EXCLUSIVE: “Meet the financial crime squad….” – Radha Suvarna, Finastra in ‘The Fintech Magazine’

Radha Suvarna talks through Finastra’s new Compliance-as-a-Service solution, which leverages Fincom and ThetaRay to provide a package of instant payment controls

The instant and irrevocable nature of real-time payments makes them attractive to consumers and merchants alike. But they pose particular challenges for financial services providers when it comes to compliance, , specifically anti-money laundering (AML) and sanctions screening.

Their growing impact on the payments system is highlighted by the impending instant payments regulation in Europe, the TARGET Instant Payment Settlement (TIPS) system and, more recently, the FedNow instant payments system in the US.

“These payments happen in real time, at high volumes,” explains Radha Suvarna, chief growth and product officer for embedded finance and payment solutions at global fintech company Finastra. “Some of the bigger banks have the bandwidth and the technologies to do that, but most have not equipped their platforms to operate in real time, at high volume, around compliance capabilities.”

Finastra enables its clients to get the best of fintech through a range of solutions that cover everything from payments to treasury and capital markets to core banking by leveraging banking-as-a-service (BaaS), which Suvarna describes as ‘taking financial services products where they are manufactured, and connecting them to where they are consumed’.

“Some of the capabilities we have reduce false positives by almost 90 per cent”

In the case of its latest Compliance-as-a-Service offering, Finastra connects regtechs Fincom, which carries out sanctions screening, and ThetaRay, an AML transaction monitoring provider, to create a pre-packaged product, available over Microsoft Azure.

The benefits, says Suvarna, are multifold. Not only does the package address a major pain point for clients, but it can also improve their bottom line.

“The value it brings is in reducing the cost of compliance,” he explains, citing the cost and also reduces a lot of headaches for the clients, who have to follow through on that. Ultimately, it enhances the customer experience,” he adds.

Finastra doesn’t claim to have all the answers to every problem but the point is, it works with the ecosystem to find them, constantly evaluating the market to source, onboard and collaborate with the best fintechs and their respective capabilities to build solutions to its clients’ challenges.

It also continues to co-create and collaborate with its clients to broaden its range of fintech solutions. Suvarna believes that AI and machine learning will play an increasingly important role in that.

For example, ThetaRay uses AI to identify suspicious transactions; NICE Actimize, another Finastra partner which is already pre-integrated with its corporate payments, cash management and retail banking solutions, leverages AI to identify fraudulent transactions. And that’s exciting, he says, because most anti-fincrime and compliance models are only as good as the historic data that is fed into them.

“There is potential for using generative AI to mimic and create fraudulent transactions, so they can constantly learn and improve, versus waiting for the fraud to happen, and collecting data over a number of years,” says Suvarna. “We’re leveraging AI/ML to improve our efficiency, how we develop code, how we identify defects in our code, etc. We’ve just started to unpack those internal use cases, as well as client-facing ones, but there‘s a lot of potential.”

In all this, collaboration is key. As Suvarna explains: “For us, this is a journey – of not trying to build everything ourselves, but rather work with the partners who are best-in-class to bring value to our clients.”

This article was published in The Fintech Magazine Issue 30, Page 33