Money Mobility Tracker – April 2022

What is the greatest risk for FinTechs and neobanks attempting to manage the money-in side of money mobility completely in-house?

There are a number of challenges with managing money-in capabilities using an in-house team. For example, the sheer scale and resources needed to maintain true money mobility capabilities — frictionless inbound funding from any source — can always be a roadblock.

However, the biggest risk of relying solely on in-house teams is fraud. An environment defined by instantly available funds arriving from a variety of accounts and transaction mediums — checks, cash, ACH, apps, etc. — that cannot be clawed back or deducted if later determined to be fraudulent puts an enormous amount of pressure on teams to get it right the first time, every time.

That is an unfair expectation because in-house teams are inherently hamstrung by a lack of visibility into the many types of fraudulent actors and behaviors that exist across the entire financial marketplace. Seeing only a tiny glimpse of the market by virtue of their own transaction history leaves them unprotected.

Even in the case of banks, which have access to robust fraud databases, there are gaps in coverage because these systems do not track nonbank transactions and behaviors. And this nonbank transaction environment is often where the most severe fraud risks exist because they operate outside of traditional, in-person know your customer and anti-money laundering protections.

The most effective fraud protection system, then, is one that has a complete view of the marketplace and can create a cross-functional network effect. For in-house operations, that means tapping into partners — either alone or in combination — that provide access to databases covering both bank and nonbank systems. This capability provides a fuller view into the overall marketplace, significantly lessening their risk profile.

Drew Edwards
CEO at Ingo Money

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