of their compliance processes in. False positives have been a significant
metric within the KYC process for years, but institutions are now thinking about
quantifying their level of compliance in terms of productivity and time. In
addition, online-only ‘neobanks’ and new types of financial institution are looking
at onboarding time and customer experience as differentiators. The numbers offalse negatives for these institutions are often more significant.
Services vs. technology. The line between service and technology firms in the
KYC space continues to blur. More service firms are entering the technology

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marketplace, and technology vendors are continuing to build out their service
offerings.

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Cloud. The blurring of the line between services and technology has beenenabled in part by the growing adoption of cloud technology. Lightweight,
containerized solutions can be deployed quickly, and their decentralized naturemeans they can be accessed by services outside the institution’s physicalperimeter.

Other notable themes in the market include:

Geographical variation within KYC processes, as institutions must increasingly
account for both global and regional regulations, particularly around sanctions.
Growing use of more sophisticated methods for quantifying counterparties,
including Know Your Business and Know Your Customer’s Customer.

Technology trends in the vendor landscape include the continued prevalence ofthe cloud and application programming interfaces (APIs) in solution offerings,
diversified workflow strategies, and the focus of some vendors on dedicatedidentity verification (IDV) solutions.

This report uses Chartis’ RiskTech Quadrant® to explain the structure of themarket. The RiskTech Quadrant® employs a comprehensive methodology of indepth independent research and a clear scoring system to explain which
technology solutions meet an organization’s needs. The RiskTech Quadrant®
does not simply describe one technology solution as the best – rather, it has asophisticated ranking methodology to explain which solutions would be mostsuitable for buyers, depending on their implementation strategies.

©

In

This report covers the following providers of KYC solutions: Alloy, AML Partners,
Appian, BasisTech, ComplyAdvantage, Diligent, Eastnets, Encompass, Fenergo,
FIS, Fiserv, iMeta, KYC Portal, LexisNexis Risk Solutions, Manipal Group,
NetReveal, NICE Actimize, Oracle, Pega, PwC, Quantexa, RiskScreen, S&P
Global, SAS, Shufti Pro, Sigma Ratings, Silent Eight, smartKYC, SymphonyAI
Sensa, Veriff, Vneuron and Zoloz.

We aim to provide as comprehensive a view of the vendor landscape as possible
within the context of our research. Note, however, that not all vendors weapproached responded to our requests for briefings, and some declined toparticipate in our research.

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Market update
Key themes for 2022

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Efficiency: more automation in the KYC process

Greater automation of the KYC and onboarding process continues acrossfinancial institutions, and remains perhaps the primary driver of solution
implementations within the KYC space. In the quest for greater productivity, fasteronboarding and more efficient use of their staff, financial institutions are
considering the use of advanced analytics and enhanced workflow capabilities.
However, the level of automation in institutions remains uneven (see Figure 1).
Jump to top©

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Figure 1: Degree of automation in the KYC process

Source: Chartis Research

Degrees of automation are driven mainly by the simplicity of the action being
automated and by the need for responsibility to be assigned to it. As a result,investigations and remediations tend to be relatively unautomated, as humandecision-making is a key requirement in the process.

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Firms have made significant investments in exploring how to automate theseareas. Data analytics, for example, can be used to identify high-risk customers
and transactions automatically. This can be done by analyzing customer data that
includes account history, demographics and patterns of transactions.

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The remediation process can be addressed via flexible workflows and RPA used
to automate task assignments and monitoring of progress. Document
management processing can also be used to store and retrieve remediation data.

AI: key developments

More encouragement from regulators

In response to more demanding compliance requirements, regulators havestarted to relax their attitude toward the use of advanced statistics by financial
institutions to relieve their compliance burden. This has been helped by a generalincrease in the adoption of these techniques in the wider technology market.
In October 2019, the Financial Crimes Enforcement Network (FinCEN) issued
guidance on the application of AI in anti-money laundering (AML) and combating
the financing of terrorism (CFT) compliance. The guidance is intended to help
financial institutions understand how FinCEN regulations apply to the use of AI intheir compliance programs, and to encourage the development and adoption of
innovative technologies to combat financial crime.

©

In

The guidance notes that financial institutions are turning increasingly to AI to
supplement their conventional AML/CFT compliance efforts. AI can help firms
identify and assess risk, detect and investigate suspicious activity, and comply
with regulations more effectively. However, the guidance also notes that the useof AI in compliance programs raises a number of potential risks. These include
the possibility of bias and errors in decision-making, the need for adequate datato train and test AI models, and the potential for AI-derived information to bemisused.

To mitigate these risks, FinCEN’s guidance recommends that financial institutions
take a risk-based approach to the use of AI in their compliance programs. Firms
should use AI-based solutions only if they have a clear understanding of the risks
and benefits involved, and should have adequate controls in place to address
those risks. In particular, they should ensure that their AI models are trained andtested on high-quality data, have mechanisms in place to monitor and assess the

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performance of AI models, and have procedures for addressing errors andbiases.

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The guidance also stresses the importance of transparency and communicationin the use of AI in compliance programs. Financial institutions should betransparent with regulators about their use of AI, and should ensure that theiremployees and customers understand how AI is being used in complianceprograms. Firms should also have policies and procedures in place to ensure thesafe and secure handling of AI-derived information.
FinCENFinCENDigital
DigitalDigitalIdentity
Identity
IdentityTech
Tech
TechSprint
SprintSprint have enabled
Such recent events as the FinCEN
institutions to examine how the implementation of technology to reduce fraud,money laundering and terrorist financing can be handled in a live environment.

Model validation and benchmarking now more significant

The growth of AI and advanced statistical techniques has been followed by acorresponding growth in the validation processes that surround them. Model risk
is the potential for financial losses caused by errors in the models used for
decision-making. In the context of sanctions screening and the KYC process,model risk can arise from inaccuracies in the data used to train the model,
incorrect assumptions about the relationships between the data variables, orerrors in the model’s coding.
The use of machine learning (ML) algorithms for sanctions screening could
reduce model risk by automating
theDigitalfeature-selection
andSprint
model-tuning
FinCEN
Identity Techprocesses. However, ML models are also susceptible to data-quality issues andoverfitting, whereby they can become overly responsive to noise in the data or
random changes.

©

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In order to mitigate model risk, it is important that firms use a robust dataset fortraining and validation, and that they monitor the performance of the model on an
ongoing basis. It is also important to have a clear understanding of the limitationsof the model and the assumptions made during its development. Morespecifically, there has been a heightened focus on scalable testing andvalidity/parameter analysis, which assess the sensitivity of a model to changes in
its parameters.
As such, within the analytics space, there has been a move toward vendors withadvanced statistical capabilities and a full set of validation and testing tools forthese capabilities, including sandboxing and simulation testing.

Page 7 of 26

Efficiency: the growing importance of alternative metrics
False positives are no longer the principal metric used to measure the efficiency
of KYC solutions in the onboarding process. Instead, firms are increasingly
focusing on productivity metrics, including time spent on the onboarding process,productivity gained from other areas in the business, and so on.

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Most onboarding processes tend to have high numbers of false positives: asolution flags an individual or entity as being high-risk, but further investigation
determines it to be low-risk. This scenario is a natural outcome of the near-zerorisk appetite that most major financial institutions have for sanctions andonboarding risk. By ensuring that their risk systems are as sensitive as possible,
they can try to prevent sanctioned entities from passing through their onboarding
screen.

However, more firms are now looking at the quantification of false negatives aspart of their onboarding solutions and strategies. False negatives occur when ascreening system deems an entity to be safe, but closer examination reveals it to
be a risk. False negatives have seldom been discussed within the compliancespace until recently, largely because they are difficult to detect. Once aninstitution has marked an entity as safe, that entity is typically not identified as arisk until some external factor reveals it as such. This, combined with institutions’
low risk appetite, has led to the view that false negatives are a relatively
insignificant metric.

In

Newer financial institutions (such as neobanks and crypto firms), however, havebeen moving increasingly toward the quantification of false negatives. These
institutions often have greater appetites for risk, and prioritize the quick andeffective onboarding of customers. This has pushed their risk profiles higher,
making them more inclined to focus on ensuring that individuals are not held up
in their onboarding process.

©

Outsourcing and the cloud

There are several benefits in using cloud-based services for KYC compliance.
Firstly, they allow financial institutions to outsource the storage and managementof customer data to a third-party provider. This frees up internal resources thatcan be better used for other tasks. Secondly, cloud-based services can be morecost-effective than on-premises solutions. This is because they require no upfront
investment in hardware or software, and can be scaled up or down as needed.
Cloud-based services also offer a high degree of security and reliability.

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Customer data is typically stored in encrypted form, and access is controlled
through user authentication and authorization. In addition, cloud-based services
can be accessed from anywhere, which is convenient for both financial
institutions and their customers. Finally, cloud-based services are constantly
evolving, and providers can regularly offer new features and capabilities on aregular basis.

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The growth in cloud-based solutions has been accompanied by an uptick inoutsourcing. Financial institutions are seeking to reduce in-house involvement in
non-core AML compliance activities by outsourcing them to external providers.
For many firms, outsourcing is a cost-effective method of managing AML
compliance and mitigating their risk of fines. The elements of AML/KYC activities
that lend themselves to outsourcing tend to be low-risk, with fewer decisionmaking or human-centric elements involved. For example, service companies arewell placed to manage such labor-intensive and routine tasks as customer due
diligence, enhanced due diligence and verifying customer identification. Only
when risk scores are particularly high are these processes typically redirected toin-house staff.

©

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Notably, when outsourcing, financial institutions do not cede ultimate
responsibility and control to the organization doing the work. Firms must
therefore be careful about which tasks they outsource, to ensure they stay incompliance with regulations. Final sign-off or initiating contact with clients (toupdate documents, for example) must be done in-house. Any activities that
include the filing of sensitive reports, such as internal investigations of suspicious
activities, are not conducive to outsourcing. These types of inquiry could involve
employee interviews, document evaluations and the preparation of reports, all ofwhich call for confidentiality. Figure 2 provides a more detailed overview of theactivities typically outsourced or performed in-house.

Page 9 of 26

In

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Figure 2: Outsourced vs. in-house activities during the KYC
process

Source: Chartis Research©

Other themes in the KYC solutions market
Geographical variation

Geographical variation is common in the KYC process. Because institutions mustaccount for both global and regional regulation, their risk profiles and compliancerequirements change from country to country. The level of geographic variation
has increased, and expectations are that it will continue to do so. While US
sanctions remain the primary driver for the market for compliance solutions, there

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is currently no comprehensive international framework for regulating sanctions,creating a great deal of variation across countries. This variation is likely toincrease in the future as more countries adopt their own sanction regimes.

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The rise of such regional organizations as the African Union and the Associationof Southeast Asian Nations is likely to lead to more regional cooperation on how
to address sanctions. In addition, the increasing use of sanctions by US andEuropean Union regulators, among others, could result in the development of
more sophisticated national regimes. Moreover, the increasing use of sanctions
by international organizations such as the United Nations may lead to thedevelopment of more comprehensive international sanctions frameworks.

The implications of variation

The increased geographical variation in sanctions regulation could have anumber of implications:
It could make it harder to enforce sanctions.

It may lead to a greater risk of abuse, because some countries may be tempted
to use sanctions for political reasons, rather than to address legitimate security
or humanitarian concerns.
It is likely to make cooperation between regulators more difficult to achieve:
some countries will be less inclined to agree to cooperate on a particular issue if
they know they will be at a disadvantage.

In

Chartis anticipates that these dynamics will lead to greater geographicalsegregation of vendor capabilities, alongside the growing variation in regional
KYC/AMLKYC/AMLData
Data
DataSolutions,
Solutions,
Solutions,2022:
2022:
2022:
data environments, as discussed in Chartis’ KYC/AML
MarketMarketMarketUpdate
UpdateUpdateandandandVendor
VendorVendorLandscapeLandscapeLandscape report.

Beyond KYC: more detail on counterparties©

As the level of data required for KYC processes has increased, institutions haveconsidered more sophisticated ways of quantifying their counterparties. These
have led to the proliferation of several different varieties of KYC, as financial
institutions have built out more detailed and complex KYC systems within theirtechnology architecture and compliance frameworks. Among the most prominentof these varieties are (see Figure 3):

Page 11 of 26

KYC/AML Data Solutions, 2022:

Know Your Business (KYB). KYB is the basis for identifying high-risk andrestricted entities at the point of customer onboarding and throughout thecustomer lifecycle. Using company risk information, compliance teams can:Conclusively verify a corporate entity’s identity.

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Resolve the entity to a full corporate hierarchy, parent corporation and set ofshareholders.
Identify beneficial owners.

Pinpoint relationships between business entities.

Perform in-depth research, to reveal relevant information for financial crime
investigations and to validate onboarding decisions (using enhanced due
diligence).

Know Your Customer’s Customer (KYCC). The process of identifying entities
that are farther down the chain from their immediate counterparties. This involves
determining whether an institution is interacting with entities that are one or more
steps removed from it, and which could be dangerous from a risk and/or
sanctions perspective. This is a complex procedure that becomes morechallenging the more steps an institution chooses to look down its relationshipchain.

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Figure 3: Varieties of KYC – KYB and KYCC

Source: Chartis Research

Page 12 of 26

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Vendor landscape
General technology trends

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The KYC space continues to expand, as does the variety of entrants andtechnological strategies within it. Some notable technology themes include thefollowing:

The cloud has become a constant presence. Almost all vendors now have acloud strategy. Low entry costs, scalability and speed to market are seen as the
key competitive advantages for vendors offering cloud solutions. In addition, theuse of APIs within the cloud and containerizations means that firms can moreJump
to accesstop
easilythird-party data providers, other vendors or service capabilities,
and from a wider range of physical locations.
Workflow strategies have diversified, and the variety of workflow capabilities
has grown. Low-code and no-code approaches, in particular, have enabledfirms to employ graphical user interfaces (GUIs) so they can use pre-built codefor document management, data capture and IDV. Several firms in the spacemarket, alongside agile and legacy workflow players, now use a no-code
approach as their primary differentiator and selling point.

©

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IDV vendors are moving into KYC. Vendors offering bespoke IDV solutions
are building out compliance capabilities and moving into the KYC marketplace.
The transition to digital methods of customer IDV and validation during theonboarding process has accelerated. Biometrics and facial recognition havebeen key tools in onboarding customers quickly and remotely, and Chartis has
seen several dedicated IDV firms enter the KYC and onboarding space.
APIs and connectors are becoming more standardized, ensuring that
deployments are as modular as possible. APIs, which are increasingly flexible,organized and well-documented, can be integrated more easily with othervendors’ core infrastructure to help them meet new requirements. In addition,
hybrid services and technology are becoming more common, and partnerships
between firms (as well as acquisitions in the market) have continued apace.

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Chartis RiskTech Quadrant® and vendor capabilities
for KYC solutions, 2022

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Figure 4 illustrates Chartis’ view of the vendor landscape for KYC solutions. Table
1 lists the assessment criteria we used for this analysis, and Table 2 lists thecorresponding vendor capabilities.

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Figure 4: RiskTech Quadrant® for KYC solutions, 2022

Source: Chartis Research

Page 14 of 26

Table 1: Assessment criteria for vendors of KYC solutions,2022
Market potential

Reporting and dashboarding

Customer satisfaction

KYC risk scoring

Market presence

Customer proNle enrichment with additional data

Growth strategy

Customer onboarding

Business model

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Completeness of offering

Financials

Source: Chartis Research

Reporting anddashboarding

KYC riskscoring

Customer proNle enrichment withadditional data

Customer
onboarding

Alloy

**

**

**

**

AML Partners

****

***

***

***

Appian

****

**

**

****

BasisTech

**

*

**

***

ComplyAdvantage

**

****

***

***

Diligent

**

**

*

****

Eastnets

**

**

***

**

Encompass

**

***

****

***

Fenergo

****

****

****

****

FIS

**

**

***

****

Fiserv

**

***

**

***

iMeta

**

***

****

***

KYC Portal

***

**

****

****

LexisNexis Risk
Solutions

**

**

****

**

Manipal Group

***

***

***

**

NetReveal

**

****

**

***

NICE Actimize

**

****

***

***

Oracle

**

****

***

***

Pega

****

****

***

****

PwC

****

***

***

****

Quantexa

**

****

****

***

©

VendorIn

Table 2: Vendor capabilities for KYC solutions, 2022

Page 15 of 26

**

***

***

****

S&P Global

****

**

***

****

SAS

***

****

***

***

Shufti Pro

**

*

**

****

Sigma Ratings

***

***

****

**

Silent Eight

**

**

****

****

smartKYC

****

***

****

***

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RiskScreen

SymphonyAI
Sensa

****

****

***

*

Veriff

*

***

**

****

Vneuron

***

***

***

***

Zoloz

**

**

***

***

Key: **** = Best-in-class capabilities; *** = Advanced capabilities; ** = Meets industry requirements; * =Partial coverage/component capability

Source: Chartis Research

Quadrant commentary

The KYC quadrant is once again characterized by a proliferation of vendors: thecategory leader space has become particularly diverse, as a number of firms
have established solutions that cover many discrete parts of the KYC
completeness of offering, either through organic development or acquisition. Data
firms have built out their technology solutions, while vendors of enterprisesolutions have developed their analytics, and service firms have extended theirsolution offerings.

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In

Agile workflow and automation have also been key areas of focus, and several
players in the market are making a significant impact in terms of theircompleteness of offering scores. In general, diversity of solution offering is anoteworthy factor: many solutions in the best-of-breed and point-solution
categories have specific areas of focus, such as the investigations process,workflow assistance in the onboarding process, IDV or enhanced due diligence.
The continued growth in diversity within the quadrant, the competition now
occurring in a growing number of sub-segments, and ongoing regulatory attention
indicate that the KYC solutions market will remain vibrant for several years.
The managed services dynamic continues to influence the landscape as leading
managed service providers (MSPs) assemble a multitude of software-as-a-

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service/on-premises solutions into an end-to-end system architecture. Their
purchasing decisions also inform the market: they are constantly evaluating theirtechnology choices and bottom line; if new technology offers significant
improvements, they will consider integrating it into their stacks. MSPs willconsider new tech if it can significantly reduce costs or just augment their existing
capabilities. As they aim to provide best-in-class solutions to clients, their choiceof vendors to partner with or use in service offerings will have a significant effecton the market presence of vendors across the KYC marketplace.
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Appendix A: RiskTech Quadrant® methodology

In

Chartis is a research and advisory firm that provides technology andbusiness advice to the global risk management industry. Chartis provides
independent market intelligence regarding market dynamics, regulatory
trends, technology trends, best practices, competitive landscapes, market
sizes, expenditure priorities, and mergers and acquisitions. Chartis’
RiskTech Quadrant® reports are written by experienced analysts withhands-on experience of selecting, developing and implementing risk
management systems for a variety of international companies in a range ofindustries, including banking, insurance, capital markets, energy and the
public sector.
Jump to top
Chartis’ research clients include leading financial services firms and Fortune 500
companies, leading consulting firms and risk technology vendors. The risk
technology vendors that are evaluated in the RiskTech Quadrant® reports can be
Chartis clients or firms with whom Chartis has no relationship. Chartis evaluates
all risk technology vendors using consistent and objective criteria, regardless ofwhether they are a Chartis client.

©

Where possible, risk technology vendors are given the opportunity to correct
factual errors prior to publication, but cannot influence Chartis’ opinion. Risk
technology vendors cannot purchase or influence positive exposure. Chartis
adheres to the highest standards of governance, independence and ethics.

Inclusion in the RiskTech Quadrant®
Chartis seeks to include risk technology vendors that have a significant presence
in a given target market. The significance may be due to market penetration (e.g.,large client base) or innovative solutions. Chartis does not give preference to its

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own clients and does not request compensation for inclusion in a RiskTech
Quadrant® report. Chartis utilizes detailed and domain-specific ‘vendor evaluation
forms’ and briefing sessions to collect information about each vendor. If a vendor
chooses not to respond to a Chartis vendor evaluation form, Chartis may still
include the vendor in the report. Should this happen, Chartis will base its opinion
on direct data collated from risk technology buyers and users, and from publicly
available sources.

Research process

The findings and analyses in the RiskTech Quadrant® reports reflect our analysts’
considered opinions, along with research into market trends, participants,
expenditure patterns and best practices. The research lifecycle usually takes
several months, and the analysis is validated through several phases of
independent verification. Figure 5 below describes the research process.

©

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Figure 5: RiskTech Quadrant® research process

Page 18 of 26

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Source: Chartis Research©

Chartis typically uses a combination of sources to gather market intelligence.
These include (but are not limited to):Chartis vendor evaluation forms. A detailed set of questions coveringfunctional and non-functional aspects of vendor solutions, as well asorganizational and market factors. Chartis’ vendor evaluation forms are basedon practitioner-level expertise and input from real-life risk technology projects,
implementations and requirements analysis.
Risk technology user surveys. As part of its ongoing research cycle, Chartis

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systematically surveys risk technology users and buyers, eliciting feedback onvarious risk technology vendors, satisfaction levels and preferences.

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Interviews with subject matter experts. Once a research domain has been
selected, Chartis undertakes comprehensive interviews and briefing sessions
with leading industry experts, academics and consultants on the specific domain
to provide deep insight into market trends, vendor solutions and evaluation
criteria.
Customer reference checks. These are telephone and/or email checks withnamed customers of selected vendors to validate strengths and weaknesses,
and to assess post-sales satisfaction levels.

Vendor briefing sessions. These are face-to-face and/or web-based briefingsand product demonstrations by risk technology vendors. During these sessions,Chartis experts ask in-depth, challenging questions to establish the real
strengths and weaknesses of each vendor.
Other third-party sources. In addition to the above, Chartis uses other thirdparty sources of information such as conferences, academic and regulatory
studies, and collaboration with leading consulting firms and industry
associations.

Evaluation criteria

The RiskTech Quadrant® (see Figure 6) evaluates vendors on two key
dimensions:©

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1. Completeness of offering
2. Market potential

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In

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Figure 6: RiskTech Quadrant®

Source: Chartis Research©

We develop specific evaluation criteria for each piece of quadrant research froma broad range of overarching criteria, outlined below. By using domain-specificcriteria relevant to each individual risk, we can ensure transparency in our
methodology and allow readers to fully appreciate the rationale for our analysis.

Completeness of offering
Depth of functionality. The level of sophistication and number of detailed
features in the software product (e.g., advanced risk models, detailed andPage 21 of 26

flexible workflow, domain-specific content). Aspects assessed include:innovative functionality, practical relevance of features, user-friendliness,flexibility and embedded intellectual property. High scores are given to firms that
achieve an appropriate balance between sophistication and user-friendliness. In
addition, functionality linking risk to performance is given a positive score.

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Breadth of functionality. The spectrum of requirements covered as part of anenterprise risk management system. This varies for each subject area, but
special attention is given to functionality covering regulatory requirements,
multiple risk classes, multiple asset classes, multiple business lines and multiple
user types (e.g., risk analyst, business manager, CRO, CFO, complianceofficer). Functionality within risk management systems and integration between
front office (customer-facing) and middle/back office (compliance, supervisoryand governance) risk management systems are also considered.
Data management and technology infrastructure. The ability of risk
management systems to interact with other systems and handle large volumesof data is considered to be very important. Data quality is often cited as a critical
success factor and ease of data access, data integration, data storage and data
movement capabilities are all important factors. Particular attention is given to
the use of modern data management technologies, architectures and delivery
methods relevant to risk management (e.g., in-memory databases, complex
event processing, component-based architectures, cloud technology, softwareas-a-service). Performance, scalability, security and data governance are also
important factors.

©

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Risk analytics. The computational power of the core system, the ability toanalyze large amounts of complex data in a timely manner (where relevant inreal time), and the ability to improve analytical performance are all importantfactors. Particular attention is given to the difference between ‘risk’ analytics andstandard ‘business’ analytics. Risk analysis requires such capabilities as nonlinear calculations, predictive modeling, simulations, scenario analysis, etc.
Reporting and presentation layer. The ability to present information in a timely
manner, the quality and flexibility of reporting tools, and ease of use areimportant for all risk management systems. Particular attention is given to theability to do ad hoc ‘on-the-fly’ queries (e.g., what-if analysis), as well as therange of ‘out-of-the-box’ risk reports and dashboards.

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Market potential

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Business model. Includes implementation and support and innovation(product, business model and organizational). Important factors include size andquality of implementation team, approach to software implementation and postsales support and training. Particular attention is given to ‘rapid’ implementation
methodologies and ‘packaged’ services offerings. Also evaluated are new ideas,
functionality and technologies to solve specific risk management problems.
Speed to market, positioning and translation into incremental revenues are also
important success factors in launching new products.
Market penetration. Volume (i.e., number of customers) and value (i.e.,
average deal size) are considered important. Rates of growth relative to sector
growth rates are also evaluated. Also covers brand awareness, reputation andthe ability to leverage current market position to expand horizontally (with newofferings) or vertically (into new sectors).
Financials. Revenue growth, profitability, sustainability and financial backing(e.g., the ratio of license to consulting revenues) are considered key toscalability of the business model for risk technology vendors.
Customer satisfaction. Feedback from customers is evaluated, regarding
after-sales support and service (e.g., training and ease of implementation),value for money (e.g., price to functionality ratio) and product updates (e.g.,
speed and process for keeping up to date with regulatory changes).

In

Growth strategy. Recent performance is evaluated, including financial
performance, new product releases, quantity and quality of contract wins, andmarket expansion moves. Also considered are the size and quality of the sales
force, sales distribution channels, global presence, focus on risk management,
messaging and positioning. Finally, business insight and understanding, newthinking, formulation and execution of best practices, and intellectual rigor are
considered important.

©

Quadrant descriptions
Point solutions

Point solutions providers focus on a small number of component technology
capabilities, meeting a critical need in the risk technology market by solving
specific risk management problems with domain-specific software applications
and technologies.
They are often strong engines for innovation, as their deep focus on a relatively

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narrow area generates thought leadership and intellectual capital.
By growing their enterprise functionality and utilizing integrated data
management, analytics and BI capabilities, vendors in the point solutions
category can expand their completeness of offering, market potential and market
share.

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Best-of-breed

Best-of-breed providers have best-in-class point solutions and the ability tocapture significant market share in their chosen markets.

They are often distinguished by a growing client base, superior sales andmarketing execution, and a clear strategy for sustainable, profitable growth. Highperformers also have a demonstrable track record of R&D investment, together
with specific product or ‘go-to-market’ capabilities needed to deliver a competitive
advantage.

Focused functionality will often see best-of-breed providers packaged together aspart of a comprehensive enterprise risk technology architecture, co-existing withother solutions.

Enterprise solutions

Enterprise solutions providers typically offer risk management technology
platforms, combining functionally rich risk applications with comprehensive data
management, analytics and BI.
A key differentiator in this category is the openness and flexibility of thetechnology architecture and a ‘toolkit’ approach to risk analytics and reporting,which attracts larger clients.

©

In

Enterprise solutions are typically supported with comprehensive infrastructureand service capabilities, and best-in-class technology delivery. They also
combine risk management content, data and software to provide an integrated‘one-stop-shop’ for buyers.

Category leaders
Category leaders combine depth and breadth of functionality, technology andcontent with the required organizational characteristics to capture significant
share in their market.
Category leaders demonstrate a clear strategy for sustainable, profitable growth,Page 24 of 26

matched with best-in-class solutions and the range and diversity of offerings,
sector coverage and financial strength to absorb demand volatility in specificindustry sectors or geographic regions.
Category leaders will typically benefit from strong brand awareness, global reachand strong alliance strategies with leading consulting firms and systems
integrators.

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fo
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tio esn LtdFurther reading

KYC/AML Data Solutions,2022: Market Update andVendor Landscape

KYC/AML Software Solutions,2020: Market Update andVendor Landscape

KYC/AML Data Solutions,2020: Market andVendor LandscapeFinancial Crime Risk
Management Systems:
Watchlist Monitoring Solutions,2022; Market Update andVendor LandscapeFinancial Crime Risk
Management Systems:
Watchlist Screening andMonitoring Solutions, 2022;
Vendor Landscape (Part II)

Big Bets 2022©

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For all these reports, see www.chartis-research.com

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