This week, we welcomed Acin to the Talis portfolio, participating in company’s recently announced Series A alongside a stellar line up of investors, including Notion Capital and Fitch Ventures. Acin was an incredibly compelling investment opportunity for Talis, and I genuinely believe it has the ingredients to become the category-defining leader in the operational risk space.
Acin is the first – and only – provider of data standards to create operational risk systems across multiple banks, creating a first-of-its-kind network that facilitates collaboration between members. Its whole system has been created for – and critically, in collaboration with – financial services institutions. The fact that fourteen global investment banks have already signed on to Acin’s platform to accelerate the development of the company’s proposition speaks volumes for the demand that Acin can meet.
Acin is tapping into an initial banking and asset management market of over $2bn per annum: but operational risk has the potential to become a c$30bn per annum market. While there’s plenty of players addressing market and credit risk, operational risk is critically underserved, and current solutions are qualitative, siloed and not data driven. The archaic systems currently in use are resulting in an average $20bn+ per year in operational losses, fines and costs. When it comes to operational risk, the stakes are high: the finance industry is notoriously heavily regulated, and under the FCA’s Senior Managers and Certification Regime (SM&CR), error can result in hefty fines for the individuals liable. Missed operational risks and controls within banks account for $150bn in gross losses: demonstrating a huge opportunity for any company who can tackle this problem. Enter Acin.
What makes Acin unique is that it is approaching operational risk intuitively. By anonymously benchmarking a client’s risks and controls against others in real-time, Acin not only shares risk intelligence among members of its network, but also gives its clients an industry overview. Given that the financial system is so interlinked, a peer-review approach makes sense: one institution’s operational risk likely matches, or is similar to, another’s. I haven’t been able to find any other organisation in this space approaching operational risk by information-sharing across a network, which is what makes Acin so exciting.
Tackling such a vast opportunity requires an exceptional team. Paul Ford, founder and CEO, is an impressive leader: having previously built a successful operational risk consultancy, he has a clear and fundamental understanding of the need for standardising and mapping data in the industry. The calibre and depth of the team around him is equally impressive, which is crucial given the complexity of the issues Acin is solving. Given that Acin has an enviable success rate on procurement processes with investment banks, it’s evident that the team is well-positioned to execute on their mission.
There’s much to be done, as with any early-stage business, but needless to say Acin is one of the most exciting companies I’ve come across for a while. In the future, I can imagine seeing ratings agencies using Acin data, and beyond that, regulators could also become natural stakeholders in the data. A similar approach could be applied in other regulated industries, such as other financial institutions; insurance; healthcare; transport; telecoms; energy… the list goes on. We’re thrilled to be on board with Paul and the team to help drive what will inevitable be an exciting next phase of growth.
You can read our announcement on the news here.
Rethinking Operational Risk Capital Requirements; Sands, Liao, Ma (2016)
ORX Banking Loss Report, 2018
AFME, Apr 2018