Challenger Bank Compliance as a Service

Building an AML & Fraud Compliance Programs from the Ground Up

Project Overview

A European challenger bank sought to ramp up its AML & Fraud compliance capabilities quickly and with minimal IT overhead. They turned to Matrix-IFS to deliver a complete cloud-based Financial Crime solution.

Challenges

  • Limited budget – Regulatory requirements related to monitoring of fraud, AML and sanction screening were not scalable – i.e. similar level of compliance must be applied by all institutions, regardless of size. Entering the market as a start-up bank with limited resources required an affordable solution that doesn’t demand high license and services fees.
  • Low compliance IT skills – having limited financial resources and few staff members with experience in implementing compliance IT solutions, the bank sought a partner who had the knowledge and previous experience with similar projects to take an active role in implementing the chosen solution.
  • Emerging requirements – During the initial phase of a bank’s establishment, business and compliance requirements are constantly created and are subjected to changes. Due to such conditions, the bank had to select a solution that would be flexible, agile and adaptable to change.

Project Solution

The project planning was aligned with the release plan of the bank so that the compliance solution was deployed together with the bank’s business milestones:

 

Phase 1: ‘Friends and Family’ release:

During the initial phase, Matrix-IFS worked with the bank’s team to define the core capabilities that will achieve regulatory compliance before scaling the bank’s operation. Activities included:

  • Defining the CDD processes, including client risk classification during the onboarding and ongoing due diligence throughout the entire relationship with the client.
  • Building sanctions screening processes both online (as part of the on-boarding process) and daily, against updated Dow Jones watch lists.
  • Creating web payment fraud rules to detect suspicious monetary/non-monetary transactions and suspicious log-ins.

 

Phase 2: ‘Minimum Viable Product’ of the bank’s app and back-office:

By the start of ‘Phase 2’, all regulatory requirements have been addressed so that once the 2nd phase goes live, the bank could open its doors for external clients. Activities included:

  • Establishment of SWIFT & SEPA monitoring including fraud rules and transaction screening against Dow Jones watch lists.
  • Enhancing web payment fraud capabilities and implement additional rules.
  • Addressing loan application fraud – setting the initial rules and prepare for enhancement in the next phase.

 

Phase 3: ‘Full Release’ 

As the bank prepared to accept an increasing number of customers, all compliance capabilities needed to be deployed at scale according to the highest technical standards. With the main goals of streamlining onboarding and maintaining a high level of compliance. Activities included:

  • Enhancing client onboarding processes, incorporating additional risk factors and improving the scoring algorithm.
  • Implementing a daily batch into the AML Transaction Monitoring system to be able to detect and alert on suspicious activity.
  • Monitoring bank employees’ activities to detect Internal Fraud.
  • Enhancements of all previously released modules.

Matrix-IFS Value

By leveraging strong advisory and implementation skills with Cloud technology skills, Matrix-IFS helped the Challenger Bank to focus on building high-quality banking services, rather than on non-core activities related to compliance technology.

Matrix-IFS also helped the bank to comply with European PSD2 and AML regulations, and build a scalable solution that can be adapted as the bank grows its customer base. This enabled the bank to reduce costs of building a compliance in-house IT team and optimizing their onboarding process.

The result was that challenger bank was confident in their ability to be compliant within their limited budget and according to the bank’s release stages.

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