As fintechs come under increased regulatory scrutiny, the firms themselves are realizing they need new tools and new operating approaches. In order to Stay on the right side of the regulators.
“The cost of fraud is high” Ryan DewSenior Vice Presidentproduct Solution thread” in a recent PYMNTS interview, adding that fintech companies are already tasked with protecting their business models to achieve profitability.
So-called Hot Button problem right Dew said that things now revolve around know your customer (KYC) and know your business (KYB), adding that it is important to know who you are transacting with. Financial services sponsors are know Learn as much as possible about your fintech businessand need know Fintechs have proven themselves adept at detecting and reporting fraud..
But amid the risk of attacks, “it’s becoming increasingly difficult to gain sponsorship and support from the broader ecosystem, especially from a regulatory perspective,” Dew said.
He said it was more important than ever for fintech companies to demonstrate their value proposition and assure investors and partners that they were meeting regulatory obligations in terms of transaction processing. forever Even back-office support for chargebacks and disputes.
“If these fintechs don’t take the right steps now, and When building a business model, Really “It’s going to hurt them more than it ever has before,” Dew said.
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Historically, the task of meeting regulatory requirements has been the responsibility of program managers for FinTech use cases. But now, with a complex mix of stakeholders and interactions between them, processors and issuing sponsors like Thredd are becoming “multiple-fold accountable” to FinTech businesses and use cases and must collaborate to ensure compliance.
Multiple Stakeholders
“Everybody has a stake in this game,” Dew said.
The burden is especially High interest in fintech that There may be limited resources to increase staffing in compliance and regulatory functions, and scamAs Dew pointed out, it’s constantly changing.
His My From Thredd’s perspective, Dew said several of its fintech clients in the push payments and cross-border funds movement space are seeing a surge in fraud in these use cases, particularly in real-time and account-to-account settings, as open banking takes shape both domestically and internationally.
“Many fintech companies are struggling to select the right tools to accommodate and monitor the types of transactions that fall outside the norm they have traditionally handled on the ‘card side’ of their business,” Dew said.
Security, he added, is not just about validating customer accounts in support of open banking, but also about providing a regulated, standardized way for customers to transfer funds and data when they deem it necessary.
threadHe says this spans the entire transaction lifecycle, including KYC and ID verification, and changes as the transaction (and fraud vectors) change, with learning models built into the process.The company also provides clients with fraud detection services for push payments, disputes and chargeback fraud.
“We’re looking at a lot of data, a lot of transactions. and We are seeing a variety of anomalies across our portfolio companies, which we communicate to our clients and support them. stitch “We’re combining solutions that leverage the fact that there are similarities in the ways fintechs are attacked,” he said.
He said that despite some consolidation underway, we are moving towards an environment where fintech companies that were once competitors are working together to ensure secure data and transfer of funds.
He told PYMNTS:pen Banking is here to stay, and the types of products and services that rely on open banking standards will continue to grow. … Fraud and compliance will be something that all providers in this space will have to take seriously.”
