Digital transformation, strengthening of financial supervision, data security legislation… In this era, regulatory compliance tech companies are growing strongly in China.

According to statistics, there were about 120 financial regulatory policy releasing in the first quarter of 2021 (not limited to specific policy documents), of which 30 were from central banks. 40 from China Banking and Insurance Regulatory Commission, 35 from China Securities Regulatory Commission and 15 from others. And the overall policy tone is strict (compared with the same period last year). Financial regulation in 2021 kicked off with a “iron-fist”.

More and more companies desire to use latest technology to serve their own regulatory compliance needs. Focusing on these needs, many start-ups provide more data and effective solutions for regulatory compliance, with the goal of simplifying and optimizing the management activities of legal compliance, risk, financial statements, and data. Such companies are called regtech companies, which belong to a larger group – fintech companies.

The relevant data shows that a total of 317 regtech companies have received more than 2.3 billion US dollars in funding in the past five years. These regtech start-ups cover financial services, such as supplier risk management, cybersecurity, environmental protection and many other fields.

Under this background, the Nanjing Oversubscription Digital Technology Co, Ltd. came into being. In the face of the changing regulation environment, private, brokers, banks and other finance institutions see the compliance costs and labor costs increasingly heavy. As a solution provider, Nanjing Oversubscription Digital Technology Co, Ltd combines artificial intelligence, blockchain, cloud and big data to help transaction monitoring, auditing for finance institutions, so as to reduce costs, enhance regulatory compliance, and improve process efficiency. Mr. Yang Xiuyi, CEO of  Oversubscription Digital, talked to FOF Global to share the story behind Nanjing Oversubscription Digital Technology. Here is the full text of the conversation:

“Nanjing Oversubscription Digital Technology Co, Ltd is launched ahead of time. By the time expected regulations arrive, we will have a mature product ready.”

FOF Global: Would you please briefly introduce Nanjing Oversubscription Digital Technology, including the main products and services it provides.

Xiuyi Yang: Nanjing Oversubscription Digital Technology focuses on technical solutions for regulatory compliance in the entire financial industry.

In the initial stage, we focus on regulatory compliance in private equity investment. When the underlying technology develops and the client group expands, we will slowly step forward to serve other licensed financial institutions, such as securities companies, banks, etc. But at present, our products are all related to private equity institutions. There are three products:

The first is our virtual cloud disk (VDR) product, which mainly provides data security and privacy for investment managers’ fund-raising and their portfolio companies’ financing processes. It has functions such as giving different level of permissions to different characters, adding digital encryption watermarks with one click, sharing WeChat limited-time invitation links, and blockchain tracing;

The second is a supportive tool in audit. It’s an intelligent platform for due diligence and audit, and provides intelligent analysis of “invoice-level granularity” data. It provides financial analysis and risk control system for enterprises and investment institutions to improve the level of enterprise internal control and risk monitoring;

The third is an AI compliance assistant for private equity funds. It synthesizes public data from private equity fund regulators, legal authority’s supervision and punishment data, case data, etc. by using AI semantic analysis and mapping knowledge domain technology. Then, cross-dimensional content query, association and analysis can be realized. It provides an “AI brains” for industry compliance regulators to help improve work accuracy and efficiency.

In strategic partnership with a well-known private equity-focused media platform in Beijing, we can cover a wide range of potential customers. At the same time, we have also formed a team consisted of former technicians from Huawei and former R&D members from Nanjing University’s Institute of Intelligence Research. So we have industry resources, professional know-how, and innovative technology.

FOF Global: How do you obtain data and ensure data security when providing service?

Xiuyi Yang: For the virtual cloud disk product, we have selected two leading public cloud partners, Alibaba Cloud and Amazon AWS, respectively, and we chose to provide services for top enterprises who are of better tech DNA. Some clients, such as China’s government-guided funds, have higher requirements for data security, in which cases we offer them options to install the system on their own servers to ensure data storage and security.

As for the audit tool, the financial data it collects during due diligence research is directly used for analysis. In the end, only the analysis reports are kept, and the original financial data are dismissed. I want to clarify that the analysis reports are not open online either – they will only be given to our clients to do the audit together with us. Some targeted enterprises do not have all the financial documents there, and our product can search online systems and fill the data gap by technical means, including invoice data at the sales and purchase ends of the targeted company. At present, even the Big Four accounting firms can not cover as much as we could.

The AI compliance assistant acquire data in two aspects – one is static data, that is obtained from regulatory texts such as laws and regulations; the other is dynamic data, that is extracted by looking at the problems encountered by all companies in the process of compliance and the answers to those questions.

I want to add up that a top Chinese cybersecurity-focused company will provide us with product testing and security support. The company find out our product vulnerabilities by technical means, and then give tech-enabled solutions to make our products more complete and safer.

“I believe that China, in its rise, will become one of the major financial forces in the world and play a more important role than it does today. So I returned to work in the financial sector, which is crowded with capital and cutting-edge technology application opportunities – to start up my own business.”

FOF Global: From what I’ve known, your education background and work experience are quite outstanding. You graduated from Nanyang Technical University in Singapore, studied at Stanford University in the United States as an exchange student, worked in Deloitte as a senior consultant for risk advisory, and played the role of CEO’s executive assistant in a Hongkong listed company. Why did you choose to let go all this and start your own business from scratch?

Xiuyi Yang: Entrepreneurship has long been an organic part of my career planning, and all my past work experience is to serve that purpose.

I had several years’ work experience in the field of Internet-based digital transformation, and later went to Deloitte’s risk advisory, where I learned a lot about corporates’ strategy, organization, management and control, human resource, finance and so on. And that means companies at all stages of life cycle: start-ups, growth, Pre-IPO, listed companies and multinational enterprises. So I genuinely learned about all kinds of business organizations.

Later, I worked as CEO’s executive assistant in a listed company in Hong Kong. That is a company engaged in informatization and supply chain finance, with annual operating revenue of about 80 billion Hong Kong dollars.

And then an opportunity just showed up – that is China greatly strengthened its financial scrutiny, bringing window opportunities in the field of regulatory compliance. This niche market was immature and yet to undergo digital transformation, which is exactly the field I used to be familiar with. So I resolutely choose to start a business based on my past experience, in an attempt to utilize capital and cutting-edge technology to create value and provide service.

“This venture is to integrate Singapore’s advanced concepts, its global perspective and the cutting-edge technology into a big Chinese financial service market.”

FOF Global: It is reported that your venture is located in Singapore Nanjing Eco Hi-Tech Island. Why here?

Xiuyi Yang: If you look at the data, Shanghai, Beijing, Jiangsu and Zhejiang are among the top five places that Chinese investment companies favor to register in – topping the list is Jiangsu, and Nanjing is just in Jiangsu. So our customers are here, which means we’re closer to the market if the company is registered here. Also, Nanjing has its unique advantages of dense universities and talents.

Another reason is that I graduated from Nanyang Technological University in Singapore, and this is the Singapore Nanjing Eco Hi-Tech Island, a sci&tech innovation center funded by Nanjing and Singapore. The high-tech island is jointly initiated by the CPC Jiangsu Provincial Committee, the Jiangsu Provincial Government and the Ministry of Trade and Industry of Singapore. It’s an Important regional economic cooperation project under the Singapore–Jiangsu cooperation framework. For your information, we have also set up an office in a fintech incubator in Singapore.

Last but not least, in Nanjing there is the Linguistic Intelligence and Knowledge Engineering Research, Nanjing China (Like Research) – which is also our shareholder – jointly established by Nanjing University and the National University of Singapore. The former of the two universities has the cutting-edge artificial intelligence technology, while the latter has rich sci&tech research resources. Like Research with its technology and us with our commercial solutions create perfect synergy.

Other candidate cities are Wuhan, Shenzhen and Xi’an, in which we will set up offices next.

FOF Global: What helps can Singapore provide for your venture?

Xiuyi Yang: Singapore is one of the most important financial centers in the world. Its financial regulation is developed and the financial concepts are advanced. It has set up an important example for other countries to learn from. And Singapore’s financial companies are tech-enabled and data-driven.

China is actually not bad at the technical level, but China can learn from Singapore about the future form of our products and services. Learning from Singapore’s ideas, application methods and product forms, this venture is to integrate Singapore’s advanced concepts, its global perspective and the cutting-edge technology into a big Chinese financial service market.

Singapore will be our first stop on the way to a multinational company. When the business has reached a certain stage, we want to explore opportunities in Singapore, Southeast Asia and countries along the Belt and Road Initiative. Over the past few decades, other countries have formed a stable global network and influence in the financial field. I believe that in the process of China’s rise, excellent financial services and technology companies will also emerge, playing a more important role globally.

FOF Global: Who are the current shareholders of Nanjing Oversubscription Digital Technology?

Xiuyi Yang: First of all I want to say that we know our strengths and weaknesses very well. Technology and its commercial application are the two key problems we’re faced with, and that decides what types of shareholders we need.

At the outset of establishing Nanjing Oversubscription Digital Technology, Like Research was introduced as a strategic shareholder, because it has advanced artificial intelligence technologies and R&D capabilities – that solves our first problem.

The second problem as I mentioned is commercial application – how to turn technology into products and solutions. In that regard, we have found a R&D team in Nanjing as the founding shareholder, composed of senior developers and technicians who have more than 15 years of work experience in Huawei and national informatization enterprises.

In addition, a Singapore-based regtech company is also on the list of our shareholders. Last year, it received S$2 million in financing. It also feels that this service model has large market in both Singapore and China. We also want to cooperate with the company further in underlying technology, sales channel and staff teams in the future.

FOF Global: What insights do you have into the Nanjing Oversubscription Digital Technology Co, Ltd and the financial industry?

Xiuyi Yang: I believe that the Chinese financial industry, including the investment environment, will get better and better. Before this great development, a sound, mature, established and manageable regulatory mechanism is needed, and the relevant institutions in the financial industry need to pay more and more attention to compliance in order to make better progress and support the country’s economic growth.

In the short term, there will be a rapid increase of market demand in financial and regulatory fields in China. That indicates a huge entrepreneurial opportunity.

SOURCE Nanjing Oversubscription Digital Technology Co, Ltd.