Why Encompass travelled 10,000 miles to grow from Scotland

Since locating to Scotland from Sydney, Australia, software services firm Encompass has grown globally, with offices in the UK, Asia Pacific and Europe. The company is now eyeing further growth in the regulatory technology (regtech) market.

Why Scotland for regtech?

Encompass chose Scotland seven years ago as the ideal location to expand its regulatory technology business. Gerald Murphy, industry adviser at Encompass (pictured) puts the company’s success down to a lot of hard work and the ‘extremely helpful’ ongoing support and financial assistance it’s received from Scottish Enterprise and Scottish Development International.

Gerald shares his story and highlights the regtech opportunities in Scotland:

"I first became involved in Encompass seven years ago when they were considering moving out of Sydney and looking at locations to touch down.

"The UK is still considered globally as the number one centre in the world for finance alongside New York. So, if you're in the business of financial regulation, you need to be coming to the UK.

Gerald Murphy, industry adviser, Encompass

"Within the UK, Scotland is the number two financial centre outside of London.

"The people I engaged with at Encompass seven years ago considered, ‘where are we going to go?’ And they looked at several different locations. They looked at London. They looked at Manchester. And they looked at Northern Ireland because there was a particular connection with one of the founders in Belfast.

"When I was introduced to them, we looked at all the different locations and we met with Scottish Enterprise, Scotland’s national economic development agency, for the support we needed.”

"Encompass eventually chose Scotland and opened an office in Glasgow. So, what attracted Encompass to Scotland in the first place? And how has that turned out, seven years on?

"We started with four staff in the Encompass office back in late 2014/2015. And there were four different reasons that we chose Scotland:

Vibrancy and culture

"First, they just felt that in terms of scale and size, Scotland had an excellent vibrancy and culture. It wasn't too big or too anonymous.

Universities among the best

"Secondly, the presence of universities in Scotland is as good as it as it gets anywhere. And, when you come to Scotland, you’ll notice there are universities literally on every street(!) including Glasgow, Edinburgh, Heriot-Watt, Strathclyde and Caledonian. So, the university component is very significant.

Talent

"The availability of graduate talent was another factor. And, seven years on, that is still very true. And I guess with the number of universities and the amount of graduate output, and particularly in terms of technology, that’s critical.

Cost savings

"And a final thing was the overall cost of running an operation in Scotland that compared very favourably with London where, as you’d expect, the costs are significantly higher and in some other regions as well.

"Now, seven years on, how has that turned out? Well, the answer is we've pretty-well ticked every single box. Scotland has proven to be a very good location of choice and we're pleased about that.

Reducing financial crime

"The company’s mission is to empower regulated firms to comprehensively detect and prevent financial crime and reduce regulatory risk. What Encompass does is, if you're a bank and you onboard a customer, you need to go through a process known as KYC, which is Know Your Customer. And traditionally banks have used teams of people to do that kind of thing manually. What the Encompass product does is two things:

"First, it automates the bank's onboarding policy for customers – that policy that's agreed with the regulator in the jurisdiction, that's the FCA (Financial Conduct Authority) in the UK.

"Secondly, we are mapping the world's large data registries, so they are digitally API connected to the Encompass product.

"So, if you're onboarding a customer, you’ve got the automation and you have very fast electronic access to data registries – and that just speeds up the overall process.

Glasgow – a springboard for growth

"When we started in Glasgow, we had four staff. In the same location, we now have 68 staff with about 180 staff UK-wide. We have a big sales and marketing operation and customer support operation out of London. And we’ve also continued to grow the Sydney operation as well. We've established operations in Scandinavia, and we're setting up in the US this year, which is a big thing. To go to America you need to be well funded. So, it’s gone well.

“Scottish Enterprise and Scottish Development International have been extremely helpful in terms of, not just handholding, but financial assistance and general customer support with the whole idea of moving to America.”

Hard work underpins success 

"We've managed to secure several blue-chip banks, such as Santander, as customers. For any company, and that includes regtech startups, if you can secure tier one banking customers, then you know you're halfway on the road to success.

"We're improving the quality of the KYC process, so clients can get a full picture of the customer for safer, more informed decisions.

"We’re helping reduce the cost, obviously, because we're introducing technology to what was prior, a very heavily manual process.

"And from the customer's perspective, it's a much more seamless and improved journey. 

Future regtech opportunities

"One of the things that we found in Encompass is that the whole world of financial regulation, not just in the UK but globally, is extraordinarily complex.

"I’ve been looking at some of the challenges. And importantly, some of the opportunities over the next 10 years in the whole world of financial regulation, bearing in mind that the overall objective is simply to reduce financial crime. There are two components to that:

"Encompass is concerned with the KYC side of the equation. And there's another component called AML or Anti-Money Laundering. These are twin cornerstones of financial regulation.

"Models potentially beginning to emerge in this space include bank utilities and risk registers. There are huge opportunities for tech companies to participate in what will become a change in the ecosystem or infrastructure - the ‘central plumbing system’ if you like, of the whole financial regulation.

"Take utilities, for example. Encompass is involved in one just now in Scandinavia, and the idea of utility is quite simple. Several banks join the utility, and you have this enormous pot into which everyone's record is added and then authenticated within the utility, as opposed to each individual bank, as is the way just now, authenticating that record for KYC purposes.

"So, the emergence of utilities is an interesting concept. You can do utilities for small businesses and for the socially excluded or the unbanked, to allow people into that. There’s a whole raft of different deployments of utility that may emerge over the next 10 years."

More about Encompass services

If you’d like to hear more about the experience of Encompass and how Scotland could be an ideal location for your regtech business, we’re here to help.

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