What is AIR?

So, what is AIR, and what's included in their TechSprints? The Alliance for Innovative Regulation is a nonprofit dedicated to modernizing financial regulation through technology. AIR's goals include bringing together regulatory agencies, banks, and FinTechs by fostering digital improvements, data-backed decision-making, and overall un-siloed collaboration. Their TechSprints bring together experts across the industry—regulators, data professionals, and fintech innovators—often being siloed in their fields. Cross-industry collaboration is essential in overcoming compliance challenges, as these issues can't be resolved in a vacuum, and every field has limited visibility to make fundamental changes. Breaking down these silos, AIR cultivates progressive solutions to address real-world compliance issues.

Up-to-Date Compliance

At iDENTIFY, we encounter these challenges every day. Attending AIR's TechSprint highlighted our industry expertise and showcased the significance of our solutions in financial technology. Ed represented iDENTIFY at AIR's TechSprint on February 27th, collaborating with industry leaders to tackle regulatory and compliance challenges in banking-fintech partnerships.

AIR TechSprint Demos

At AIR's TechSprint, experts across industries gathered to tackle some of the most pressing compliance issues in sponsorship banking. With the event hosted in a fast-paced and collaborative setting, the event was composed of teams, each tasked to tackle specific regulatory issues. Teams were tasked to address the following:

Regulatory Data: Ways we can manage and report financial data effectively.
Data Sharing and Integration: How Banks and FinTechs should be exchanging key data securely.
Partner Relationships: Ensuring that FinTech partnerships are transparent with their data and mitigating risk effectively.
The Future of Bank-Fintech Relationships: What's next for compliance?

Ed's collaboration was on Team 1: Fintegrate, where they focused on Data Sharing & Integration. Working with other data professionals, now paired with regulators and other compliance experts, one of the primary purposes was to create and present a solution where banks can make informed compliance decisions by receiving the correct data at the right time.

Reflecting on the experience, Ed noted:

It was eye-opening to work with so many leaders in the space. I quickly realized that while compliance is essential, many banks don't have the right infrastructure to manage fintech risk effectively.

Team 1: Fintegrate's Solution

Ed's team developed a risk assessment framework, which allows banks to set clear compliance parameters for fintech partners. Utilizing AI-driven insights, banks can automatically detect early warning signs before minor compliance issues become... significant.

A New Perspective on Risk

While Ed's team's solution can be applied to our clients where relevant, we gained additional key insights from the event. Looking at our clients' history, as Ed noted, it's evident that many small banks lack the tools and resources to manage risk effectively. It's clear that larger financial institutions have the budget for an entire compliance team, but where does that leave our local community banks that strive to provide their members with the most upstanding financial services?

The iDENTIFY team helps level the playing field for community and sponsor banks by providing the same advanced data capabilities that larger financial institutions rely on. Our expertise in data engineering, reconciliation, and cloud migrations transforms raw data into actionable insights, enabling smaller banks to manage risk and compliance more effectively. Progressing to modernized data infrastructures, banks can significantly improve querying their data, which allows for improved data governance and helps compete with larger financial institutions.

Now, why is data hygiene important? Because once the FDIC comes knocking with a consent order-- it's already too late.

Another significant takeaway from this event was that regulatory compliance is the floor, not the ceiling. Many banks approach compliance as a checkbox exercise, taking a minimal approach to mitigating risk. We see risk mitigation as proactively monitoring, managing, and adapting current fintech partnerships to deepen their relationship and ensure joint regulatory success.

Conclusion

AIR's TechSprint reinforces our vision of unifying bank data, as compliant data governance remains a top priority for financial institutions. Being on legacy systems inherently leads to improper data hygiene, making it difficult for banks to manage risk effectively. While batch-based processing has been reliable, it falls short in meeting consumer demand for real-time data and embedded finance. Modernized data infrastructure on Snowflake's Data Cloud opens the capabilities of CORE data - making sponsor banks be able to compete with national banks at a fraction of the cost.

However, adopting these systems isn't just about compliance; it's about striking the right balance between risk mitigation and regulations. Banks must strive to protect their customer data while maintaining compliance. Building trust with clients and regulators is complex, but when done right, it cultivates financial stability and long-term growth. Sustainable FinTech programs create mutual success for banks and their FinTech partners. "I kept hearing the same thing from different teams," Ed noted. "The solutions are already out there—banks just need to start implementing them. The challenge isn't figuring out what to do; it's making sure the industry actually does it".

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