Alloy introduces new risk management solution

As per the information detailed in the press release, Alloy, which currently supports approximately 600 banks and fintech companies, introduced Alloy for Embedded Finance, a product tailored for sponsor banks, Banking-as-a-Service (BaaS) providers, and their fintech partners. The solution allows them to collaboratively manage identity risk while meeting regulatory requirements.

Frequently, sponsor banks do not receive sufficient insight or control over whether their fintech partners adhere to the banks’ government-mandated compliance requirements. On the other hand, in models where sponsor banks retain all compliance responsibilities, they often set their fintech partners in a one-size-fits-all approach to compliance that does not necessarily fit companies’ evolving risk needs and increases complexity in user experiences.

By launching Allow for Embedded Finance, the company aims to mitigate the aforementioned issues, with the new product leveraging the capabilities of Alloy’s existing platform and introducing a new parent/child account configuration. Through this, sponsor banks, or parent accounts, can designate levels of autonomy and guardrails for each of their fintech partners, or child accounts, based on how mature the company is, how much of the process it wants to own, the risk inclinations of both parties. By leveraging the product, sponsor banks are set to simplify developing compliance policies and allow them to issue and enforce them to each of their fintech partners concomitantly. Autonomous fintechs can tailor their controls in addition to these baseline policies, providing them with the flexibility to customise risk measures that don’t add unnecessary complexities for end users. However, regardless of the fintech partner’s autonomy level, the sponsor bank retains complete oversight of its policies to ensure full compliance.

Furthermore, representatives from Alloy underlined that sponsor banks cannot operate without controlling their Customer Identification Program (CIP)/Know Your Customer (KYC) and Anti-Money Laundering (AML)/Bank Secrecy Act (BSA) policies of the fintechs in their program. Alloy for Embedded Finance aims to solve this issue along with improving the user experience. The launch comes during a period of potential for the Embedded Finance industry, with research projecting that the market across the entire value chain is set to reach USD 606 billion by 2025. However, the sector has been facing several compliance difficulties, with regulators increasing pressure on sponsor banks to ensure their third-party partners meet all requirements. Alloy is committed to supporting banks and fintechs in developing their operations, with the company already working with financial providers, including Grasshopper, Evolve Bank & Trust, Liberis, Treasury Prime, and Marqueta, among others. The company’s end-to-end identity risk management platform allows its customers to manage fraud, credit, and compliance risks while assisting their growth journeys.

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