Being all-digital, virtual banks face inherently higher fraud-risks and cyberthreats, so this pioneer financial institution has some high expectations to meet.

As a trailblazer, Hong Kong’s first virtual bank is under intense regulatory and supervisory pressure to demonstrate that it has a robust risk and compliance screening system in place. It has to comply with measures against financial crime, sanctioned regions or entities, politically-exposed persons (PEPs) in order not to be used as a conduit for illicit activities.

Additionally, ZA Bank’s own mission to offer exceptional customer experience means that its risk and compliance screening system has to cope with the need to filter a variety of rapidly-changing domestic and international regulations and sanction lists in real time without disrupting the flow of finance or generating unnecessary and overwhelming amounts of extra work.

More importantly, the bank needs to maintain a high level of efficiency when handling account openings, loan applications and payments. Said the bank’s CEO, Rockson Hsu:“While (the bank) provides around-the-clock, innovative services purely through a mobile application, we have adopted a rigorous compliance and risk management approach like the traditional banks do… to make banking accessible to more people in our community through technology.”

The virtual bank meets the Anti-Money Laundering and Know-Your-Customer regulations through its adoption of a screening solution by underpinned by unique filtering technology and configured based on the bank’s specific needs and risk profile.

The range of solutions can screen millions of customers at the time of onboarding, while also screening millions of transactions for fast settlement. An individual’s name, for instance, is the starting point for many screening checks. The filtering technology has been designed to account for common variations in name structures or typologies in English, Simplified Chinese characters, Traditional Chinese characters, and Hanyu Pinyin, amongst many other languages.

By turning to such technologies, ZA Bank believes it has achieved a balance between ensuring rigorous risk management and delivering excellent customer experiences. The solution operationalizes three key steps: automated alert detection, reduction of false positive alerts, and prioritization of high-risk alerts. This system allows the bank to generate an electronic audit trail that acts as retrospective proof compliance policies in force, for auditing and regulatory oversight.

According to Bharath Vellore, Managing Director of Accuity, the bank’s supplier of the high-tech screening solutions: “The competitive edge for digital banks is primarily through customer experience and lower operational costs. Accuity is proud to be supporting ZA Bank’s innovative business model, as well as Hong Kong’s advancement into the era of smart banking.”