Why the time is right for Open Banking in Conveyancing
Money laundering is a problem that plagues the legal sector. Recent figures published by the Solicitor’s Regulation Authority (SRA) has revealed that they have reported suspicious activity equating to more than £200m to authorities in the last 12 months.
Tom Lyes, Director of Engagement at Today’s Conveyancer has been speaking to Mike Ward, Executive Chairman of Armalytix who provide fast, accurate and secure bank account information reports.
Who are Armalytix?
The FCA-regulated company was formed just over 2 years ago by senior experts from the banking sector. Their mission is to harness the power of Open Banking to provide innovative and best in class financial reports to the professional and financial services sectors. They have just launched a source and proof of funds analysis report that empowers law firms to quickly gather and assess all the client bank information needed for the checks, replacing a process that has traditionally taken hours. As well as providing services direct to firms, Armalytix also works with platforms and partners to provide reports and has recently launched source of funds analysis reports with Veriphy.
Due to the legal sector not having access to financial information upfront, in the way that other sectors have, how would you go about making the process of reporting and using Open Banking easier for them?
What are the challenges that your solution helps to tackle?
Mike has seen an acceleration in conversations with regulators both before and after the LSAG draft guidance was published with regards to the importance of source of funds and source of wealth checks. The steady influx of enquiries to Armalytix about how they can help with these checks has been from legal firms of varying sizes, which demonstrates that there is a strong appetite for this type of solution out there.
“LSAG guidelines have focused people’s minds with regards to checking source of wealth and source of funds during the home buying process.”
What does the future look like around Open Banking in Conveyancing? How else do you think it could be used?
Mike commented that in addition to the source of funds and wealth checks themselves, Open Banking could also be used in a firm’s process to verify clients’ bank accounts. This would add an additional layer of protection and prevent payment fraud, which unfortunately is on the increase at the moment.
“Checking the ownership and control a person has over an account is vital to prevent fraudsters running away with client money,” Mike added.
Law firms that I speak to are often initially a touch apprehensive about Open Banking, why do you think this is and how can they feel more confident in the technology?
The UK is the world leader in Open Banking and as well as being faster, more powerful and more accurate than traditional methods, it’s perhaps counterintuitively more secure, although it’s understandable why people would be apprehensive.
When asked about security, and what protection Armalytix has in place, Mike explained:
“An Open Banking firm will not get access to any client log in details. We get the data by obtaining a ‘token’ when the client opens their banking app, and then they see a request from ourselves. The client then ‘pushes’ the details out to us. As part of the FCA regulations we have to adhere to strict guidelines around how we collect and use data. One of the most important factors for us is encryption. Here at Armalytix, we use the same encryption technology as the banks.
“We also have to follow guidelines provided by the FCA with regards to the sharing of data. So, in our customer journey, the client has complete control about whether to share their information with us or not, and the time period and amount of information that is shared with us.
“We adhere to GDPR rules to keep data safe, and security is an important foundation to us here.”
In 5 years’ time how do you envisage open banking being used across the home buying process?
If you want to speak to Armalytix to find out more about source of funds checks, just email [email protected]