Alloy’s State of Compliance Report with CEO Tommy Nicholas
Nov 2, 2023
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Reggie Young interviews Tommy Nicholas, CEO of Alloy, discussing the challenges of fraud in fintech and the future of banking. They explore the increase in risk tolerance among fintechs, simplify audits and understand fraud in the card space, manage card issuing complexity in the fraud space, build trust with banks and mature fintechs, and discuss overlooked topics in fintech such as market reorientation and the community banking crisis.
Strong authentication and verification methods are crucial in preventing fraudulent activities in a digital environment.
Automation plays a vital role in streamlining compliance processes and enhancing efficiency for Fintechs.
Deep dives
Fraud methods are evolving and becoming more complex
Fraudsters are becoming more sophisticated in their methods, and it is important to focus on understanding the person behind the fraud, rather than just the fraudulent transactions. In a digital environment, it is crucial to assume that fraudsters are constantly finding ways to bypass controls and spending money to deceive the system. This insight highlights the need for strong authentication and verification methods to prevent fraudulent activities.
The two types of fraud in the card space
The card space presents a unique challenge when it comes to fraud. There are two types of fraud to consider: fraud committed by individuals who were always going to commit fraud, either using their own identity or stolen identities, and fraud resulting from the speed at which money can be moved in the digital world. The ability to issue and spend on cards quickly adds complexity to fraud prevention measures, necessitating a focus on strong authentication and verification at the card issuance stage.
Key findings from LA's report on Fintech compliance
LA recently released a report on the state of Fintech compliance based on a survey of practitioners. Surprisingly, it was found that risk tolerance for compliance increased by 86% year over year. This suggests that Fintechs are willing to take on more risk from a compliance standpoint, possibly due to changes in the regulatory environment. Additionally, over 60% of respondents reported paying at least $250,000 in compliance fines in the past year. This highlights the importance of having effective compliance measures in place to avoid costly penalties.
The need for automation in Fintech compliance
The report also revealed that lack of automation is a significant barrier to meeting compliance requirements. A majority of respondents identified automation as the key factor in overcoming compliance challenges. Some areas where automation can have a significant impact include continuous controls testing, application decisioning, SAR filing, and consumer consent tracking. By leveraging automation in these areas, Fintechs can streamline compliance processes and enhance efficiency.
Join us in this episode of Fintech Layer Cake as Reggie Young delves deep into the world of fintech and compliance automation with Tommy Nicholas, the CEO of Alloy.
Explore the ever-evolving landscape of fraud trends, the hurdles of selling to banks and mature fintechs, and the future prospects of community banks in the US. Gain valuable insights into establishing trust through compliance, navigating the complexities of card-related fraud, and the latest innovations reshaping fintech infrastructure.
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