Mumbai-based regtech startup CogNext Analytics targets global financial institutions

Rregtech startup CogNext Analytics was founded in April 2019 by Alok Tiwari and Sandip Mukherjee. Regtech is a portmanteau for ‘regulatory technology’ in the startup ecosystem, as hundreds of tech ventures compete online to help banks in complying with regulations for transaction monitoring, fraud and risk management, and identity management, among other functions.

The market opportunity grew enormously after the 2008-09 global financial crisis. As banks paid $321 billion in fines alone for lapses, regulatory authorities like the US Securities and Exchange Commission called for technology-driven accountability. Since then, banks and financial services companies spend a massive $270 billion on risk and regulatory compliance activities every year, according to a MEDICI RegTech 2018 report.

Mumbai-based CogNext Analytics is differentiating itself in the Regtech as a Service (RaaS) market with Platform X, a no-code regulatory compliance platform that is available for both on-premise and cloud deployments.

As a no-code offering, Platform X enables business users in banks to change the configuration from the front end without any intervention or support from the IT department. The risk, finance, and regulatory teams of the bank can therefore respond swiftly to any changes in the regulatory or business environment, says Alok.

For example, during the ongoing global pandemic, CogNext customers could reconfigure models and recompute outputs according to changes in customer behaviors and macro-economic environment with more ease. Alok says that this helped the banks in saving a lot of time. Moreover, the use of artificial intelligence (AI) and machine learning (ML) to simplify and automate regulatory compliance also makes the platform cost-effective for financial institutions.

To date, the startup has 10 enterprise customers spread across North America, Africa, the West Asian markets of the Gulf Cooperation Council, and India. CogNext commenced its operations in India’s financial capital Mumbai and established an R&D center in Bengaluru besides offices in key global financial centers New York, London, and Dubai. It presently has a workforce of over 35 in-house technology, data scientists, and subject matter experts in global risk and regulatory compliance.

The startup closed the calendar year 2020 with an annualized revenue run rate of $2 million and growth of 300%.

Alok, Co-founder and CEO of CogNext says, “We are aggressively building global partnerships with leading technology and software companies to expand the reach. In certain markets such as Asia, Africa, and the GCC countries, we have direct salespeople.”

Platform X is built on cloud-native big data technologies such as Spark, Mongo, HDFS, and a UX designed for the business user. “The choice of these technologies brings high performance, AI-driven automation, scalability, and open API based configurability at a fractional cost compared to legacy technologies,” he explains.

Alok says CogNext has established a record of delivering a 50% time and cost reduction in risk and regulatory function with 10X improvement in performance. The present applications on Platform X include ECL Compute (IFRS9/CECL), Balance sheet analytics, Basel III/IV, Model Risk Management, Integrated Stress Testing (IST), Portfolio Credit Analytics, and AutoML model development.

Moreover, it allows the user to explore multiple methodologies interactively, empowers them with explanatory power, self-service, and traceability. Powered by Deep Learning and other ML algorithms, the offering streamlines the model workflow of the bank with reduced turnaround time, improved business volumes, and return on assets.

CogNext Analytics operates on a subscription-based business model. It charges an annual subscription fee from its clients, i.e., banks, financial institutions, non-banking finance companies, neo banks, and digital lenders. The annual fee is determined based on the asset size of each institution, and for specific modules subscribed by them.

“Financial institutions are always under high pressure of reducing the cost of regulatory compliance,” Alok says. “Most financial institutions use conventional technologies to manage regulatory compliance that is expensive, proprietary, closed, fragmented, and resource-intensive, which leads to extremely high-cost operating models for risk and regulatory compliance function.”

Started with an initial investment of Rs 5-10 lakhs, the regtech startup is working on its growth and plans to increase its presence in existing markets 3X and expand in newer recently added markets Europe and the UK by the end of 2021. This is a highly competitive market with more than 60 regtech startups in the financial services industry including Signzy, IDfy, FixNix, CustomerXPs, etc.

“CogNext’s current clients include large global banks, regional banks, and financial services firms,” Alok says. It plans to raise capital in mid-2021 to “scale up sales and marketing efforts and accelerate the platform development by expanding our engineering teams”.

Founders Sandip and Alok have built a risk and compliance advisory firm before: Aptivaa, way back in 2005 to deliver risk management services to the global financial services industry, which grew to 150 + global clients in 35 countries. With CogNext, they want to repeat and scale up their regtech know-how—faster and better.

They also currently have openings for Business Analyst GRC Platform, Product Manager GRC Platform, Java Developer (Full Stack Developer), UI Front-end Developer, Head DevOps/ Java Developer (Lead), Business Analyst- Model Risk Management, Business Analyst- Credit Risk Management Solutions, and Liquidity Risk/ ALM Specialist. Applications for all of these positions can be sent by visiting the careers page of the company’s website.