Client Showcase: Leading Sponsor Bank

TLDR:

Client Profile: Top 10 Sponsor Bank 

Notable Quote: “We are flying blind.” 

Type: Private 

Industry: Banking 

Operates: United States 

ROI: TBD 

Use Case: Third-Party Risk Management 

A sponsor bank is a regulated financial institution that provides licensed banking services (e.g., payments, cards, and account access) to fintechs or third-party programs that cannot offer those services directly. 

Our prospective client is widely viewed as a top-tier, high-reliability sponsor bank with deep experience, broad capabilities, and a conservative yet competent compliance posture—qualities that make it a preferred partner for many regulated fintech products. Because they are responsible for the compliance of the services they provide, they must also oversee the compliance practices and overall risk posture of their partners. 

Today, the standard practice to “ensure” a third party is compliant is to give fintech partners a long questionnaire about their regulatory practices. In some cases—usually when issues have already surfaced—there are deeper, more active audits. In general, the sanctions-related questions boil down to: Do you perform sanctions screening? Yes/No. “We are flying blind,” says our contact, the Deputy BSA Officer. Over the last two years, there have been 13 enforcement actions against sponsor banks for insufficient oversight of their partners’ compliance functions. “Something has to change,” our bank partner told us. 

We began working with the bank on how to use our technology to establish a benchmark based on the bank’s own sanctions screening practices, and then test third-party partners’ screening systems against that benchmark. Any partner performing below the benchmark would enter an improvement plan, monitored through our technology. 

We are currently in the procurement process after identifying the initial partners for a Proof of Concept (POC). We have already benchmarked the bank’s screening system and are now moving through the bank’s (lengthy) procurement steps. 

From an economic standpoint, a successful POC would turn into an operational framework giving us access to their 100+ fintech partners. This would push us toward an estimated ACV of ~$500K in a multi-year contract, with the opportunity to expand as we develop additional testing technologies for PEPs, identity verification, and transaction monitoring. There are over 200 sponsor banks across the US and UK.