London-based Capnovum, one of the 10 finalists of the inaugural SuperCharger Malaysia program, is evaluating Kuala Lumpur as a base from which to capture the Asian market and more importantly, to foray into key Shariah financial markets.
For Capnovum, whose core target markets have been in Europe, choosing a Malaysian accelerator program was primarily driven by the fact that the Southeast Asian nation is one of the world’s leading Islamic finance hubs. After three years in business, founder and CEO Niclas Nilsson – a finance professional with 20 years of industry experience – wants to ramp up the regtech firm’s Islamic focus. Nilsson previously worked in an Islamic bank in Kuwait and had experienced first-hand the complications Islamic financial institutions faced as far as compliance is concerned.
“It can be frustrating when it comes to Islamic finance, as it is a lot more difficult than conventional finance, because you have a number of additional sources of information,” Nilsson shares with IFN Fintech. “It’s hard to work on product development in a marketplace which is somewhat opaque.”
Capnovum is a cognitive compliance management platform hosting a proprietary database of regulations, obligations and regulatory news from over 150 regulators in 70 countries, allowing financial institutions to manage compliance across jurisdictions. The platform covers both conventional and Islamic financial regulations although Nilsson admits that the emphasis had primarily been on collecting and monitoring regulatory information without addressing the additional complexities associated with Islamic finance; the direction now is to add an Islamic finance paradigm on top of its existing offering to make it more robust.
“What we have now works with Islamic financial institutions because we are covering both Islamic and conventional regulations but we want to put an Islamic finance lens on it including key information sources within the Islamic finance space. We’d like to enhance transparency and at the same time, be able to look at products and compare the regulatory treatments on similar products across Islamic and conventional spaces,” explains Nilsson.
Using natural language processing and artificial intelligence to categorize, filter and derive insights from regulations and regulatory changes, the technology is able to assist financial institutions better manage their compliance and react to changes accordingly. Capnovum processes approximately 20,000 regulatory updates per week. In comparison, banks – according to Nilsson – could take up to six weeks to update its stakeholders on regulatory changes; in that time, Capnovum would have processed about 120,000 updates.
The firm is now working on capturing Shariah standards issued by the likes of AAOIFI and IFSB. Currently undergoing a 12-week program with SuperCharger, to end on the 15th December, Capnovum is hoping to be able to develop a proof of platform with Malaysian Islamic financial institutions, which would open doors for it to penetrate the Malaysian market and also the Middle Eastern region.