From Complex to Simple: Moving the Needle on Regulatory Compliance

Written By:

Peter Murray, Head of Sales, W2

The gambling sector has many challenges but clearly, none can be more critical to the industry’s sustainability than the issue of compliance. To some it is simply too complex, restricting innovation and growth, whilst to many it is a necessary evil that just has to be adhered to, but ultimately it is the one part of the sector that is crucial in delivering trust to consumers, the public and the politicians ensuring sustainability longer term.

To operators having to keep on top of it in order to ensure compliance, it feels like the current “tsunami” of regulatory changes coming their way is both hugely complex and incredibly costly. The seemingly ever increasing burden on companies shows no sign of abating and if you were the senior management team of a gambling operator at present you could be forgiven for thinking that the increasing burden you face cost would eventually mean that compliance is unsustainable when it comes to having a profitable business.

From Australia to Holland, Brazil to Germany, self-exclusion to affordability, time outs to multi-stream deposit limits, be it jurisdictional or product, the list keeps coming, and with no sign of regulatory harmonisation to help ease the pain, operators and their partners are in a particularly difficult position. The trade-off is to meet the criteria or cross the line and embrace the black markets where profitability is higher but safety is not.

The list of regulatory requirements is long but the list of solutions out there purporting to offer the answer is even bigger. The list of traditional suppliers adapting (or acquiring) further solutions and the proliferation of “disruptors” entering the market is both positive, in the fact they recognise the problem, but also adding to the challenge faced. In the area of KYC alone new entrants emerge almost monthly offering enhancements across the customer journey. From device ID and Geolocation to facial recognition and behavioural analytics, it’s a question of “where do I start?” And we haven’t even arrived at the AI discussion!

To meet regulations many operators currently rely on multiple systems to mitigate fraud, implement effective KYC and deliver customer engagement strategies. However, this often means different providers, different data, different technologies, all part of the puzzle, but a dozen APIs allowing a dozen different feeds is worth nothing when that data is not aligned. Multiple solutions are by their very nature less efficient and often less effective. Hardly helpful when the goal is to do the opposite.

How to cope with the moving landscape would be considerably eased if Gambling had the oversight of some other sectors and a general consensus on the way forward but Gambling seems to bring with it an added level of regulatory oversight that other sectors do not seem to endure. Front and centre in the eyes of the politicians, media and the public, you just have to look at the way gambling is viewed in the UK to get an idea of the minefield the industry has to navigate.

When it comes to EU laws, meant to harmonise trade across borders, the regulators tasked with ensuring the industry is fair and safe, seems to be more about competition than consensus.

Here at W2 we work across many regulated markets and finding solutions that ease the burden is what we do. It is what keeps us in business and delivers customers and growth to our clients. We absolutely believe complexity should not be a barrier to business and we work in collaboration with partners that believe in the same. No organisation needs to be prevented from gaining and retaining customers because of the regulatory challenges presented to them, but in today’s environment, it doesn’t feel like that.

Having worked collaboratively in the sector for over a decade we understand Gambling presents unique challenges in that it not only has to adhere to the letter of the law but has to go above and beyond what the regulators have set. It is often held to a higher standard and is rightly criticised for its failings but rarely recognised when it steps up. But things are changing, and the industry is rallying around the fact that compliance is no longer about ticking boxes and that they have to go further and do better. For that, you need as much data as possible and technology that can make sense of it.

So, in that complex and often toxic environment, the question remains in how we can dial down the complexity and in doing so, is it possible to reduce the cost.

Clearly, for us and others like W2, we find the answer in technology. We see providing simplicity as a key strategic factor and a driver of effective compliance. It was something that made us change our business focus and come away from a concentration on the individual parts of compliance and look at how it was accessed and delivered. That is where simplicity and efficiencies can be delivered. The answer was to provide as much as possible through a single platform. One integration, one area on which to focus.

As an example, if we return to the subject of KYC, then what supported the industry a decade ago is no longer fit for purpose today. A simple check on a CRA database now provides only a small part of someone’s identity. Attributed data will give you a time stamped but static view of your customer. But add in digital, Behavioural and biometric and now you are getting not only a great view of your most important asset but something the regulator will accept as having “gone further” and “done more”.

So, when it comes to simplifying the complex for us, less is more and the concentration should be about the technology that enables it, not the individual components it contains. The single platform delivers this. Data and technology aligned and working together, with the minimum of friction. One set of developers, one set of support staff, one team providing the delivery. That is how compliance is simplified, the burden eased, and everyone wins.

The final piece of simplifying the process is collaboration. A much overused word but underutilised skill - but one that is so critical to the long-term sustainability of the entire gambling sector. There are some that see this as unachievable with commercial entities unwilling to share to maintain a competitive edge. However, we see in other sectors how a business can keep their competitive edge and differentiate their brand whilst managing to share critical data for the common good. Financial services and insurance are just two examples of where we see the huge value of using shared data and simplified technology to protect businesses and individuals. Fighting fraud is often the starting point but it evolves into critical areas such as self-exclusion and minimising harm. Gambling has to embrace this and through the advances in single platforms, enabling the sharing of technology advances and best practice, we can move the needle on compliance and safety.

If the gambling sector gets this right, then simplifying the process can be a key strategic differentiator. Not only do the operators get an efficient and effective solution, but regulators also get a process that is open, transparent, and auditable whilst consumers get a great customer journey and a frictionless experience. When it comes to API’s I really see the benefit of “One for all and all through one!”

Before I sign off it would be hard to do an article without some reference to COVID, as tempting as that might be! For us, the trials and tribulations of the last few months have simply meant that technology has an increased focus and importance both in driving business growth and delivering regulatory compliance. If the various lockdowns really have legitimised the use of technology across the board, then, now, more than ever, making the complex simple is business critical.

Stay safe everyone.