People in the US reported $8.8 billion in financial fraud to the US in 2022 Federal Trade Commissionand while the FTC received fewer reports, 2.4 million versus 2.9 million in 2021, the aggregate monetary figure is 30% higher than in 2021. Bank transfer or payment fraud reached $1.6 billion by 2022.
When you expand this globally, Cableco-founder Natasha Vernier told TechCrunch that financial crime is becoming a $4 trillion problem. And one Vernier, co-founder Katie Savitz and the Cable team have been working on it since 2021.
Vernier explained that banks and fintechs must first have controls in place to mitigate risk. Controls can include Know Your Customer checks, sanctions, screenings, transactions and monitoring, all offerings made by suppliers such as Unit21 and Alloy.
About a decade ago, banks were fined by regulators for having “inadequate financial crime controls,” and while the number of those fines dwindled as regulatory vendors came in, some banks still face fines for having “ineffective controls,” Vernier said. . There is a second requirement that regulated financial institutions must meet, namely that they must independently test whether their controls actually work.
“Until now, this has been done completely manually,” she said. “Banks and fintechs manually sample a small percentage of accounts to see if those checks are working. That is what we have automated and we believe we are the first and only automated solution available today.”
Cable’s financial crime risk assessment dashboard (Image credit: Cable)
This makes Cable’s platform, which offers automated assurance and risk assessment, complementary to many of the financial crime vendors. It enables banks and fintechs to monitor all of their accounts – not just a fraction like before – to know in real time if they are compliant with regulations and if their failure checks are working as expected to combat breaches.
Cable also gives Banking-as-a-Service organizations insight into the fintech partners they work with. Remember that most fintechs do not have a banking license and therefore work with banks to provide financial services.
In the past year, the company increased its revenue fivefold and has attracted clients since 2021, including Axiom Bank, Quaint Oak Bank and Griffin on the banking side, and fintech and crypto companies including Tide and Ramp.
“Fintechs have to work with banks to essentially borrow their license,” Vernier said. “That’s where we’re finding real traction and one of the areas the OCC (Office of the Comptroller of the Currency) is mostly focused on right now is banks lending their license to fintechs. They need to understand the effectiveness of the controls at those fintechs, and our product is a perfect fit for that use case.”
Today, Cable announced an $11 million Series A investment led by Stage 2 Capital and Jump Capital, with participation from existing investor CRV. The new investment gives the company just over $16 million in total funding.
The capital will enable the company to hire product, engineering, data and go-to-market teams and also accelerate product development. Vernier said the company has built out just 1% of the products and features on its two-year roadmap.
Meanwhile, Vernier said, as the banking industry advances, it will continue to add more ways for consumers to handle their finances rather than just traditional banks. And with that, regulators will be more scrutinizing better oversight, which is why she said it’s the “perfect time for Cable to raise more money and accelerate.”
“Regulators are particularly interested in effectiveness testing, but also the volatility in the banking sector right now, with COVID and whether we are in a recession or not, there is more financial crime,” Vernier said. “We have certainly seen an increase in fraud and other forms of financial crime worldwide in recent years. And as real-time payments roll out in the US, we will see more financial crime.”