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NEW YORK, August 25, 2025 – Alloy, a leading identity and fraud prevention platform provider, announced today that its solution for Sponsor Banks, Alloy for Embedded Finance, was named Best Know Your Customer/Business (KYC/KYB) innovation by Datos Insights as part of its 2025 Fraud & AML Impact Awards. “Embedded finance presents a massive growth opportunity for both financial institutions and fintechs, but it’s also an area where regulatory expectations are constantly evolving” said Jason Ioannides, Vice President, Global Fintech & Sponsor Banking at Alloy. “Alloy for Embedded Finance allows our clients to automate the fraud and compliance piece of bank/fintech partnerships so that they can focus on driving business growth.Alloy for Embedded Finance enables Sponsor Banks like Grasshopper Bank to enforce compliance and risk controls at scale across their partner portfolios on a fully auditable platform, while enabling fintechs to build on those requirements to create better customer experiences. The product leverages the strength of Alloy's platform and includes a parent/child account configuration. Sponsor banks (or 'parent accounts') have the ability to designate different levels of autonomy and guardrails for each of their fintech partners (or 'child accounts'), depending on how mature the fintech is, how much of the process the fintech wishes to own, and the risk appetites of both parties. Alloy for Embedded Finance was recognized due to the customizability of policies per fintech it enables, its scalability for growing fintech partner portfolios, and its unified platform to manage compliance across the portfolio.“As the embedded finance sector continues to expand, the regulatory scrutiny and compliance challenges facing sponsor banks have intensified,” said Chuck Subrt, Research Director, Fraud & AML Practice at Datos Insights. “By offering flexible control mechanisms that can accommodate different partnership models and risk tolerances, Alloy for Embedded Finance provides a scalable solution that can grow with institutions’ needs. It enables banks to create a unified compliance framework that can scale across multiple partnerships and accommodate different risk tolerances and business models.”Datos Insights is the leading research and advisory partner to the banking, insurance, and securities industries—both the financial services firms and the technology providers who serve them. The Datos Insights Impact Awards are designed to recognize and celebrate innovation achieved by financial institutions and insurers globally, and to share across the industries what the best business impact looks like now.About AlloyAlloy provides an identity and fraud prevention platform that enables global financial institutions and fintechs to manage identity risk so they can grow with confidence. Over 700 of the world’s largest financial institutions and fintechs turn to Alloy’s end-to-end platform to access actionable intelligence and the broadest network of data sources across the industry, as well as stay ahead of fraud, credit, and compliance risks. Founded in 2015, Alloy is powering the delivery of great financial products to more customers around the world. Learn more at alloy.com.
What did sponsor banks have to say about embedded finance compliance in 2024? Get the fast facts as stats.
NEW YORK, August 21, 2024 -- Alloy, the identity risk management company trusted by over 600 leading banks, credit unions and fintech companies, today released its 2024 State of Embedded Finance Report, a survey of over 50 decision-makers working at U.S.-based sponsor banks. The report found that while embedded finance programs drive significant revenue (over 50%) for sponsor banks, a majority (80%) of respondents reported that meeting embedded finance compliance requirements as a sponsor bank is challenging in the current environment. Alloy’s State of Embedded Finance Report comes at a time when sponsor banks in the U.S. face drastically increased regulatory scrutiny. According to data from Klaros Group, 25.6% of the FDIC’s formal enforcement actions have been directed at sponsor banks since the beginning of 2024. “Running a sponsor bank program is inherently complex because you have banks who are highly regulated working with companies that are often new, fast-growing, and creating entirely new ways for consumers to interact with money,” said Tommy Nicholas, CEO and co-founder of Alloy. “Despite the challenge, we’re already seeing sponsor banks respond to regulatory developments by investing in better controls, training, and adding to their compliance tech stack.”These recent compliance violations have resulted in financial consequences for sponsor banks: Alloy’s report found that 75% of sponsor banks have lost $100k or more due to compliance violations, with 39% reporting losses of $250K or more and 6% reporting losses of $1M or more. However, financial losses are far from the worst consequence of regulatory violations: decision-makers at sponsor banks rank reputational damage as the top consequence of mishandling fintech partners’ compliance. Alloy’s report found that sponsor banks’ top barriers to maintaining a compliant embedded finance program are 1) a lack of control over their fintech partners’ policy controls and 2) a lack of auditability of their fintech partners’ policy controls. Earlier this year, Alloy launched Alloy for Embedded Finance, a product that gives sponsor banks, electronic money institutions, and program managers in the U.S., U.K., and E.U. the ability to oversee the compliance policies of their fintech partners. Alloy for Embedded Finance directly addresses embedded finance providers’ need to have greater control and visibility into their fintech partners’ compliance programs. Today, Alloy also announced a new module within Alloy for Embedded Finance: Audit Access. Tools like Alloy for Embedded Finance are becoming more widely adopted by sponsor banks: Alloy’s report found that sponsor banks’ most likely course of action in response to regulatory scrutiny is investing in new compliance technology. “Using Alloy for Embedded Finance has been a game changer for our team,” said Teddy Gordon, Director of Data at Grasshopper Bank. “We can easily set KYC requirements for our fintech partners and then roll those policies out to our entire program all at once. We ensure we’re compliant across the board, and our fintech partners still get to manage their own risk tolerance.”Alloy’s State of Embedded Finance report was fielded from May 30th to June 5th, 2024 and includes respondents from sponsor banks in the U.S. with at least $2 billion assets under management (AUM). The report was conducted on behalf of Alloy by The Harris Poll, a global consulting and market research firm.For more insights, read the full report here. About AlloyAlloy solves the identity risk problem for companies that offer financial products. Over 600 banks, credit unions, and fintechs turn to Alloy’s end-to-end identity risk management platform to take control of fraud, credit, and compliance risks, and grow with confidence. Founded in 2015, Alloy is powering the delivery of great financial products to more customers around the world. Learn more at alloy.com.
Alloy for Embedded Finance launches complimentary audit-only features for sponsor banks to view their fintech partners’ risk controls.
A guide for banks, credit unions, and electronic money institutions. By Alloy and Treasury Prime.
If sponsor banks focus solely on compliance, they ignore the fraud risks lurking in the embedded finance ecosystem. But Alloy has a new solution that tackles both fraud and compliance.
NEW YORK, February 29, 2024 -- Alloy, the identity risk management company behind nearly 600 leading banks and fintech companies, today announced Alloy for Embedded Finance, a new product custom-designed for sponsor banks, BaaS providers, and their fintech partners to collaboratively manage identity risk and stay ahead of regulatory requirements.Oftentimes, sponsor banks have not had sufficient oversight or control over whether their fintech partners have adhered to the banks’ government-mandated compliance requirements. Alternatively, in models where sponsor banks have taken on all compliance responsibilities, they have often forced their fintech partners into a one-size-fits-all approach to compliance that doesn’t suit fintechs’ evolving risk needs and often adds unnecessary friction to their user experiences.Alloy for Embedded Finance solves these challenges. The new product leverages the strength of Alloy’s existing platform while introducing a new parent/child account configuration. Sponsor banks (or ‘parent accounts’) have the ability to designate different levels of autonomy and guardrails for each of their fintech partners (or ‘child accounts’), depending on how mature the fintech is, how much of the process the fintech wishes to own, and the risk appetites of both parties. With this construct, sponsor banks can seamlessly build compliance policies, then issue and enforce them to each of their fintech partners all at once. More mature or 'autonomous' fintechs can customize their controls on top of these baseline policies, giving them the flexibility to tailor risk measures that don't add unnecessary friction for end users. Regardless of the autonomy level a fintech partner has, their sponsor bank retains total oversight of their policies to ensure they are fully compliant.“Sponsor banks can't operate without controlling the CIP/KYC and AML/BSA policies of the fintechs in their program—recent enforcement actions make this clear,” said Tommy Nicholas, CEO and Co-founder at Alloy. “At the same time, risk programs that are ‘one size fits all’ result in terrible user experiences for fintechs that pride themselves on providing a frictionless interface. Alloy for Embedded Finance solves both sides of this problem.”Alloy for Embedded Finance arrives during a period of massive potential for the embedded finance industry: Ernst & Young predicts that the global embedded finance market across the entire value chain will grow to $606B by 2025. However, the industry has been plagued by compliance challenges, with regulators increasing pressure on sponsor banks to ensure their third-party partners meet compliance requirements. According to data from advisory firm Klaros Group, sponsor banks drew one-third of all formal enforcement orders by federal banking agencies in the fourth quarter of 2023. With regulatory attention unlikely to slow down, it is more critical than ever for sponsor banks and their fintech partners to work collaboratively to meet compliance requirements so they can truly capture the full potential of the embedded finance market. Alloy already works with many of the leading sponsor banks, BaaS providers, and fintechs in this space, including Grasshopper, Liberis, Treasury Prime, and Marqeta.Learn more about Alloy for Embedded Finance here.About AlloyAlloy solves the identity risk problem for companies that offer financial products. Today, nearly 600 banks and fintechs turn to Alloy’s end-to-end identity risk management platform to take control of fraud, credit, and compliance risks, and grow with confidence. Founded in 2015, Alloy is powering the delivery of great financial products to more customers around the world. Learn more at alloy.com.
Embedded finance solutions can help banks maintain compliance control while giving fintechs the flexibility to customize their risk management approach.
Alexis (Lex) Alexander, Chief Legal & Compliance Officer at Liberis, sits down to chat about managing compliance risk at Liberis.
Check out our webinar on trends in embedded finance and BaaS, and learn strategies to overcome challenges in setting up and scaling programs.
Looking at the year’s top trends in embedded finance risk management and compliance
Paintbrush founder & CEO Stephen Walter talks about founding a fintech, finding a sponsor bank, and staying compliant as regulatory attention on bank/fintech partnerships intensifies.
FINTRAIL and Alloy outline the global embedded finance landscape and share tips for mitigating risk and overcoming common challenges that come along with offering embedded finance products.
