As financial services become increasingly digitised, the need for regulatory technology (regtech) solutions and compliance software has grown rapidly in recent years.

An obvious case in point is Australia’s banking sector, where compliance flaws around automated client services and anti-money laundering (AML) controls were laid bare in the wake of last year’s Royal Commission.

Sydney-based startup SimpleKYC is one company positioning for that growth, with a SaaS-based offering which helps clients securely fast-track their know-your-customer (KYC) identification checks for new business accounts.

After building his career in credit risk management, CEO Eric Frost founded the company in February 2017. It now has around 25 staff with offices in four countries.

Speaking with Stockhead, Frost said while the business was initially focused on establishing its Australian client base, the product had always had a global application.

Customers include American Express, which has embedded SimpleKYC’s product as part of its on-boarding process, as well as a major Australian bank.

“They use our technology in branches, so if you open up a business account, SimpleKYC’s software can verify that business customer’s details,” Frost says.

“It allows them to compliantly open up that account, often in real-time, whereas before it might take a back office team several days to process.”

He added that a primary business objective had been to develop SimpleKYC’s in-house knowledge base and intellectual property. To that end, Frost hired two technical co-founders early on with a focus on product development.

“About 85 per cent of our team is focused on R&D in one way or another, so pretty much everything is proprietary. We do leverage some external tech capabilities where they exist already, but a lot of it is built from the ground up.”

The company operates in a growing industry with a number of competitors, but Frost said the team hadn’t seen a strategic need for patenting its technology at this point.

“We could in the future, but we’ve sort of chosen not to go down that route. A lot of our tech capability is still private domain so we keep it proprietary, and a lot of it also customer-focused — so our model is to be very hands on with clients and build up a trusted relationship.”

Like most startups, Frost started the business by tipping in some personal funds for seed capital. But since then he said SimpleKYC had largely met its funding requirements organically, with the exception of an early investment from the private equity division of illion (formerly Dun & Bradstreet).

“At the time we were looking for a strategic investor we could partner with, and we chose illion. They made an investment at the pre-product level, but we haven’t raised any external capital since then,” Frost said.

And for now, the company is focused on its next stage of growth. It’s hoping to sign up another of the big Australian banks to the platform, while also laying the groundwork for a global expansion.

“We’ve chosen to focus on Australia and New Zealand first, to make sure we get the right product-fit and business model without extending ourselves too fast. But I do believe there’s a lot of ability to replicate it in other markets,” Frost said.

He explained that while anti-money laundering (AML) regulation varied from country to country, it also had an international governing body that set out global standards.

“Because of that you get a lot of similarities from country to country, so at the high level our solution is applicable in many countries.” And to fund that global expansion, SimpleKYC is likely to offer external investors another opportunity to get on board.

“We’ve found that we could build this business organically, and we wanted to get it to a certain point before we did another capital raise,” he said.

“We’ll more than likely do one next year as we look to expand globally, but so far we haven’t felt the need to do it.”