Always remember where you came from. Understanding my pathway to success has been very important to me. It also helps remind you why you are where you are today. I have been in the business world for 40 years and have witnessed many CEOs and executives forget their mission. When you lose sight of your goals, your role and job can become diluted, ultimately risking employee morale and a sense of who you are as a person and a leader. For me, teaching at a university level helps me to stay grounded. As a professor on entrepreneurship and management, I am surrounded by young, bright, hard-working students who will inherit our world one day. I want to be able to share my wisdom and experience with them, but I am also able to learn from younger generations’ preferences, demands, skills and enthusiasm.
I had the pleasure to interview Mike Nicastro the CEO of Continuity. Continuity is a leading provider of automated compliance management technology for financial institutions and mortgage lenders. In this role, Mike is responsible for the company’s strategic direction as well as the executive oversight of sales and operations. Mike is a seasoned technology, sales and marketing executive with more than 40 years of experience in the fintech industry.
Thank you so much for joining us! What is your “backstory”?
As a 40-year financial industry veteran, I have been involved in RegTech since well before 9/11 brought it to focus. My banking career began in the 70’s where I worked in lending for a community bank and then a tier-one institution. Having developed a passion for and deep understanding of bank technologies, I took the next step to work in fintech at a Fortune 500 company. Then in 1994, I helped launch Open Solutions Inc. a fintech company that I lead through a 2003 IPO and a 2007 private equity sale valued at $1.4 billion.
I watched RegTech develop into its own entity from 2001 to 2009. Following 9/11, business continuity plans were struggling to keep pace across all industries, not just financial. After the economy had a chance to recover, 2008’s financial crisis flipped everything once again. Uncertainty proliferated as the big banks that we were supposed to trust worked around and broke the outdated rules. It was clear that we needed better rules in place to keep our industry safe and efficient. It was then, in 2009 that I joined Continuity’s Board of Directors to help our industry manage the pendulum shift as we search for balance between safety and efficiency. When investors began planning Continuity’s next phase of growth in 2016, I was asked to transition to my current role as CEO.
Today, RegTech is one of the fastest growing areas in the financial industry. I view my role at Continuity as one that supports the stability of the financial industry and all the communities that institutions serve. Community is very important to me, as I currently serve on the board of Simsbury Bank & Trust and have served for 10 years as a member of the Governing Board and executive committee of the Tony Award winning Hartford Stage Company, among many other things. I am an Entrepreneur in Residence and a member of the faculty at the CCSU, School of Business. I have been a guest lecturer at Yale University, School of Management and a Moot Court Judge at Western New England University, School of Law. And I serve on the CT Next Higher Education Advisory Committee.
Can you share the funniest or the most interesting story that happened to you since you began leading your company?
Last week I was talking with a large bank prospective client about a TV commercial from a mega-bank that we saw during the Players Championship. The commercial was about their long-respected history and how, despite recent blunders, they were focused on earning back customer trust. As we were talking about it, a news alert notified me that the same bank on this commercial had employees altering documents in order to make a compliance deadline! We got a laugh out of that, but it really is serious business.
There is too much at stake to trust any part of the regulatory process to blind faith. Bank executives have heard and seen enough horror stories and they are done playing with fire. They realize the demand for automation and regulatory management in banking today.
What do you think makes your company stand out? Can you share a story?
The thing that makes Continuity unique to its space is its holistic design that can accommodate a variety of regulatory content. Unlike traditional point systems, our Compliance Management System allows a client to manage all aspects of regulatory compliance, from risk to governance to procedures, monitoring, training, audit corrective action…it’s a hub for all of the regulatory responsibilities an institution has to manage on a daily basis. On top of that, our team of experts supports the technology by answering basic compliance questions and helping guide deployment of the solution to achieve best results. We like to call it “expert-driven technology from technology-driven experts.” We’re proud to have pioneered that kind of hybrid, “solution-as-a-software” plus “platform-as-a-software” approach for the regtech space.
Are you working on any new or exciting projects now?
We always have R&D initiatives running constantly in the background, and we dedicate a few million dollars a year to keeping our products aligned with current trends in both the regulatory and technology domains. One of the fun things we’re doing right now is upgrading our technology platform to allow users more options in choosing how they interact with the solutions — a more tailored personal experience versus one-size-fits-all. And we’re doing some work in creating a taxonomy and classification system for regulatory controls that will dramatically improve the ability to automate more of an organization’s controls environment over time. It’s an area that’s always presenting problems to solve that are both intellectually and operationally interesting.
What advice would you give to other CEOs or founders to help their employees to thrive?
Be patient. Whether you are in RegTech and banking, or another commercial avenue, you must understand that the entities that your organization may be selling to are facing regulatory pressures. Some industries will adapt to increasing regulatory pressures, but not necessarily in a timely manner. RegTech is not an “If you build it, they will come” scenario. As leaders in RegTech, you should not get too far ahead of customers’ needs; the constant pendulum swing of changing administrations, rules and regulations inhibits us from predicting too far into the future.
Can you share the top five ways that 5 ways that RegTech can help increase a business’s bottom line.
Based on experience, I’ll offer that these five ways are common to most every type of technology deployment — they’re not really limited to “RegTech” at all, although that’s the space that’s hot right now. The enhancements technology brings to your organization — all of which combine to drive efficiency up and cost down — are what we at Continuity call the secret “SAUCE”:
· Scalable — RegTech allows you to deploy the same compliance protocols across your enterprise, even when it’s spread out geographically or is growing or shrinking based on market demands, without the hassle and expense of staffing up or down.
· Accurate — RegTech is proven to produce more reliable outcomes than human effort. Not only does this reduce the risk of incurring financial pain through enforcement actions or lawsuits, but it also reduces the operational costs associated with quality control, monitoring and auditing activities. More accuracy on the first attempt means dramatic savings downstream.
· Uniform –RegTech gives the ability to drive uniform standards across diverse people, geographies, product lines, etc. Uniformity makes results measurable, and this gives management and directors visibility into the compliance efforts organization-wide. These metrics can be used in turn to calibrate effort to the desired result.
· Cost-Effective — Machines are always cheaper than humans, long-term. And we’re finding that most regulatory technology has a short ROI, 6 months or less, generally, to payback of the upfront investment to acquire and deploy.
· Easier — RegTech makes getting the work of compliance done easier for everyone, from the frontline to the boardroom. Frontline personnel can get things right without struggle, compliance/risk/audit can view their results remotely, and senior management can review performance and produce Board-ready reports in a fraction of the time of human effort.
Does the emergence of RegTech threaten bank jobs? Can you explain why?
The answer, as with all technology solutions, is…yes and no. Yes, because obviously, there are tasks that a machine can do as well or better than a human, and at a lower overall cost, where the human will no longer be required. Examples of these include things like sifting and sorting and recognizing patterns and producing repetitive or rote outputs. So yes, certain jobs will be unseated if technology prevails. That being said, other jobs cannot yet be replaced by robots — the ones that require higher-order analytics skills in spaces that don’t give way to technology yet, such as interpreting regulatory requirements or deciding whether a particular transaction was done soup-to-nuts in a compliant manner. We’re still a long, long way away from being able to replace the judgment of a seasoned compliance officer or risk manager. But what we can do is free up the dollars wasted on the low-level tasks in the compliance budget so that we can preserve access to the best human talent for higher-order work.
Can you share any interesting approaches that RegTech firms use to engage banks?
Over the years, I’ve seen everything done to grab attention, from conference giveaways as big as motor scooters (literally, a core provider gave away a Vespa in a drawing!) to ball caps with clever sayings to superhero capes, to try to attract the attention of bankers. We even bring a magician with us to the big trade shows to draw booth traffic, and it works! But the reality is with subject matter as serious as compliance, while they may let you grab their attention with marketing pizazz, people don’t tolerate a big sense of humor when it comes time to buy. They want traditional approaches used when asked to part with their money. The best strategies seem to include solution-based, consultative sales: describing how the bank’s problem is solved with the regtech solution, and why the vendor is the best fit to provide the solution. Then, of course, passing the rigorous due diligence process inside the buying organization. Nothing has changed much in the fundamentals. The psychology of selling is still that people buy from people, and they buy from people they trust.
Can you please give us your favorite “Life Lesson Quote”? Why does that resonate with you?
Always remember where you came from. Understanding my pathway to success has been very important to me. It also helps remind you why you are where you are today. I have been in the business world for 40 years and have witnessed many CEOs and executives forget their mission. When you lose sight of your goals, your role and job can become diluted, ultimately risking employee morale and a sense of who you are as a person and a leader.
For me, teaching at a university level helps me to stay grounded. As a professor on entrepreneurship and management, I am surrounded by young, bright, hard-working students who will inherit our world one day. I want to be able to share my wisdom and experience with them, but I am also able to learn from younger generations’ preferences, demands, skills and enthusiasm.