RISKC/\PCOM

RegTech That Protects and Saves. 2020

ICAAP Constructor

BANKS REQUIRE SOCIAL TRUST

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“Global banks’ misconduct costs have now reached over $320 billion– capital that could otherwise have supported up to $5 trillion

of lending to households and businesses. But there is a biggercost. An industry the scale and importance of finance needs

social capital as well as economic capital. It requires the consentof society in order to operate, innovate and grow.”

MARK CARNEYGovernor of the Bank of England

21 March 2017

GLOBALLY BANKS HAVE FRAGILE COMPLIANCE PROCESSES THAT ARE UNDER CONTINUOUS SCRUTINY

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AUSTRALIA AS A RECENT EXAMPLE:“The Royal Commission’s interim report, released today, is a frank & scathing assessment of the culture, conduct & compliance in the financial sector. Australians expect and deserve better.”

Josh Frydenberg, Australian Federal Treasurer. (28 September 2018)

“Make no mistake, today is a day of shame for Australia’s banks. Having lost the trust of the Australian people, we must now do whatever it takes to earn that trust back.”Anna Bligh, Australian Banking Association, CEO. (28 September 2018)

“…[Banking] entities treating regulatory compliance as a cost of doing business rather as a foundation that informs and underpins how the business must beconducted.”

Banking Royal Commission Interim Report. (28 September 2018)

A NEW APPROACH TO BANKING COMPLIANCE IS NECESSARY AND OVERDUE

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• Regulators are actively encouraging banks to adopt RegTech solutions to better operate compliance management procedures & reporting to regulators. Why? RegTech has proven far more effective and efficient.

• Bank’s antiquated & mostly manual compliance systems guarantee costly non-compliance, board compliance management and governance issues. The undeniable fact Bank/ADI Boards and Executives now understand is that regulatory requirements have become too complex and onerous for manual systems to be effective.

• A comprehensive RegTech ‘Compliance Operating System’ system is the best solution possible.

• RiskCapCom offers that solution: The 'ICAAP Constructor' – commercially proven to be a far more effective and efficient compliance management and reporting system than anything being used in banks today.

• A unique RegTech compliance solution that pays for itself many times over in compliancecost savings, is designed to significantly reduce compliance risk, board of directors' liability and to reduce the PCR ratio.

• Our 'ICAAP Constructor' software system has already proven itself invaluable ata TOP40 Global Bank, ASX Listed Banks (Australian Stock Exchange - Banking Group) and Regulator (Central Bank).

• We have a UNIQUE domain expert GRAC (Governance, Risk, Audit & Compliance) solution – offering a‘qualitative’ methodology (expert guidance) based on each line of International Basel regulations/laws,to achieve a GOLD STANDARD of compliance.

“Today, everybody is asking how we can mitigate the conduct risk, and how we can reduce compliance manpower. The answer is clearly regtech.”Arial Attias – CEO, Athena Portfolio Solutions.

• Risk & Capital Compliance Solutions Pty Ltd (RiskCapCom) is an Australian based RegTech company – offering a World Leading ‘Compliance Operating System’.

• Our software products are coded in Australia, using the very robust and universally used Oracle Apex language. Making the system very safe and easy to implement. Our Compliance Management & Automated Reporting System ‘ICAAP Constructor’ can be deployed and used as standalone software or via a secure cloud service.

• We specialize in Prudential Standard Software - focused on the Basel II Accord (including ICAAP), Basel III, proposed FRTB and proposed Basel IV (Risk & Capital Compliance). Our system provides the Banks/ADIs solutions to the most critically important ‘Qualitative’ procedures required by law in over 80% of all Banking regulations.

• ICAAP centres on the regulatory compliance of risk and capital management procedures of a bank. Risk & Capital Management are the 2 most fundamentally important areas for any Bank/ADI/Insurer’s operations - to ensure they hold enough capital given their risk appetite and environment. That is why they spend the most time, money and effort on ICAAP. Due to their importance to ensure a safe and robust Global Banking System, ICAAP regulations are the most complex, onerous and most policed/enforced by national regulators all over the world.

• ICAAP takes primacy over all banking laws. ICAAP laws are the ONLY laws within Basel/Prudential Standards that can issue severe fines and penalties (often in the hundreds of millions, even billions).

• Banks Worldwide are legally mandated to comply with Basel II (including ICAAP) and Basel III.

• Our RegTech System ‘ICAAP Constructor’ makes a Banks ICAAP substantially more comprehensive, higher quality, cheaper, quicker, easier and mitigates against non-compliance/failings

“Regtech also creates transparency and consistency, as well as sustainably increasing the quality of risk management and compliance.”

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WHAT WE DO: THE COMPLIANCE JOURNEY STARTS WITH ICAAP

“RegTech has many similarities with developments in the manufacturing sector in the late 1990s,

Brooke Goudie – Thomson Reuters, E-learning and Connected Risk Marketing Specialist P 6

• 22,500 financial institutions comprise our total addressable market.• 90% of the world’s 25,000 financial institutions (FIs) must comply with ICAAP and international Basel Accords, upon

which our RegTech solution is based.• Our World First and Commercially Proven ‘Compliance Operating System’ will provide substantial cost savings and

strong value propositions to any sized Bank/ADI.• Our RegTech software system has been reviewed buy leading compliance and consulting experts in the financial

services industry, ALL have stated it provides a powerful compliance tool with NO competitor product in the market.

• Globally scalable and quickly deployable.• 1 to 5 months to modify ICAAP Constructor for a new country – depending on the regulation mapping requirements.• Short installation time – bank-size dependent ranging from 5-day period to install and train staff ready foruse.• Regtech is the fastest growth sector in FinTech and is expecting to have double digit growth for another 10 years or

more – reflecting the fact RegTech is simply a far more effective and efficient tool to manage and report compliance.• Banks/ADIs around the world are increasingly aware and keen to adapt RegTech for the significant cost

and time savings it offers BUT also critically important is the risk mitigation these systems provide against heavy fines and penalties for non-compliance/poor governance for their operations and board/executive.

• RegTech industry is growing exponentially.• FIs using RegTech to fill compliance gaps, reduce costs and detect enterprise risk before the regulators.• 2018 Global RegTech market revenue estimated at $23 billionn – est. to grow at 25.4% p.a. over the next 5 years.

COMMON INTERNATIONAL RULES: THE GLOBAL TREND OF INTERNATIONAL REGULATIONS IS HERE TO STAY AND BECOME EVEN MORE STRINGENT

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By 2020 RegTech is expected to make up 34% of all regulatory spend

$270bnFinancial institutions’ annualcompliance spending1

>$300bnFines paid by banks since 20084

23,864Fintech patents owned bythe most prolific tech company7

1 FT, Banks’ AI plans threaten thousand of jobs, 2017² KPMG, The Pulse of Fintech, July 2018³ FT, Banks face pushback over surging compliance and regulatory costs,2015⁴ Bloomberg, World’s biggest banks fined £321bn since fnancial crisis, 2017⁵ Juniper, Research Strategies for Financial Services 2017-2022, October2017

⁶ FT, Banks’ AI plans threaten thousand of jobs, 2017⁷ Aistemos, Technology Disruption Through a Patent Lens, July2018⁸ Aistemos, Technology Disruption Through a Patent Lens, July2018⁹ KPMG, The Pulse of Fintech, July 2018

$1.37bnRegTech investment in thefirst half of 2018 - more than for all of 20172

$76bnForecast RegTech spending by2022 - up from $10.6bn in20175

4,697Total fintech patents ownedby the top 15 banks8

7,000Number of compliance staffemployed by a global bank in 2014 – four times more than before the financial crisis3

10-15%of financial institutions’ staffwork on governance, risk management andcompliance6

34%RegTech’s predicted share of allregulatory spending by 2022 (4.8% in 2017)9

Globally Banks are Acquiring RegTech Solutions: 2020 RegTech is expected to make up 34% of all regulatory spending

Regulators are growing less tolerant to instances of misconduct and are increasingly penalizing financial institutions and individuals for non-compliance.

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• Banks constantly fail to comply with ICAAP.• Regulators deploy substantial resources on ICAAP review.• Banks annually spend millions on ICAAP compliance.• Despite ICAAP being 10 years old, Banks regularly deliver non-compliant ICAAPs.

• Non-compliant banks face severe penalties and consequences. Australia as a recent example.• Large fines: CBA fined AUD700M. $125million for ANZ, Westpac and NAB.• Capital Add-on: CBA and Westpac received AUD1B each and $500million for both ANZ and NAB.• Revocation of banking licenses, reputation damage and share price drops.• Morgan Stanley estimates Aussie Top4 Banks face $3.4 billion in regulatory costs over next 3 years.• $3.4 billion estimate comprises expenditure on new compliance programs, fines and customer

remediation programs.

• Board directors and executives personally liable for non-compliance.• Forced resignations: 5 Board members and CEO of AMP/Westpac CEO and Chairman • Personal fines can exceed AUD$1m.• Prison terms of up to 10 years for serious misconduct.

• International Fines.• BNP: AUD8.9B fine issued for operational risk breach through ICAAP.• HSBC: AUD1.92B fine issued for operational risk breach through ICAAP.• Standard Chartered: AUD327m fine issued for operational risk breach through ICAAP.

THE CURRENT FINANCIAL SERVICES SITUATION – Banking scandals, heavy fines and debilitating Capital Add-ons all centre around ICAAP failings

Driving the growing popularity, investment and strategic importance of RegTechhas been the ongoing wave of new and changing regulations over the last decade.

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• Narrow margin for error in compliance.• Regulators becoming stricter, not hesitant to impose substantial penalties for non-compliance.• Fines levied on US and UK banks estimated to top $400B by 2020.• Manual Compliance systems simply cannot keep up – producing constant gaps and errors

• ICAAP regulations are principle-based.• ICAAP rules do not specify a standard set of documents and/or questions from the regulator.• A bank’s view of what constitutes compliance often doesn’t match the regulators.

• Siloed approach to compliance.• Invariably banks use a single department for ICAAP compliance.• Siloed approach substantially increases risk of ICAAP non-compliance.

• Compliance is onerous.ICAAP covers several complex areas:

• Governance• Risk Identification• Capital Management• Reporting

• Risk Appetite,• Risk Management,• Stress-testing,• Internal Audit.

• Compliance with ICAAP requires bank wide participation.• Banks must create and manage over 95 separate documents to be ICAAP compliant.

CHALLENGES AND CAUSATIVE FACTORS (1) – Reasons for Utilising RegTech

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“…many companies continue to fall short of regulatory expectations by maintaining highly manual regulatory and compliance processes, which lack meaningful data for transparency...”John Humphries - Risk Priorities, CEO

• Unstructured and manual compliance procedures.• Banks do not have a structured approach to ICAAP reviews or maintenance.• Inefficient manual processes used to generate compliance reports and conduct audits.• End result: Compliance is unnecessarily difficult, time intensive and expensive – poor quality and non-compliance

CHALLENGES AND CAUSATIVE FACTORS (2) – Reasons for Utilising RegTech

• Knowledge attrition problems.• Every 1-3 years banks (depending on country) must submit a detailed ICAAP report to the

Regulator which requires bank wide participation.• Current manual approach to ICAAP means the specific staff complement of a bank must remain

constant over long periods.• Staff turnover and internal movement makes consistency year-on-year (and certainly within 3-

year period) very hard to achieve. Costly to manage and costly reliance on external consultants.

• Ill-prepared board, senior executives and staff.• Australian Banking Royal Commission found:

• Bank board directors had no real grasp of governance in their bank.• Bank senior executives not risk aware nor conscious of compliance within their departments.

• Inconsistencies between banks in a group.• Not uncommon for banks within a group to use varying ICAAP compliance procedures which are

inconsistent with each other.• Existing compliance processes makes it extremely difficult and expensive for banking groups to

satisfy ICAAP.

“Zeyn was the best Project Manager at getting ICAAP modelsdelivered. Highly organised and recommended.”Adrian Waynforth – Sandtander, Head of Risk Transformation, Business Banking and SME Risk.

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THE SOLUTION• 'ICAAP Constructor' - a purpose-built Banking RegTech software system. The world’s first proven ‘Compliance

Management & Automated Reporting System’. The system’s comprehensive list of features and functionalities provides Banks/ADIs with a very cost effective and efficient ‘Compliance Operating System’.

• Company founder, CEO and world leading banking compliance expert, Zeyn Adam, has developed and implemented ICAAP regulations into numerous country’s banking systems, including working with Regulators and 9 of the top10 global banks. He was also part of the expert committee that developed Basel II that over 90% of Banks in the world now follow.

• Zeyn’s 20 year professional experience enabled him to identify a big gap in the Financial Services Sector that required filling – a gap that could only be effectively closed using RegTech. So he set about conceptualising, designing and developing an industry best practice ‘qualitative’ compliance methodology software solution. A comprehensive ‘turn-key’ compliance management and reporting system.

• ICAAP Constructor makes ICAAP compliance significantly easier, substantially cheaper and considerably more effective.

• ICAAP Constructor pays for itself many times over in compliance costs savings.

- Running, maintenance and reporting costs (30-50% cost reduction)- Mitigates against heavy non-compliance fines, capital add-ons (savings millions)- Mitigates against Board members being fined or fired for non-compliance breaches and related poor

oversight & governance- Designed to help reduce PCR (allowing banks to use cash to generate millions more in revenue/profits)- Educates, trains and develops industry best practice compliance from the Board down.

UK Financial Conduct Authority - 2016–17 Business Plan.P 12

• Substantially reduce compliance costs.• Banks spend millions of dollars annually on ICAAP compliance.• Estimated ICAAP Constructor will reduce ICAAP compliance expenditure by up to 50%.• Compliance cost savings far exceed software license fees (multiple times over).

• Board Compliance Supervisory/Management Tool (world first).• Board directors frequently receive incomplete information late.• Poor communication means fixable problems become public and punished.• At the touch of a button, board directors can instantly receive a real-time report of the banks’ current

level of ICAAP compliance.

• Gap analysis.• Currently banks submit ICAAP reports to Regulator.• Regulator identifies compliance gaps in ICAAP reports and punishes bank.• Our software identifies compliance gaps before ICAAP reports are submitted to Regulator.• Our software offers step by step expert guidance to close those gaps• Ability to fix compliance gaps before they come to attention of Regulator or auditors.

OUR VALUE PROPOSITION (1)

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“…strong regulatory support for RegTech has already emerged, in particular from the Financial Conduct Authority, which has made innovation and adoption of RegTech a clear policy objective,”John Dwyer – Celent, Senior Analyst.

• Designed for comprehensive compliance.• ICAAP principle-based rules require interpretation (too high level, FIs need prescriptive rules).• Banks and regulators often have inconsistent understandings of compliance requirements.• ICAAP Constructor provides an exhaustive list of questions (1004 in total - all compliance based) and

compliance criteria.• Exhaustive questions / criteria cover all permutations of regulatory requirements.• 1004 questions assigned to relevant bank departments Board, Finance, Treasury, Risk Management, HR, Internal Audit

For example, 40 questions for Board, 100 questions for the Finance department etc.• An ICAAP designed, built and assessed using ICAAP Constructor (if correctly followed) will achieve at least a

GOLD STANDARD of compliance.

• A structured legacy project management system.• Structured and efficient process to manage, maintain and report an ICAAP to Board or Regulator.• Distributes ICAAP procedures throughout the bank for increased transparency and compliance accountability.• Each compliance task is assigned to an individual and tracked to completion.• Links documents to relevant compliance regulation.

• Trains, educates and builds best practice compliance knowledge and processes throughout the Bank/ADI.

• Legacy system solves costly staff turnover/knowledge transfer issues.• Compliance procedure & methodology improvements.• Knowledge transfer for each new user from the Board down.

OUR VALUE PROPOSITION (2)

leading to a paradigm shift in regulation.”FinTech, RegTech and the Reconceptualization of Financial Regulation (October 2016) – Arner, Barberis and Buckley. P 14

•

•

• This represents the biggest day to day and year on year bottom line benefit to any sized Bank/ADI (Authorized Deposit Taking Institute) because a reduction in the PCR by Regulator from scoring a GOLD STANDARD ICAAP report will reduce the amount of Capital (Cash) they need to hold in bank with those extra millions being able to be used to make loans, invest and trade to generate higher revenues and profits.As such this design feature if achieved would pay for itself many times over. It represents a significant value proposition for any bank/ADI.No other RegTech software in the world offers this unique and valuable design feature - they do not even use comprehensive domain expertise guidance (methodology) in their solution, instead offers basic compliance guidelines and work flows to follow, not expert guidance on complying to every line of every regulation.

• Automated reporting platform.• Every year banks submit a summary ICAAP report to Regulator.• Every 1-3 years (depending on the country’s regulator) banks submit a detailed ICAAP report to Regulator.• Software enables banks to have year-on-year as well as three-year consistency for ICAAP reports.• Automated report generation of detailed ICAAP reports will save banks millions of dollars and months of time.

• ICAAP Group Coordination.• ICAAP Constructor is integrated throughout the entire domestic banking group (i.e. parent and subsidiaries).• Group wide integration enables parent bank to issue consistent ICAAP compliance criteria and questions to all

subsidiary banks.• Using our system information provided by subsidiary banks to the parent bank is easily analysed and reported.• Risk of inconsistencies between group banks is significantly reduced.• Group wide integration also available for international banking groups.

• Designed to help Reduce Prudential Capital Ratio (PCR)

OUR VALUE PROPOSITION (3)

“What if that RegTech solution could prevent our company from receiving a $60m fine or from dealing with a regulatory issue involving multi-year global remediation requiring $10m in consulting fees?”John Humphries - Risk Priorities, CEO

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• Audit system.• ICAAP Constructor provides a specialised internal audit tool that can be used internally and for submissions to

Regulator .• Information is stored in a regulatory-topic, departmentalised structured and period relevant manner.

• Consolidated electronic library.• Captures and stores all documents for ICAAP (including all ICAAP specific responses to compliance criteria).• Information is stored in a departmentalised, organised and period-relevant manner.

• Mitigates against non-compliance penalties.• Our software makes compliance easier and quicker.• Likelihood of non-compliance substantially reduced.• Avoid severe non-compliance penalties:

• large fines.• ongoing, profit destroying, expensive requirements to hold additional capital.• loss of banking licence.• costly remedial work and reputational damage.

OUR VALUE PROPOSITION (4)

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“There has been technology used at various levels in the Regulatory space for over 20 years. However, what the new RegTech label recognises is that the gap between software and non-software enabled services has widened significantly.”Alan Meaney – FundRecs CEO.

WE ARE THE ONLY SOLUTION ON THE MARKET

• No other RegTech software in the world exists that can offer anything close to our methodology, detailed questions, legacy functionality, document linkage and reporting system – providing our clients with distinct cost savings, compliance advantages and capital ratio reduction strategies.

• ICAAP has qualitative requirements (80% of ICAAP) and quantitative requirements (20% of ICAAP).

• ICAAP Constructor is the ONLY software in the world that assists banks to comply with risk & capital prudential regulatory ‘qualitative’ requirements.

• Large majority of bank fines for ICAAP non-compliance are for breaching its ‘qualitative'requirements.

• ICAAP is a non-discretionary expenditure for banks.

• No GRAC system being used in your bank offers anything comparable to our compliance methodology, reporting and functionality, found in our ‘Compliance Operating System’.

“Alongside the rapid development of FinTech, we expect more financial institutions, both new and established, to adopt RegTech”

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• Two versions of ICAAP Constructor – one for regulators, one for commercial banks.

• Regulator Licensee: A large Central Bank.• Supervises 430+ banks (manual supervision not feasible)

• The Central Bank ran tender for ICAAP compliance assessment software and RiskCapCom was chosen over other global vendors

• RiskCapCom was the only bidder to offer a comprehensive ICAAP ‘qualitative’ assessment tool.

• Bank License Sales and Pending Pilots/Sales• We won a closed tender to sell a 4-year license of ICAAP Constructor at Europe’s 4th largest bank

• Sold a 3-year license to an ASX listed Australian Bank

• EU and Australian e-bank – agreements reached to use our 3-year compliance software for start-up and bank license approval

• Several Saudi Arabian Banks interested in running pilots of our software as part of their evaluation to purchase.

• A Big 4 professional services and audit has teamed up with RiskCapCom to promote our software and RegTech solution to their banking clients. They ALL recognised banks/ADIs sorely need our solution - to more effectively and efficiently manage and reporton compliance.

PROGRESS TO DATE

“The global demand for regulatory, compliance and governance software is expected to reach USD 118.7 billion by 2020.”Medici Report - “Strategic Analysis of RegTech: A Hundred Billion-Dollar Opportunity” (April2016).

LICENSING FEE INFORMATION

• Two licence fees for ICAAP Constructor (based on asset size/value to the bank):• One-Off Installation Fee - POE.• Recurring Annual Fee - POE.

• Initial licence term of 3 years for ICAAP Constructor - this ensures our clients enjoy the benefit of our system producing an ‘Industry Best Practice’ detailed compliance report for the Regulator, Board and its Auditors.

• Significant bottom line benefits include no costly remedial work for non-compliance/poor quality ICAAPs, mitigates against heavy fines and/or capital add-ons for non-compliance/breaches.

• The high quality ICAAP Report produced underpinned by the industry best practices and procedures, facilitates the application and approval of PCR reductions. Any reduction would provide a substantial increase in revenue and profit producing cash into the banks/ADIs operations.

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DISCLAIMER

The material in this presentation has been prepared by Risk &Capital Compliance Solution Pty Limited ACN 617 736 517 (RiskCapCom) and is general background information about RiskCapCom activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including regulatory guidance, software functionality and regulatory reports, should not be considered as final and complete guidance, as each bank has its own unique risks, business processes, risk management and methodology.

Before acting on any information provided in this presentation, you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, if you require, you should seek independent advice. All purchase transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or politicaldevelopments.

ICAAP Constructor (the Tool) is meant to assist and guide banks in becoming and maintaining compliance. RiskCapCom does not guarantee nor is legally liable for the erroneous, unreliable, inaccurate or expired data or information being loaded into the Tool by a financial institution.

The information contained in this document is being made under regulations at a specific point in time.

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RISK AND CAPITAL COMPLIANCE SOLUTIONS

For more information and to arrange a meeting please contact our executive team.

GREG JARDINE

CHIEF OPERATING OFFICERgreg.jardine@riskcapcom.com

+61 (0) 413 511 590

ZEYN ADAM

CEO

zeyn.adam@riskcapcom.com

+ 44 7769 700 404