Fintech Transaction Monitoring Behind the Scenes

With regulatory scrutiny continuing to mount around the bank-fintech relationship, it’s become increasingly important for both banks and fintechs and enterprises to be diligent about detecting and preventing nefarious behavior on their platforms. Treasury Prime supports fintech fraud detection through our partnership with RegTech platform Unit21 alongside our growing network of banks. This collaborative approach — a tool that empowers our bank partners and fintech/enterprise customers to own their compliance, and a direct relationship with a large network of banks that effectively mitigates risk — is not only a convenient solution but a necessary one. 

Fintechs and enterprises that partner with Treasury Prime as its BaaS provider have the opportunity to integrate with Unit21 (as well as other RegTech leaders like Alloy) as our services can be linked and provide a streamlined workflow. 

Our integration enables fintech customers — as well as our bank partners — to expedite fintech transaction monitoring, fraud detection, and to make data-driven decisions to protect themselves against risky behavior and accept good actors into their customer base. 

How fintech transaction monitoring works

Once a company has partnered with  Treasury Prime, integrating with Unit21 is easy. Unit21 has an out-of-the-box data integration with Treasury Prime, so fintechs can quickly and easily get started with a simple API provided by Unit21. During onboarding, fintechs who choose to use Unit21 as a compliance tool will not require any extra coding, restructuring of internal tech stacks, or added implementation time beyond the initial onboarding process with Treasury Prime.

“Treasury Prime and Unit21 are pre-integrated, so transaction data from fintechs that hit the Treasury Prime ledger auto-populate in Unit21.” Shana Haynie, Unit21’s Head of Content explained. “Through this integration, banks and fintechs can start monitoring transaction activity immediately and, more importantly, efficiently collaborate when suspicious activity is identified.” 

When integrated with Unit21, fintechs and their partner banks are able to work collaboratively to monitor suspicious behavior and resolve any outstanding issues. The bank as the regulated entity assumes the transaction monitoring responsibility but can allow the fintech to participate by delegating the adjudication of certain alerts and rules as appropriate. Fintechs can then leverage pre-configured, custom rule sets and models to monitor suspicious activity as well as modify them to fit their exact use cases, and use their own custom rules and models whenever necessary. 

“Once rules have been set up within our system, they are easy to optimize, which allows for on-the-fly testing and iteration,” Haynie said. “And Unit21’s case management solution helps to streamline investigations and automate manual tasks like SAR (Suspicious Activity Reports) filing, which has led many of our customers to significantly reduce their average investigation times.” 

Fintech fraud prevention

Taking action quickly is paramount to preventing fraud and other financial crimes and ensuring the smoothest customer experience, especially as fintechs look to onboard new accounts. The partnership between Treasury Prime and Unit21 allows for real-time investigative alerts so that both bank partners and fintechs can quickly address any new issues. Bank partners can also allocate first-level alert resolution to its fintechs, who best understand whether flagged activity within the platform is risky or not. Simultaneously, bank partners maintain complete visibility into any underlying activity of all alerts.

“Unit21 customers can monitor all kinds of data in a platform that is highly customizable and easy to use,” Unit21’s Head of Partnerships Matt Lifshotz said. “The platform was purposefully designed as a flexible infrastructure that allows risk and fraud teams to leverage their knowledge of the space without needing engineering support.”

Importance of fintech transaction monitoring

Acting Comptroller of The Office of the Comptroller of the Currency, Michael Hsu has voiced concerns about the future of the bank-fintech relationship and the resulting “de-integration” of banking.

His worries over the blurring lines for both customers and regulators of where banks end and fintechs start underscores the importance of maintaining a sound transaction and compliance framework.

BaaS providers who absorb compliance responsibilities from fintech customers only do them a disservice. Unit21 shares our belief that we should empower our fintechs to be active participants in preventing financial crime and risky behavior — and one that we think is aligned with what regulators are signaling as well.

As Treasury Prime Associate General Counsel and VP of Compliance Sheetal Parikh explained, “Innovation in the financial services space has precipitated innovation in our approach to establishing a compliance framework in the bank-fintech ecosystem. It is great to see tools like Unit21 that are designed to address the specific typologies and fraud patterns that pervade the electronic payments space.”

As federal regulating bodies signal a tighter grip on the bank-fintech relationship, fintechs who are aligned with their bank partners and are owning their compliance are best positioned to weather any regulatory fallout.

“There’s a tremendous amount of support by regulators for brands and partner banks to bring better financial services access and experiences. One of the clearest signals of support is the ongoing discussion on how to manage compliance and fraud,” Haynie said. “Setting up an infrastructure that allows monitoring professionals to do what they do best, puts brands, banks, and customers in a better position.” 

Interested in learning more about owning your own compliance framework and transaction monitoring with Unit21 or managing fraud? Contact us, we’d love to tell you more and share how it’s a lot easier to integrate with our partners than you might think.

Related fintech fraud prevention content:

How Treasury Prime Partner Alloy Helps Clients Cut Fraud in Half

How Are Neobanks Regulated?

Cable - Automating Financial Crime Effectiveness Testing

Setting Up the Right Fintech Compliance Program for the Size and Stage of Your Company