accommodating, a startup providing an “AI-driven” business onboarding and risk scoring platform, today announced it has raised $14 million in a seed round led by Level One Fund with contributions from former Visa president John Partridge and current CEO Stuart Sopp. The money will be used to support Kompliant’s product development, CEO Edward Katzin told londonbusinessblog.com, as well as to expand the company’s customer base and hire additional team members.
Kompliant has a curious history. Incubated by Snoop Dogg’s (yeah, That Snoop Dogg) Casa Verde Capital, a venture firm focused solely on the cannabis industry, Kompliant initially started to address the pain points surrounding payments in the marijuana trade. But slowly, according to Katzin, it evolved into a solution for financial institutions in general.
Before co-founding Kompliant, Katzin was the head of global emerging products at Visa (hence Partridge’s interest) and the director of global retail payments at Apple. Kompliant’s second co-founder, Brad Wiskirchen, was chairman of the board of directors of the Federal Reserve Bank of San Francisco and a member of the Interdepartmental Working Group on Finance and Technology at the International Monetary Fund.
“The pandemic has been a huge backbone for Kompliant as it accelerated the adoption of electronic payments, online banking and the use of digital onboarding and verification services by financial institutions,” Katzin said. “As a result, the addressable market for Kompliant’s services continues to grow rapidly.”
On the Kompliant platform, customers can — usually acquirers’ processors, banks and sales organizations — to build credit risk programs using services such as auditing, application processing and verification, and business monitoring. Sales and finance teams can use Kompliant’s tools to design the data collection, workflows, pricing algorithms, and credit decision rules that drive their programs, while surveillance teams can take advantage of the startup’s risk and compliance management solutions.
Katzin noted that financial institutions face tighter oversight from regulatory authorities, which he says makes Kompliant’s expansion timely. Fines and penalties against financial institutions for violating the Bank Secrecy Act, the Fair Credit Reporting Act, the Financial Crimes Enforcement Network and others reached $10.4 billion in 2020, according to a analysis by Fenergo.
“Using the configurable Kompliant platform means a financial institution has more time to focus on driving revenue growth and portfolio expansion by making the onboarding, decision-making, activation and monitoring of their clients frictionless,” said Katzin. “The technology helps companies increase profitability by improving the efficiency of customer acquisition, underwriting decisions and account activation. With enhanced authentication, businesses can also improve customer conversion, decision cycle time, business monitoring and response to fraudulent activity.”
Kompliant is certainly not the first supplier to offer such services. Rivals range from Alloy (valued at $1.35 billion as of September 2021) and Fenergo ($800 million) to smaller players such as Fonoa, PassFort, FrankieOne, Flagright and Salv. But Katzin, right or wrong, argues that no competitor engages in the “full spectrum” of compliance and monitoring services “across the trade lifecycle.”
“In reality, when we look at true end-to-end trade compliance and adoption, we are more likely to compete with email, Excel spreadsheets, and manual processes,” Katzin said. “Kompliant’s management is seizing the opportunity that arises with the current market conditions and the capital raised to provide differentiated services.”
Kompliant completed several pilots in stealth mode and now has several “money-producing” customers, Katzin said. In the coming months, the company will work with partners to co-develop new offerings, including several relevant to credit bureaus, data service providers and fraud prevention platforms.