Joe Robinson, Co-Founder and CEO at Hummingbird, a modern platform for anti-money laundering (AML) that makes investigations “agile and intelligent,” says that it took some time before traditional banks began to view Fintech firms as legitimate business partners that could help them with their digital transformation strategies.
Robinson claims that Fintech companies still need established financial institutions more than these institutions need them. He notes in a blog post published by PaymentSource that while Fintechs are innovating on the front-end, banking institutions are taking care of the sponsorship and licensing requirements that make it possible for financial tech firms to offer payment services.
Robinson explains that compliance or adhering to regulatory guidelines is one the most important requirements for a financial services business. When banks are working with Fintechs on offering new services, they’re legally responsible for ensuring compliance, Robinson noted.
He also mentioned that compliance involves problem prevention or remediation and it also aims to offer an effective way to resolve disputes. He pointed out that AML and proper anti-fraud measures are needed to prevent problems such as financial crime. AML policies and procedures may include following applicable Know Your Customer guidelines, transaction monitoring, performing investigations and reporting.
Robinson further notes that transaction disputes might be quite difficult to handle at scale when you don’t have access to the right tools. He revealed that scammers have figured out how to exploit these inefficiencies in order to “extract payouts from the system over and over.” He also mentioned that many established payment card service providers have experienced substantial losses due to poorly handled disputes — “once you’re in that hole, it’s tough to climb out,” Robinson claims.
But he also says that there’s a way to make compliance a lot more effective and scalable for banks and Fintech firms. He explains that it comes down to “breaking bad habits and practices.”
But traditional methods like using spreadsheets and other standards tools are not enough to get the job done properly, Robinson claims. He suggests that the best solution is to “automate the organization and timing of casework.” He adds that the AML/compliance solution must fit into your firm’s technology stack and it should also complement the systems your business is currently using to offer customer support. The system should also offer a way to support collaboration and transparency between your company and a banking partner.
In July 2020, Hummingbird along with Regtech firm Lucinity managed to secure millions in funding in order to develop AML tech to prevent financial crimes.
Established in 2017, US-based Regtech Hummingbird has entered into partnerships with large financial institutions. It’s also reportedly working with Fintech firms Brex, Upgrade and Etsy, which may be using its AML technology.
Hummingbird offers special case management and investigation tools, and also provides a reporting platform. The company provides an API for validating and submitting regulatory reports as well.
Joe Robinson, co-CEO at Hummingbird, remarked (in July 2020):
“The new funding will allow us to move forward with technologies that could improve the quality and speed of communication among institutions and leverage structured datasets, with ethical care, for machine learning.”