On Tuesday 17th June, David Wilson, Head of Risk Intelligence, hosted a webinar on LSEG's Risk Intelligence division.
The session provided an overview of the key business activities, industry trends and future growth opportunities, followed by Q&A.
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Event replay
Good day, ladies and gentlemen,and welcome to the LSEG Risk Intelligence Webinar,hosted by David Wilson, Group Head of Risk Intelligence.During this webinar, all participants are in listen-only mode.Later, we will conduct a question-and-answer session.To submit a written question,please click the Q&A button at the bottom of your Zoom screen.You can submit questionsthroughout the duration of the presentation.Instructions will also follow at the time of Q&A.I would like to remind all participants that this call is being recorded.Questions will be answered after the presentation.I will now hand over to David Wilson, Group Head of Risk Intelligence, to begin.Hello, everybody.I'd like to add my welcome to everyone joining this webinar today.I'm David. I lead the Risk Intelligence division of LSEG.I've been with the organisation since 2023and have an experience of running global businessesin the financial crime and payment space over many years.If we could go to the next slide, please.That's it. Thank you.On the agenda today, I'll explain more about the groupand the problems that we solve for our customers.Also, we'll go through the compelling market opportunityin which Risk Intelligence operates,supported by multiple macro trends as tailwinds.Of course, our strategy to accelerate growthin line with the market opportunities and the changing requirementsof customers and prospects all around the world.As mentioned a moment ago,we'll have plenty of time for all your questions.If we could jump in, please, and go to slide four.Risk Intelligence operates in an environment of complexand ever-changing financial crime.Our solutions help customers avoid regulatory non-compliance, tackle fraud,benefit from operational efficiency, and gain advantage in navigating risks.We're the trusted partner to the world's largest banks,nonfinancial institutions, corporates, and governments.Our business is built on a heritage of accuracy, integrity,and customer focus spanning back over 2 decades,with a track record of reliable intelligence,subject matter expertise, and technology innovation.Our World-Check database has over 5 million records,supported by over 500 analysts speaking 70 languages.Our payment fraud solutions verify over 200 million transactions per yearof around about a million identified as potentially fraudulent.Our identity services are required to keep pace with fraudsterswho perpetrate financial crime and fraud on a vast scale.Fighting financial crime and reducing fraud using our data for goodis a key driver of the team,and it sits at the heart of everything we do.We use that desire to make a differenceto help our teams to innovate and improve every day.If we could go to the next slide, please.This will give you a little bit more of a basic understanding of the business.It's, as you can see, made up in three main areas or buckets,as I tend to call them.You'll see to the left that Screening is the largest part of the business,making up 78% of our revenues.Our World-Check databasewas the very first database of its kind in the world,and this year, celebrates its 25-year anniversary.It helps customers detect, assess,minimise potential risks across multiple vectors,including sanctions, politically exposed individuals,adverse media, and UBO structures,helping customers meet their regulatory obligationsand avoid the facilitation of fraud and money laundering.In the middle bucket, you'll see Digital Identity & Fraud.As you will all know, as digitalisation continues to accelerateand fraud has become more and more sophisticated,the need for rapid, frictionless verificationsof identities and accounts continues to grow.Our Identity Verification Service allows customersto verify their customers and vendors anywhere in the world,quickly and effectively.With global data and the latest biometric and liveness technologyto combat deep fakes and identity takeover fraud.Our payment verification services safeguard payments,mitigate push payment, and takeover fraud,and allow customers to make payments with confidence.Finally, the smallest part of our business is our Enhanced Due Diligence portfolio.That's a combination of research reports and technology,which provides insights on a specific entity,helping firms assess the financial and reputational standingof customers, suppliers, and other third parties.This ultimately allows them to onboard customers and third partieswith paced precision and with security.Next slide, please.In screening, as I've mentioned,we have our industry-leading solution, World-Check.It's used by the vast majority of Tier 1 banks around the world,and a rapidly growing numberof multinational corporates around the world.We provide data and insights,as I've mentioned, on sanctions, politically exposed individuals,and adverse media.Our data is best in class and rigorously researched by specialist analysts,many of whom have been with World-Check since the firm's inception back in 2000.We have access to unique and proprietary data sourcesthat allow us to provide more accuracyand timely information versus our competition.We deliver the product in multiple formats,such as file transfer, high-performance APIs,and SaaS applications.You can choose to have that with or without case managementand workflow tools.We monetise this solution through an annual subscription,offering strong recurring revenue.We have headwinds that are supporting our business,including the inflation in the number of sanctionsdating back to Russia's invasion of Ukraine,and the complexity of sanctions.As regulators in Canada, Europe,and the United States have imposed sanctionsand export controls an unprecedented rate,and global businesses need to comply with those changesWe've seen a lot of growth in all regions as a result of that complexityand that need to ensure that you're up-to-date at all times.A typical use case, as you can see to the right here,is a global leader in e-commerce.They wanted to screen their customer transactions in real-time.As you can see, our solution was World-Check One.This allowed the customer to meet the qualityand timeliness of a scalable solution,allow them to complete that real-time screening.Our solution has helped the business grow rapidlybecause they've been able to onboard customersand facilitate transactionswhile ensuring they have that regulatory compliance.This is a very common use case that we'll have in our screening business.We go to the next slide, please.We've also got within our screening businessour World-Check One proposition, as you'll see here.Now, World-Check One is a solution for customerswho wish to use our best-in-class data,but also screening tools workflow in a single application.This has been a significant contributor to growth over the years,and you'll see some of that when we look at our 5-year CAGR, a little bit later.It supports customers from a large global financial institution,such as a Tier 1 bank, right through to smaller organisationsor regional businesses that have become subject to AML and KYC lawsas the regulatory landscape has grown.It's church is very broad and very diverse.It provides a large number of different workflow tools,case management, reporting, and analytics capabilities.In the last 18 months, we've invested heavilyto create a highly scalable businessthat can support very large transactions pretty much anywhere in the world.The reason this is important going forward is as regulatory pressure grows,investments in adopting cloud-based architecturehave positioned World-Check Oneas a screening platform can support those very high concurrent transactions.What this does, it reduces screening time for customers,and that can be done without compromising either accuracy or speed.A really important part of the portfolio.As a result of that work,we can now support over 1 billion daily screens.Daily screens, even.Daily screens, I have plenty of those, but over a billion daily screens.Next slide, please.As digitalisation continues to accelerateand frauds has become more and more sophisticated,as I mentioned at the top of this call,the need for rapid, frictionless verificationsof identities and accounts continues to grow.Our digital identity and bank verification toolsare predominantly deliveredthrough high-performance APIs and online tools, which we monetisethrough a transaction consumption-based pricing model.A typical use case here,a Fortune 500 company experiencing fraud in their claims' disbursement.By integrating our account verification solution,its payment workflow was not only faster,but they were able to avoid over 12 million in fraud lossesbecause of both the speed and the accuracy to be able to identify those transactions.Again, whether it's on the identity side for a fast onboardingor on the payment side,the speed and scalability of our global solutionis allowing us to win in the marketplace.Next slide, please.As I've mentioned, EDD is the smallest part of the business today,which provides risk insights into a specific entity,helping firms assess the financial and reputational standingof their customers, suppliers, and other third parties,and of course, third-party riskand understanding the counterparts that you do business withhas become a growing important trendfor all businesses of all shapes and sizes over the last few years.We serve the customer by providing bespoke reportsthat indicate ultimately the risk of transaction with entitiesbased around the company's policies and risk appetite.The reports can be provided through our own platform,or they can be integrated into a whole range of other platformsto be used for supplier onboarding.They're monetised through both outright and recurring revenues.Again, when it comes to a transaction basis,we monetise that through consumption-based pricing.In this area of the business, a typical use case herea global medical device company,they needed to comply with third-party compliance policy,but in doing so, streamlined the cost and time it took to complete the process.We're able to integrate our due diligence reportsinto the platform they were currently using,which resulted in a 1 million annual cost savingand obviously a very clear return on investment for the customer.We could go to the next slide, please.Let's look a little bit about how our revenue and customer typeis broken up here because it differs, I would say,from what you typically see, perhaps in the rest of the LSEG group.If we start with revenue,the business is delivering stable long-term revenue growth,benefiting from both a diverse customer base,but also this high percentage of recurring revenue.If you see to the illustration on the left,77% of Risk Intelligence revenues are recurring.As global identity and payments transactions increase,we benefit through to that usage-based revenue.If customers are very active around key shopping periods,let's say Black Friday or Cyber Monday,we will see that immediate benefitfrom those increased transactions over those periods.Our growth has been supported by our core, of course,if we look at the customer types of banks,fintech, but also regulated nonfinancial, such as legal and mortgage firms.You can see we've got a large proportion of corporates,and this covers a whole range of different areasfrom healthcare, e-commerce, automotive, and travel.Next slide, please.A diversified customer base and the fact that, as you saw,we've got high recurring revenues have driven really strong growth.You can see here we've got a CAGR that I think is impressive,particularly when you think about that continued double-digit growththat it's been driving across the business.In addition to the strong performance in screening,the growth of the business has been supportedby Digital Identity and Fraud acquisitions,GIACT for Trusted Payments, and the Global Data Consortiumfor Digital Identity.Most importantly, we're not standing stillas we continue to innovate at pace,strengthening and broadening our offerings,as I'll mention in a moment,I feel very good about the growth potential of the businessas we go forward.Next slide, please.Risk Intelligence sits at the heart of LSEG's customer position.When it comes to risk and the rest of the group,I think it's fair to say we have a very happy marriage,and we benefit one another.We benefit from LSEG scale, distribution, investment, shared technology,and of course, highly trusted and respected brand.We benefit the group as we have a consistent track recordof double-digit growth,and we operate in high-growth marketswith high recurring revenues and retention rates.As you can see to the right, our margin is also accretive to the group at 53.9%.Over 80% of the large D&A customers use Risk Intelligenceand we secure a diverse customer base within Risk Intelligencethat can be used as a funnel for other LSEG servicesas the wider LSEG business looks at corporates as a main growth area.Again, works very well for the different strengths of the group.Next slide, please.What I'll touch upon now is the compelling opportunity.I've mentioned a couple of times alreadythat I believe we operate in a very strong marketand the underlying market dynamics are strongand are likely to stay strong going forwardbecause of some macro trends that I'll touch upon.But if we start with the next slide, please.There are multiple drivers of growth for the business.You'll see, overall, the business today, at the size of the segment it operates.But most importantly, some of those multiple structural growth driverson the right-hand side.If I start with geopolitical tension,which is something that's affecting all of us day to day at the moment,the Russia-Ukraine conflict in particular,prompted many firms to reevaluate their sanctions' exposureto Russian entities.From that point, we've had US tensions with China,de-globalisation, fragmentation of sanctions regimes,and national autonomy,which is all changing that regulatory landscape rapidlyand creating further demand for our services.There's also been the global expansion of both the regulatory scopewith all types of firms of different sizes being drawn into wider regulation,but also sustained regulatory enforcement.You have that regulatory net getting wider,different customer types being brought into KYC and AML regulation.You also see that nonfinancial sector and the sector overallgetting sustained enforcement and fines movingfrom traditionally large banks to now a range of corporates as well.Another growth driver is the greater supply chain risks,which I've talked about.That creates a real need for KYB and KYC services.Again, as I've mentioned, the growth in digital payments.Everyone that produces any analysis on this space will tell youthat the volume of digital transactions is expected to continue to grow rapidly.That's driving innovation in both traditionaland emerging transaction markets,as well as an ongoing requirement for process efficiencyand fraud protectionas the fraud grows in line with those payment volumes.We see this huge increase in payment fraud.In addition to traditional areas of fraud, like payment cards,there are now more than 20 different varieties of scam typesthat fraudsters are taking advantage of.Things from investment scams, impersonation scams, remote access scams,romance scams, e-commerce scams,and now more recently, business invoice redirections scams.A lot of the proceeds of financial crimeare being redirected back into industrial-scale fraud factories,which are targeting all of these different scam types.It's never been more important for our customersto have the right defences.Finally, it's a battle between scale, efficiency,regulatory compliance, and trust, but also offering customers a very fast,low-friction onboarding experiencebecause businesses risk losing customers to their competitorsif they can't offer effective and fast secure onboarding tools.We play very much a rolein helping them continue to manage that complexityand that continuing growth in volumes.We could go to the next slide, please.If we think about those macro trends as a whole,what those trends are doing is creating increased customer needs,and that in turn, obviously,produces opportunities for growth Risk Intelligence.We start to the left.There's a strong demand for efficiency and cost reduction.There's also been a significant shift towards cloud adoptionand real-time services to meet increasing customer demand.Now, I think when I came into the compliance space many years ago,cloud adoption was not only not used in any real shape or formby anyone outside of very large global organisations,but there was a viewpoint back thenthat they were always going to be limitedwith their opportunities for cloud adoptiondue to the complexity and concerns about the regulator environment.We've now seen a complete switch,and most, if not all, financial Institutions have embracedthe journey towards cloud.Now, the way this helps us is that we have, as I've mentioned,best-in-class data and SaaS platforms like World-Check One to meet that demand,and due to some of the other strategic opportunitiesthat I'll talk about a little bit later,we see even greater opportunity to deploy new solutions and services in the cloud.Real-time requirements,I've mentioned that's very important to onboard customersand complete the KYC checks earlier in the customer journey,and this is driving the need for those high-performant APIs.As businesses face ever expanding third-party risks,we see a consolidation of vendorsto reduce both the cost and risk of doing business.What this does is it provides an opportunity for an embedded partnerlike Risk Intelligence to cross and upsell servicesbecause the trusted brand and the existing relationshipgives us the first mover advantage when customers are looking fora wider range of financial crime and fraud services.We're very confident, finally, on the right-hand sidein our ability to deploy AI in both internal and external use cases.Again, if I look back to the environment,say 5 years ago, and to where it is now,the financial crime segment has really embraced AI,and that's not just been because of the technology that's available,it's because there's been a marked shift in regulator, support,and confidence in the modelsbecause they are becoming much more explainable.AI will continue to provide efficiency in the financial crime and fraud space,and I believe we're very, very well positioned to take advantage of that.Next slide, please.Many of you will know some of the companies that you'll see below,but the headline here is thatthe market has been really extremely fragmented over the yearswith customers forced to deal with multiple vendorsto complete financial crime workflows,and that in turn creates then the need to stitch or connect those insightsfrom different providers,again, increasing complexity and increasing cost.Now, with changing fraud and financial crime patterns,the increasing sophistication of the fraud attacksand that rapid change in regulation,it's making it much harder for customers to remain compliantwith multiple vendors across this workflow.As the segment matures and vendors consolidate,customers are increasingly demanding connected end-to-end solutionsto provide more interoperability, to reduce the numbers of third parties,to respond faster, and of course, to reduce cost.If you look at the jobs to do under the complete life cycle,and you look at where the Risk Intelligence product is today,we have a comprehensive offering right across that compliance life cycle,which allows us that cross and upsell opportunity,and when we look at accelerating our product innovation,we plan to increase propositions further across that life cycle.Again, strong offering today,but lots of opportunity to deliver even further growth for the business.Next slide, please.LSEG Risk Intelligence has a history of transformational change,and that's through different mergers and acquisitions,but different products that have been launched over the yearsto support the evolving market opportunity.If you look to the far left-hand side,you'll see that World-Check dates back to 2000.As I've mentioned,the first Risk Intelligence database of its kind.It's 25 years old this year.We have celebrations with our customers in many, many parts of the world.But that's obviously been a foundation of our screening business.You'll see, if you move one to the right,GIACT was founded in 2004 and acquired in 2020.You'll see that the Global Data Consortium was founded in 2010 and acquired in 2022,and as a result of those acquisitions and those product enhancements,the portfolio now contains the data leaders in KYC,IDV, and payment fraud segments.That's important because we seeopportunities to put those data and insights togetherto solve different types of problems for our customers,which I'll touch on in a moment.Next slide, please.Big market, business doing well.How do we now take advantage,and grow the business even more successfully?If we go to the next slide, please.Ultimately, we've now got, I believe, the core building blocks in place.My ambition, the ambition of the teamis to accelerate the growth of the business.But these core building blocks were very importantto give us a foundation for growth.With a focus on cloud-enabled solutions, which are the choice of the market,we've divested our non-core on-premise assets,partly because they lack scale,but also because of that bespoke nature, they delivered lower margins.We've also put together a team of industry-leading talentwith a track record in delivering product innovationand commercial success in financial crime and payments.We have new leadership coveringtechnology, operations, strategy, product, and sales.Risk Intelligence has expanded our cloud partnership with Amazon Web Services,which allow us to bring a number of new cloud solutions to marketplacein the next 3 years.I've mentioned AI, and if you look finally to the right,we've accelerated the investment in AIand automation to take advantage of the growing opportunityto automate parts of the financial crime workflow.AI makes us effective,and in turn makes our customers more effective.If we go to the next slide, please.Three businesses today, and our strategic prioritiesalso sit in three focus areas.Number one, we are strengthening our current businessby growing our leading position in core segments.We're now connecting, integrating, and orchestrating our productsto create compelling customer solutions and to solve new problems,and we're expanding the business by addressing a wider rangeof customer problems in adjacent market segments.Let's talk a little bit about that and how we're doing it.Next slide, please.If we talk about strengthening within our core,and growing our leading position,our move has been from data collection, predominantly manually,to intelligent automated collection of data.If you think about our content curation teams today,they're still fairly manual, but with AI,we're improving the automation of data collection,and transformation to increase the breadth and depth of our operationsbecause of the speed and efficiency AI creates.Similarly, many customers struggle themselves with the improvementand collection and interpretation of risk data.As Risk Intelligence learns and deploys this technology internally,we can gradually expose those tools to customerswho can more efficiently run their own compliance processes.Things like reducing false positives,almost automating some of those low-risk alerts,through to actively predicting financial crime risk,and this all in turn significantly reduces that overall cost of compliance.We look at our distribution models, we're moving from rigid to agile.We're enhancing our data curation platform and distributionto ensure the updates to our database for things like sanctionscan happen faster and reach our customers more quickly.This is of increasing importance to our customers,particularly our larger customers,because in areas like AML, regulators are demandingnear real-time implementation, enforcement of sanctions.The days of getting a sanctions alert and making a decision2 or 3 days after that alert are long gone.In parallel, we're overhauling our data schemasto enable customers to better splice and diceand work on deltas rather than whole files or formats of data.This provides more targeted insights,and again provides speed and efficiency for the customer.We're also looking at scalability and moving away from bespoke solutionsto more self-serve opportunities for our customers.Again, we're doing that through evolving our solutions and infrastructureto be more scalable,allowing customers to leverage SaaS solutions,doing that in multiple regions that may have their ownGDPR or privacy laws or data hosting laws,and we're doing that through sophisticated API endpointsthat manage high throughput for areas such as payment screening.As those volumes go up, we can be very confidentthat we can keep the pace of the solution.Finally, moving from focused data solutionsand breadth of offerings to broad base.One of our main efforts, as I've touched upon,is that we want to expand the universe of our datato help customers work on a range of other problems using our data.When you look at the breadth of our customer base,you'll see that those problems are solved in different ways.I'll touch upon that as I conclude in a moment.A great example of this breadth of solutionis some of the customer types that are new to the business,and the types of problems that they bring to us.Based on the foundations,we believe that strengthening the way that we serve our customers,the breadth of the way we serve our customers,and these highly on performance SaaS solutionsleaves us best place to take the largest share of wallet.Next slide, please.If we look at the second pillar or second bucket of our strategy,it's all around connectivity,and seeing us integrate our product suite to solve a wider number of use cases.This provides the opportunity to bring togetherour identity, risk, and fraud capabilities,which provide, again, improved efficiency,and also user experience because they can consumedifferent insights in common platforms.Just three recent examples you see on the right-hand side.For integrated customer onboarding,we've now combined our ID verification solution into World-Check One.For streamlined payments,we've now integrated World-Check data into our trusted payment solution.Again, for ID verification and an EDD,you can conduct third partyor order third party due diligence requirementsthrough the World-Check One interface.Again, making that interoperability easier, safer,and easy to monetize for us as we go forward.Next slide, please.The final slide before we go over to questionsis around that expanding customer footprint,and how we can develop our presence in both adjacent segments and geographies.If you look at the domino's pizza wheel, which is what we use internally,so forgive me, I'm sure there's a better analogy,but if you look at the pizza wheel,you'll see that we have a heartland in financial services,but we're continuing to expand our presencein both adjacent segments and geosbeyond this historical financial services core.Now, that is, and you'll see the use cases in some of the smaller text,that's from things like proof of age, for the technology sector,to passport checks for the public sector.That's things like opening an account in gaming,to supplier onboarding in retail.It's all of those jobs to do around applying for a loan or mortgagethrough to reducing claims fraud.The three strategic enablers that make usvery excited about the opportunities for the business going forwardare that increasing customer focus as we expand data coveragewith targeted content and diversifying our use cases,and as we diversify those use cases, that growing diverse range of customerswith highly reoccurring revenue streams and transaction volumesdriving the underlying growth of the business.That's it for me before I join Chris for questions.I hope the session has been useful.I've hoped I've been able to help a little bit morearound the understanding of how the business sits today,a little bit more for you in terms of the compelling market opportunity,and why we believe we've got a very strong runway for growthwithin Risk Intelligence.Again, thank you for your time.I'll now hand back to Chris for questions.That was great. Thank you very much, David.We will now turn to Q&A, as you mentioned.But first, a little bit of housekeeping.If you'd like to submit a question, please use the form on the screen.I gather some of you are having difficulties with your firewalls,in which case just send me an email, chris.turner@lseg.com,and I will feed those questions into the Q&A queue as well.Let's start with the first question,which is around the revenue wheel that we saw earlier.We showed that about 16% of revenues in Risk Intelligencewere coming from usage-based pricing.Can you talk a little bit about that, David, in terms of,A, what is driving that usage-based pricing,what consumption is it that's driving it?Then, secondly, how do you see that evolving over time?Yeah, thank you for the question.As you say, Chris, 16% of revenues today,which I expect to grow every year from this point onwards.Two main drivers.Firstly, the number of customers that are now onboardingfor a range of different reasons as customers have moved fully online,and as that digitalization has continued.Things that they would typically do at a high street branch,or at an automotive firm are all happening online,and that creates an increasing demand for identity services,because every time you complete a transaction,if you're using our services,we are checking the identity of that person.On the payment side,as the volume of payments increases really significantly globally,again, driven by e-commerce as one part,we are checking on a transaction basisfor fraud across those different payment rails.As the volumes increase, our customers' transactions increase,and therefore we see more revenue.It's certainly a growing picture for Risk Intelligence.I think it's certainly something that the wider LSEG groupsees potential in as well.I think consumption-based pricing,particularly for consumption via the cloud,is something that's on the radar,but I think you'd have to ask David Schwimmer or our CFO Mattto be a better place to talk to individual markets.But certainly an opportunity, I would say.That's great. Thank you, David.We've had a few questions actually on a similar theme,so I'll lump those all together into one question,and actually steal the phrasing from Russell Quelch at Redburn, who asked,"It appears the main barrier to entry for competition in this spacehas been around collecting and maintaining data at scale."If AI is helping to automate data collection and aggregation at scale,does this translate into lower barriers to entry, essentially?I think it will certainly produce lower barriers to entry when it comes tojust collecting publicly available data.Typically, the things that individualsmay have had to do manually are now being done through AI,and we do that ourselves, as I've mentioned,we are using that within our owncontent teams to be able to pull together.If you think about things like adverse media,all of those global media sources, we can pull that together more quickly.But I think the most important thing isif you think about how AI becomes effective,particularly as you get into things like agents,the quality of the data has a massively significant impacton the effectiveness of AI.The thing that makes, if you take World-Check as an example,very differentiated is because we've got that human expertisethat can take advantage of that curated, faster AI data,but can then use that human intelligence to produce richer, more granular data.I think it will continue to disrupt the space.But I do believe, particularly as our customershave very trusted relationships with us,that we will still be seen as that differentiator and that providerof the highest quality data,which will ultimately increase the performance of those AI modelswhich they wish to deploy.Thank you.The next question is from a buy-side investor,so I'll keep him anonymous.He says, "Participants and competitors say that Wilchek is established,but it's also a legacy solution, and there's newer providers in the space."Can you share your thoughtson how that competitive dynamic differs between the two?Yes, I think when you've been the first, to go back to 2000,I think as anyone has seen some of the information we put outabout the 25th year anniversary,started with three people working in a garage in South Africa,now over 5 million records, 500 researchers around the world.What continues to differentiate us is the quality and that expertise,because we don't employ people that are not, in the most part,very knowledgeable experts in AML and KYC,because part of our value propositionis the interpretation of different regulation,which can be gray for a number of different reasons.Yes, we're the oldest, so we'll get the legacy tag.But if you think about things like the growth of World-Check One,if you think about the waythat the World-Check data proposition has evolvedfrom a simple file deliveryto now this year with our next generation productoffering intraday reporting.As I research a post, a record into the database,you call our API, and you'll get access to that record straight away.I think it does us a little bit of a disservice in terms of the amountof innovation that we've done within the portfolio.That said, I do think there's so much more we can do,particularly through cloud adoption, to make those services even more effectivewhen you take into consideration the opportunities that AI produces,as you've outlined.I do think the other providersin the market are some way, I would say,behind us at the moment, commercially and strategically.And although we obviously compete with a whole range of different businessesacross that core screening space, I'm confident that the reasonthat we've continued to be the leader in the market is that we'll continueto innovate at pace.So we will never sit on our laurels.There will always be new entrants, but I think we're well-placed,particularly as customers have got that growing desire and need for trustedrelationships and partnerships that go back,and for many of our customers, that's wider than Risk Intelligence.All right. Thank you.Questions are coming in thick and fast now, so let's keep going.Arnaud Giblat at BNP Paribas Exane says,you're looking to expand into adjacent markets.Can you talk about how the TAM evolves, how much bigger the TAM gets as you moveoutside the core financial services into some of these adjacencies?Yes.Obviously, I would love to have a crystal ball,but I won't be giving any forward-looking forecast.But as you saw in the summary,we operate in a TAM that's expected to grow 8%-10%.Some of those are other providers that I've just touched upon,do not have that all-weather model in the way that we do.If you think about retail transactions,payment volumes, and the increasingcore screening opportunity,I think we've already got a lot of diverse use cases within the group.But if you think about how customers continue to evolvetheir onboarding processes,you think about areas like the public sector,and where government eIDV schemes,eIDV schemes, I should say, are looking, again,to innovate and make that onboarding process easier.If you look at that wheel,they are all big opportunities in their own right.The great thing that we have is that if we go to a corporate proposition,be it in healthcare or automotive or gaming,we can help them with that whole range of services.They will have third parties that they need to do diligence.They will have big onboarding requirements.They'll have a range of different requirements.That's why I think it's going to be really interesting to seehow that corporate growth happens.It has been a big driver of growth in the business alreadyover the last couple of yearsas more and more customer types are being regulated.But I think, as I say, overall, lots to aim at,and with faster cloud-enabled solutions and quicker ways to integrate our datainto workflows, we're very well positioned.Next question comes from Mike Werner at UBS,who, nice and short, simple question actually says,"Are Risk Intelligence products included in enterprise-wide agreements?"Sometimes we refer to them as LSEG data agreements,and if so, can you talk about whythat's a valuable and important channel for the group?Yes, absolutely.The business thrives and flourishes on those trusted relationships,as I've talked about, and those LDA agreements,particularly with our larger customers, are a very, very effective wayto build that trust and partnership, but also to be able to providea range of different products and services through a single vendor cost effectively,because the customer benefits from those economies of scale.We are very much embedded in the very large numberof those LDA agreements.As I mentioned in the summary,80% of DNA's large LDA customershave Risk Intelligence.Those that do not have obviously got an ongoing dialogue,and we have the opportunity to share our roadmap and our innovation,so it's very aligned with the wider group,and I think more opportunities to come as we go forward,both from LDA clients taking Risk Intelligence,but also as we introduce new types of customers into the groupthat may have treasury or other requirementsthat the wider LSEG group can help with.Thank you, next question is from Enrico at JPMorgan,with a good question, actually,asking about what's the geographical footprint of Risk Intelligence?Are there particular geographies that you're excited about the growthcompared to some other geographieswhere you think the growth might be a bit slower?Obviously, very, very global by nature.We have teams all around the world,our three largest hubs beingLondon, New York, and Singapore.We have distributed teams that operate in, as I say, a large number countries.The growth of the group overall has been, again,a little bit of an all-weather model, because if the Asian IPO marketis doing well, that has helped our EDD business traditionally.As we see a different regulatory changes in the US,that helps customers demand to be more up to date or efficient.Again, the all-weather model is supported as well.When it comes to opportunities for growth, I think Asia continues to innovate,particularly around identity and consumer experience.We've got some large trusted partners that we've securedin the last year or so that are helping us innovate in Asia.I think our cloud solution helps ustake advantage of some of those marketsin areas like the Middle East, where it's taken a little bit longerto move away from some of those deployed solutions,and part of that is because of concerns over where the data is hosted.Again, as part of our strategy, being able to have those multiple hostingsites all across the world will help in a scenario like that.If I had to pull out too, I think Africa is another big,growing, demanding market, but lots of opportunity in summary.Exciting stuff.There's a few people have asked similar questions around retention,including Greg Simpson at BNP Exane.Along the lines of, can you talk about retention,customer retention, how that's trending over time?Are there particular pockets of customers that are less sticky than others?Yes, it's a great question.I'm very pleased that the retentionacross the business has remained very high historically,so we're in the '90s across the group.I think because of the strategic nature,our retention rates are traditionallyextremely high in larger businessesand mid-tier organizations and corporates.When you get down to the very long tail,which could be a watch shop in Hong Kongthat needs to demonstrate that they have an AML process,very often that can be an area that gets eroded purely on pricebecause the sophistication of the solution is not as important as the price itself.If I had to pick out one area that perhaps has traditionally been a loweror had a higher churn rate, I would say that very smallSME business that is either newly regulatedor wants to demonstrate that they're compliant pretty quickly.Turning now to questions on the area of the market structure.We've had a few different analysts asking similar-ish questions.Can you talk a little bit about the overall market structure?Based on the slide, I think, number 8, I think it might be,but we talked about the fact that Risk Intelligencewas around 5% of the group of the space.How fragmented is the industry?Are we one of the larger players, one of the smaller players?If you'd share your thoughts on that general theme, please.Yes.I think what makes this market very interestingis the fact that it is extremely fragmented.In some of the markets in which a business like LSEG operates,we will have two or three dominant players in the market.Now, that's not been the case.If you look at that fragmented slide that I showed,I think it was slide 16,companies traditionally have been happyto buy a range of different products and deal with that challenge of stitchingthem together, particularly larger organizations.I don't mind taking my data from World-Check,but using perhaps LexisNexis for something else or Trulioo for something else.But the way the market has changed is you are now seeing consolidation,and you're seeing obviously M&A activity as that market consolidates.But what you're also seeing is obviously a real demand from customersto deal with fewer vendors, and they want to do that effectively.They would much rather deal with a handful of companiesrather than this traditional picture.Those companies that are successful, I would say, in being ableto take advantage of a wider offering set, but also consolidatingsome of these smaller opportunity areas, I think, are the businessesthat are going to win.I think the other thing that has changed is that it's much riskier to deployperhaps a startup in financial crime or fraud within a large organization,perhaps than it was sometimes ago because of that increasing cyber risk,because of the concerns about ultimate beneficiary owners.I think the larger trusted and well-known businesses,if they execute well, should be in good position to takeadvantage as that market consolidates.Thank you.We've had a couple of questions on the next step for that,which is how do you think about inorganic growth in the space?Is that a tool that you have in your toolkit?Yes, absolutely.To that last point around the ability to consolidate.Where we see opportunities, either with very, very strong proprietarydata sets or technology and tools and analytics that appealsto us, then inorganic is very much part of our plan.Obviously, when you looked at the way the business has transformed backfrom 2000, it has been very much part of our heritage,the acquisition of businesses like [inaudible 00:52:34] and GDC,and I think others will definitely materialize.I think when it comes to the group appetite, because of the successof the Risk Intelligence business and because of the opportunityor the market opportunity that is available to it,I do see also the support and the resourcesbeing there when we need it.So always difficult to say who, when, how, but certainly part of our plans.Thank you, David.And thank you to everyone who's sending in questions.I can't promise we'll get to all of them,but we've got time for at least a few more.One here coming from the buy side, really asking about pricing.Can you talk about how much of the growth is coming from price?And then in terms of how you think about price conceptually in termsof as you roll out new functionalities, particularly AI functionalities,are they an additional extra charge or are they part of the core propositionin terms of pricing?Really good question.Let me start with the first one, which was around the growth and the price.If you think about that growth overall, it's typically a third that we…a third of the growth that has come from pricing.We traditionally price once a year in January.If you think about the…Take screening as the largest part of the business,if you think that every year we have to deal with this growing numberof individuals that are sanctioned, companies that are sanctioned,and complexity as those regulatory regimes change, we can demonstrateto our customers why we're adding more data and functionality.Even though we tend to continue to increase that price,we've got that price elasticity, and we've got that high retentionbecause we can demonstrate the value that we're adding.I think when it comes to AI,it all depends on the particular use case.As an example, if you think about things like alert remediation,if you're operating a very small business, and you're only dealing with a smallnumber of transactions, it may be that you're comfortable to workwith the screening model that you've done traditionally,and you wouldn't be interested in a sort of automated alert remediation.However, if you're at the other end, there is a very, very clearreturn on investment by being able to automate those low-risk alertsthat normally found their hands in…normally find themselves in the hands of analysts.I think when you're driving those really significant costand efficiency drivers,then there will be opportunities to monetize.Because I think what we're seeing, if you think about things,if I take AI as an example in alert remediation, not only is this reducingthe noise in terms of the numbers of alerts and the speedin which they can be dealt with, but it's also allowing organizationsto focus on the alerts where the true risk is.In doing so, being more effective at identifyingbad actors and potential fraud.I think the value proposition will allow us to monetize in certain circumstances,but I think it will all depend on the use case and the customer type.Hope that's useful. I know it's quite broad.Last question I think we can squeeze in.It's a good question here saying, in the presentation,you talked about regulation as one of the themes in spaceor one of the drivers of growth.How do you think about that in the medium term?Are there any particular catalysts you're looking at or,tying this to a similar question someone else has asked,with the US administration seemingly rolling back on regulation,is that perhaps a headwind to the business from here?Yes.One of the things that's happened is this fracturingof ecosystem operating on a common OFAC standard,and with the UN acting as a bodythat is representative of countries around the world.What we've seen is now mostlarge countries are moving towardscertainly either their own complete AML and KYC regulationor very specific regulation around certain entity typesand certain areas where there is concern about doing business.I think that complexity is going to continue.As an example, if we think about some of the changeslast time in Mr. Trump's first administration,the frequency of those new sanctioned updates meant that customers were drawnto a brand like World-Check, where we had the most resourcesand the most capability of responding to that,and putting that into a recommendation quickly.At the moment, obviously, things are changing all the timewhen it comes to those changes.There is talk of discussing regulation.We don't see really any of our customerstoday moving away from their traditionalareas of operation because I think there's an awarenessand an understanding that things can change quite quickly.Even though things may be easing up,there's been no drive to do things differently.I think where we're protected is,even if that happens in core financial services in the US,obviously, we've got a global business,but we've also got these other drivers of growth,so regulation, yeah, very important, but it's not the only one.We've got the digital transaction payment volumes.We've got third-part risk, which is a business requirement.Interesting to see how things play out.But I think the other thing that will continue to happen alsofrom a regulatory point of view is that regulators are increasinglyturning their attention to corporates when it comes to enforcement and fines,and therefore, corporates are needing to thinkand act like financial institutions more and more,and again, I think that provides opportunity.Thank you, David. We'll squeeze in one last question.We're a little over time, but let's do it anyway, which is,one of your slides talks to customer demand for cost savings,greater efficiency.Are you talking about price deflation there?Is there pressure coming from customers in terms of pricing?No, the efficiency is purelydue to the volume of work that's being created.If you think about the sanctions area and more and morenoise in the top of the machine driving more and more alerts,they want to be able to automate and deal with those alerts more efficiently,and ultimately, move to perhaps a model in a few years timewhere those alerts are managed by agents,AI agents rather than individuals.But they also want to be able to, where possible, use better datato reduce the number of false matches that they get.They are looking at this as a cost of compliance,and total cost of ownership picture.We can ordinarily demonstrate that our data will providelower friction in the machine.If you're on the payment side, we can now allow a businessto make payments to 26 different countries through a single APIrather than setting up different payment rails,all of which has time and cost.Sometimes it's also that breadth of the offering just make things easierand faster and cheaper to deliver.But certainly for the compliance function, there's a widespread desire to reducethat total cost of compliance, which has continued to growfor the last decade or so.Thank you, David, very much for taking the time to talk usthrough your business and share your insights.The slide presentation that you showedwill be on the investor relations section of our website shortly.Also, finally, thank you to everyone who took the time to ask a question.We're happy to follow up as the IR team later on to chat through some of thosein more detail if that's helpful.But for now, we will call it a day. Thank you, everyone.Thank you, everyone, for joining.
