Capgemini acquires Exiger’s FCC division to help banks scale fincrime compliance capabilities

Regulatory compliance is one of the most enduring areas of need for banking and financial services (BFS) enterprises. As financial markets continue to transform across transaction models, engagement approaches, and evolving offerings and business models, regulators, in turn, evaluate changing risks and update regulations accordingly. The role of artificial intelligence (AI), the rise of digital assets, legal marijuana businesses, banking-as-a-service, and massive increases in digital transaction volumes are some of the current issues commanding attention and driving investment and change across BFS regulatory compliance programs.

In noting this ongoing and dynamic need, Capgemini enhanced its BFS capabilities by acquiring Exiger’s financial crime compliance (FCC) division. The potential benefit to financial services firms is the ability to combine the FCC division’s deep fincrime compliance and regulatory knowledge with Capgemini’s BFS domain expertise, technology partnerships, and global delivery footprint to yield scaled, tech-enabled fincrime compliance operations.

Exiger’s FCC division brings deep expertise in FCC advisory, compliance and risk analytics, and managed services

In September 2023, Capgemini agreed to acquire Exiger’s FCC division. Founded in 2013, Exiger was created to oversee the HSBC monitorship in the US following anti-money laundering (AML) and sanctions-focused regulatory action. It expanded its business beyond the monitorship to offer risk and advisory and managed services around fincrime compliance and supply chain risk. Various technology acquisitions placed Exiger on a clear path to prioritize its supply chain business.

Capgemini’s acquisition of the FCC division garnered an experienced leadership team, 100+ fincrime compliance domain experts, about 50 clients with deep chief compliance officer (CCO) and chief operations officer (COO) relationships, and managed services operations in Texas (onshore) and Bucharest (nearshore). While the acquired entity brings a mix of capabilities across FCC advisory (e.g., program design and gap assessments), risk and compliance analytics (e.g., systems tuning and model validation), and managed services (e.g., transaction monitoring and customer due diligence), its business was advisory led, which Capgemini will leverage heavily as a tip-of-the-spear engagement approach.

The real value to banks will come from melding fincrime compliance expertise with enabling tech to drive automation and AI at scale

On paper, the acquisition looks great. It brings Capgemini a bouquet of capabilities and expanded C-suite access, including respected fincrime compliance advisory expertise, analytics, some limited managed services, access to new logos (including fintechs), and respectable CCO and COO relationships. Capgemini will cross-pollinate the FCC capabilities across its existing BFS-focused stable of consulting, IT services, and business operations services, bringing in its vast technology and process expertise, partnership ecosystem, and global scale. Capgemini will leverage its existing client base to activate cross-selling. It will also build a strong onshore/nearshore/offshore managed services capability, combining the onshore and nearshore capabilities of Exiger’s FCC division with operations in India and Poland.

The real alchemy of the union will come from combining fincrime compliance expertise with enabling technology—specifically automation and AI done at scale. Fincrime compliance services today are largely consulting or people-based staff augmentation. Tech-enabled managed services do not exist in fincrime compliance. It’s one of the least penetrated domains within financial services for automation and AI adoption. Capgemini needs to focus on bringing together domain expertise plus tech plus scale—done in a blended onshore, nearshore, and offshore fashion to meet all and sundry data and processing requirements.

Exiger’s FCC team will be a part of Capgemini’s financial services business unit, working across capabilities

Capgemini is smartly keeping the advisory, analytics, and managed services capabilities of Exiger’s FCC division together by retaining key leadership to run the business tightly coupled with Capgemini’s existing risk management business in financial services. This will help the firm offer end-to-end fincrime compliance solutions without overly focusing on the components. Separating the capabilities, such as spinning out advisory, runs the risk of creating silos, as we’ve seen from IBM and its Promontory acquisition. Exiger’s FCC division will continue to serve its existing clients while working to cross-pollinate offerings to existing Capgemini clients (and vice versa). We have seen Capgemini make similar moves with other recent BFSI acquisitions, Chappuis Halder for transformation advisory and Quorsus for capital markets post-trade expertise, keeping the domain expertise within the financial services division rather than carving it up.

The Bottom Line: Capgemini’s acquisition of Exiger’s FCC division offers financial services firms the potential to scale their fincrime compliance programs with AI- and automation-enabled managed services. Banks need to be willing to try.

AI and automation adoption in fincrime compliance is nascent. Rules-based tech like robotic process automation (RPA) never took off in this domain, as there is way too much variability and unstructured content. It’s thus a largely people-driven function, and the regulators seem to like it that way despite increased legal permissibility. However, with the advent of generative AI, a continued talent crunch, and the rapid pace of continued regulatory change, banks need to be open to change. The people will never go away, but fincrime compliance practitioners need help scaling.

Capgemini wants to drive this scale. The key will be tightly coupling advisory with AI- and automation-enabled managed services. Managed services must pull through automation and AI to help lessen massive manual burdens, but it has to be supervised where the tech augments the humans. Otherwise, it will be a non-starter with regulators.

Capgemini’s acquisition aims to help BFS firms scale fincrime compliance ops with AI and automation. Banks need to be willing to try.