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The Growing Compliance Burden for Sponsor Banks in Banking-as-a-Service Models

Embedded finance is spearheading a fintech revolution that is transforming how consumers access <a href="https://www.socure.com/industries/financial-services">financial services</a>. As digital experiences shape consumer expectations, financial tools tailored to customers&#8217; needs have become the new competitive advantage. Ambitious brands now have an immense growth opportunity to tap into by integrating banking directly into the apps and services where consumers already are — their favorite brands.
Consumers today expect convenient, personalized experiences, and they want their money to move as fast as the rest of their digital lives. Products like the Apple Card are the future — in fact, <a href="https://www.galileo-ft.com/blog/how-embedded-finance-can-grow-substantially-with-gens-y-and-z/">74% of millennial B2B consumers</a> have switched to vendors that offer more consumer-like B2B payment experiences. 
When you offer your customers banking tools tailored to their needs, you get to know them better, build deeper loyalty, and open new revenue streams — all while banks handle <a href="https://www.socure.com/blog/what-is-a-customer-identification-program">KYC/CIP compliance</a> behind the scenes. 
As <a href="https://www.socure.com/glossary/banking-as-a-service-baas">banking-as-a-service</a> offerings explode in popularity, <a href="https://www.galileo-ft.com/blog/how-banking-as-a-service-can-benefit-banks">more than 85% of banks</a> are racing to launch their own platforms to meet demand. But with innovation moving at breakneck speed, many struggle to manage risk effectively at scale. For example, Socure recently helped a top five U.S. bank <a href="https://offers.socure.com/rs/570-ENG-578/images/Socure_Case_Study_Portfolio%20Scrub.pdf">eliminate synthetic identity fraud in its customer accounts</a>, shutting down 30,000 suspicious users. 
The success of these institutions rides on closing visibility gaps in compliance monitoring across programs. 
That’s why Socure is thrilled to <a href="https://www.socure.com/news-and-press/socure-drives-fintech-innovation-with-banking-as-a-service-insights-and-controls">unveil a first-of-its-kind solution</a> to <a href="https://www.socure.com/resources/videos/fight-fraud-while-promoting-financial-inclusion">help sponsor banks fight fraud</a>, assess risk, and <a href="https://www.socure.com/resources/videos/unlock-compliance-excellence">meet CIP compliance requirements for fintech partners</a>.
The Visibility Gap in BaaS Compliance 
When creating BaaS programs, most <a href="https://www.socure.com/industries/sponsor-bank">sponsor banks</a> work with multiple fintech and brand partners, as well as compliance technology vendors. 
This fragmented approach creates huge visibility gaps that inhibit compliance:
<ul>
<li style="font-weight: 400;" aria-level="1">Siloed data across programs and tools make it nearly impossible to see the complete risk picture and provide proof of controls in an audit. Banks cannot benchmark program performance or spot issues that span vendors and partners.</li>
<li style="font-weight: 400;" aria-level="1">Manual processes require extensive headcount to implement policies, monitor transactions, and investigate issues — yet they still lack efficiency and accuracy at scale.</li>
<li style="font-weight: 400;" aria-level="1">Limited control over programs’ choice of vendors and technologies leads to inconsistent practices and standards across the BaaS portfolio.</li>
</ul>
The results of these gaps?
Banks frequently face regulatory penalties, customer complaints, and reputational damage from the failures of poorly-managed programs. It only takes one weak link to put the entire BaaS strategy at risk.
The End-to-End Solution: Socure for Sponsor Banks
Socure is the undisputed market leader for BaaS compliance, supporting over 80% of the sponsor bank market, as well as 400+ fintechs. We’ve powered pioneering platforms to move billions of dollars, issue millions of cards, and change how customers access essential <a href="https://www.socure.com/industries/financial-services">financial services</a>. 
By building our platform from the ground up, we can serve the unique needs of diverse fintech ecosystems. Where others see “partnership,” our infrastructure makes embedded finance yours to shape from end to end. 
<a href="https://www.socure.com/products/control-center">Socure&#8217;s integrated solution tailored for sponsor banks</a> means you can:
<ul>
<li style="font-weight: 400;" aria-level="1">Gain real-time visibility into all your programs’ compliance KPIs, including identity fraud rates, CIP compliance approvals, lagging watchlist screening case closures, and more through a single dashboard. Monitor performance, set alerts, and detect issues across the portfolio.</li>
<li style="font-weight: 400;" aria-level="1">Create and enforce controls for all or specific programs in one place with a no-code controls interface. </li>
<li style="font-weight: 400;" aria-level="1">Update policies quickly, simulate their impact with actual past customer data before the policies go into place, add new monitoring rules, and ensure consistent best practices with <a href="https://www.socure.com/products/decision-module">Decision Module</a>.</li>
<li style="font-weight: 400;" aria-level="1">Review high-risk transactions, collaborate directly with programs, and escalate issues as needed through streamlined case management with team queues. Scale CIP compliance operations with advanced automation.</li>
<li style="font-weight: 400;" aria-level="1">Standardize technology used across your BaaS portfolio to simplify vendor management and gain end-to-end visibility with an all-in-one CIP compliance stack for <a href="https://www.socure.com/glossary/identity-fraud-management">identity fraud management</a> and <a href="https://www.socure.com/glossary/anti-money-laundering-kyc">anti-money laundering KYC</a> screening with real-time monitoring programs. </li>
<li style="font-weight: 400;" aria-level="1">Serve the unique needs of diverse fintech ecosystems through highly customizable workflows that allow finer-grained control for specialized programs, versus one-size-fits-all identity verification software.</li>
<li style="font-weight: 400;" aria-level="1">Connect the various facets of an identity into a holistic, 360-degree view through lightweight integration layers, allowing programs flexibility in their risk-based approach without sacrificing visibility or user experience. </li>
</ul>
The Future of Finance is Open, Connected, and Customer-Centric 
A world where consumers can access hyper-personalized financial products seamlessly woven into their daily experiences — all while regulations protect those consumers — is entirely possible. Partnerships between sponsor banks, BaaS providers, and fintechs are key to enabling this secure innovation at scale.
By implementing <a href="https://www.socure.com/solutions/compliance">Socure&#8217;s integrated compliance solution</a>, banks gain real-time visibility into all their programs’ key risk metrics through a centralized dashboard. Socure&#8217;s automated workflows, no-code controls interface, and AI-driven insights empower banks to enforce consistent policies and scale oversight at the pace of innovation.
Bold brands willing to embed financial tools into the heart of their customer experience stand to reshape entire industries — as long as they have the right partner.
<a href="https://www.socure.com/products/control-center">Learn more about Socure’s BaaS solution here.</a>

The Future of Banking-as-a-Service is Yours to Build

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Josh Linn