Historically, business verification has been a significant cost for fintechs and banks that service businesses.
Culture of compliance: Generative AI is poised to entirely upend risk management and compliance within financial institutions over the next five years, according to a recent report by McKinsey. Advancements in automation and speed promise significant productivity gains across the banking sector specifically, driving a strategic shift in how AML and BSA programs foundationally operate. But as banks embrace the transformation, they must also establish robust guardrails to ensure responsible implementation.
Accelerating verification: Arva AI is a YC-backed compliance technology company that provides AI-enabled business verification solutions for banks and FinTechs. It aims to automate and accelerate most aspects of the onboarding and compliance processes. The company offers products such as document analysis, fraud detection, online presence analysis, and enriches it with data from 140 different registries, significantly reducing the need for manual tasks.
- "Historically, business verification has been a significant cost for fintechs and banks that service businesses," says Arva's Co-Founder and CEO Rhim Shah, speaking about the lengthy and cumbersome nature of re-engaging customers in the traditional process.
- The old way often involved multiple back-and-forth communications between customers and compliance analysts due to missing documentation.
- Shah is uniquely positioned to solve the challenge, having formerly led the FinCrime product team at Revolut Business.
[Reducing the risk of human error] is about understanding how human analysts currently conduct evaluations, and then how AI can handle those tasks more efficiently and with a stronger compliance approach.
In real time: Arva AI's approach addresses these challenges by providing real-time feedback and decisions during onboarding, effectively streamlining the process. Shah emphasizes the potential of AI to replace human labor in low to medium risk assessments, allowing compliance analysts to focus on more complex and interesting high-risk cases. "The [compliance analysts] are often doing very repetitive mundane work, and because of this, turnover is generally high."
What's next: The upside to getting it right will change the future of financial institutions. As AI takes over, companies will need to adjust their approach to workforce skills and training. "You're relying on things like providing websites and social media profiles," Shah explains. The shift not only enhances efficiency, but also reduces the risk of human error, leading to more robust and reliable compliance systems. "All of that information requires humans to look through it and give a verdict. It's about understanding how human analysts currently conduct evaluations, and then how AI can handle those tasks more efficiently and with a stronger compliance approach."
