QuickFire Questions with
Founder and CEO of ClauseMatch
Founded in August 2012, ClauseMatch exists to bring full digital transformation to compliance and legal functions at regulated companies, offering a workflow tool – in essence, AI-powered smart connected documents for risk and compliance. It helps to completely revamp the internal policies and procedures frameworks.
The award-winning policy management, regulatory change management and compliance platform automates time-sucking tasks, organises data and makes collaboration and knowledge-sharing a breeze! ClauseMatch is listed among Top RegTech companies by Dow Jones Financial News, CB Insights, FinTech Global, FinTech 50, and FT Sifted, to name a few.
ClauseMatch sees a huge benefit in RegTech companies collaborating together to help craft a combined regulatory eco-system that would bring together the best of breed solutions, all interconnected to deliver true regulatory supervision and compliance.
In 2014, ClauseMatch successfully graduated from the inaugural Barclays accelerator programme. Following the programme, the company signed a deal with its first client – Barclays global bank – integrating the innovative document management platform with the bank’s internal system and onboarding hundreds and then thousands of users onto the platform.
At Barclays, ClauseMatch is used by all risk and compliance departments to manage their global policies in real-time. The company helped to reduce their annual policy refresh cycle by 40%, with the compliance reports taking away 85% of manual work and every employee having access to the latest policy in one central place from desktop, tablet and mobile.
In 2015, ClauseMatch became the winner of the BBVA Open Talent Challenge, the world’s biggest FinTech competition. And in 2016, its developers successfully participated in the FCA TechSprint putting several chapters of FCA’s Handbook into a machine-readable format.
There were major advances in product development during that time as ClauseMatch started introducing AI capabilities for regulatory change management. Intesa Sanpaolo and Revolut digital-only bank followed as clients. One of the main objectives for Revolut to hire ClauseMatch before the international expansion was to build AI-powered data connections, linking relevant regulations to internal policies, procedures and controls on a granular level. ClauseMatch delivered on the vision, built data connections at a paragraph level, and then enhanced this functionality further with the introduction of Natural Language Processing and AI/ML capabilities.
In 2018, ClauseMatch closed its Series A funding round led by Index Ventures. In 2018, the company’s product was also being tested as part of the third cohort of companies in the Financial Conduct Authority’s (FCA) Regulatory Sandbox supporting a top-tier bank with its technology.
In April 2020 ClauseMatch was one of ten companies selected to participate in the FinTech Innovation Lab NYC 2020 run by the Partnership Fund for New York City along with Accenture.
Hi Evgeny! What is your personal story and how did you come up with the idea?
I spent over a decade working at compliance and legal departments at Morgan Stanley and UK energy companies.
The idea behind ClauseMatch was cultivated over my own experience while observing the inefficiencies companies go through when working on high-risk or high-value documents.
The company dates back to 2012 when after a decade of working as a lawyer with derivatives trading agreements for global banks and energy companies, I became absolutely frustrated because of managing contract negotiations and regulatory changes remediation via emails and Word documents, collecting and consolidating feedback from hundreds of versions, and spending long nights on administration rather than value adding work.
It was a tortuous process of negotiating contracts via long email chains, with the hours spent searching for that critical comment which must be buried somewhere…
When I started ClauseMatch I thought I’d found the solution to the problem of document management in legal departments. But as it turned out it was a key to something much bigger.
It was a lightbulb moment, I just knew it would work – if I could get people to understand the benefits.
The fear of being fined, lack of sustainability, throwing people at the problem and personal senior managers accountability are certainly driving factors, but to an extent. It is the increasing need for the organisations in financial services to move more quickly and to be more nimble, innovate faster and adapt to new challenges that are driving RegTech adoption.
Following the 2008 financial crash, banks faced a slew of increasingly complex regulations. And now, with the coronavirus having a huge impact on the industry, we have seen many updates from financial regulators lately. The present-day situation shows us that multiple new requirements and measures to ensure business continuity and resilience are issued by the regulators globally leading to greater regulatory oversight. The good thing is that transformational change always happens when there is some pressure coming externally. With many companies working from home, the importance of embracing digital tools is more essential than ever. Digital tools, collaborative functionality are becoming vital for work. And we are witnessing the increasing demand towards our solution that is agile in providing the response to the present-day needs.
What were some of the challenges you faced?
At the very beginning, it wasn’t an easy ride: things were moving at a snail’s pace. Launching a startup in the very ‘unsexy’ field of regulatory compliance could never be easy. And during the first time, we had some challenges around finding the right product-market fit.
Initially we were developing the solution as a contract negotiations platform for the legal market. But with the research came understanding that it is a perfect fit for regulatory compliance for the finance industry and much broader. It was a lightbulb moment for our company strategy and product.
Going forward, at much later stages, market research has always been absolutely necessary for us to enter new markets. Understanding what’s the right market niche, for instance, should we go after large banks or should we go after a mid-tier market.
Who is your target market?
We are selling to large global banks, as well as FinTechs, insurance, energy companies, and also working with regulators.
Our customers are compliance, legal, risk professionals. We’re dedicated to making the lives of these people easier by automating daily repetitive and burdensome tasks.
Since 2008 the role of compliance has changed significantly and today Chief Compliance Officer sits on the board and compliance takes up to 20% of the bank’s operating budget. And yet the tools for compliance have not changed at all for the last 20 years. It is still a heavily manual process that is just pushing paper around between thousands of people in the organisation.
As a positive trend, now, we are seeing more and more often that financial firms start to employ people responsible for technology within compliance teams, and they are great to work with because they are focused on finding the right technology.
How do you market your business and which approaches have been the most successful?
We are not investing big sums in sponsorships, paid advertorials or any paid activities in general. Although it is usually a mix of things, a combination of activities that works best. There are many industry events but you have to be very specific about which ones of them are relevant to your business. At first we were trying to be present at the key ones but then we understood that it is actually not our target audience and we need to be more specific, we need to narrow our focus to niche industry shows.
ClauseMatch is active on social media. We have strong experts on-board, and we’re open to media, researchers, influencers who are interested in learning more about the company, our technology, product and the problems we’re solving.
Finally, we can probably say that our product speaks for itself. In this sense, the best advertising is developing a really good product. Then it’s the word-of-mouth that works for you.
Since you launched, what has worked in not only attracting but retaining customers?
Most of the GRC solutions are built as a workflow on top of (around) Microsoft Word documents. This means that while the workflow could be very sophisticated, the document is still an unstructured text, i.e. the information in those documents is hard to analyse.
ClauseMatch documents are a highly structured content, where all meta-data in and around each paragraph is captured in its entirety. This allows for granular data analytics, real-time MI reporting, and risk and exposure analysis. Because of this structured dataset approach, ClauseMatch is able to leverage the latest technologies in Machine Learning and Artificial Intelligence, and deploy algorithms to its clients based on the latest advances in Natural Language Processing and the Semantics.
What kind of culture exists at ClauseMatch and how did you establish it?
We’re now in a high-growth stage. Like any fast growing company, we exist in an environment that’s very intense and high-pressured, but the culture inside the team is still all about fun, being supportive, collaborative and open.
ClauseMatch is now 50 people strong. Our team includes not only very smart and talented people but also really diverse people. They come from all over the globe and have various backgrounds: corporate and banking, legal, technology start-ups, entrepreneurship, financial data analytics, user experience and design, to name a few. This combination of competencies and backgrounds blends in a unique team culture: we value both everyone’s professional experience and personalities. For instance, the Head of our Q&A team is a professional hockey player, our Head Product Designer is a former conductor, my Co-Founder is a chess master, and so on.
Once a year the company goes on team retreats to different countries around the world. Last time, we spent a week in the mountains of Georgia and it was a fantastic time. This year has been different. But hopefully, sooner or later, we will have the opportunity to reunite again as it is also part of the company’s DNA.