Revolutionizing financial compliance: why we invested in Cable
We are thrilled to co-lead Cable’s Series A funding round alongside Stage 2 Capital. Cable’s all-in-one effectiveness testing platform helps banks and fintechs comply with their financial crime requirements.
To understand why we’re thrilled to join Cable on their journey to thwart financial crime, we need to delve into financial compliance. Typically, there are three lines of defense within the compliance function at a bank, financial institution (“FI”), or fintech - and they haven't changed much in decades.
- The first line of defense is now typically owned by fintechs and sits within the customer journey, where new user identities are verified during onboarding and account openings.
- The second line of defense comprises the independent testing and assurance of controls of the first line of defense solutions. This involves ensuring that Know Your Customer (KYC) tools function properly. Ultimately, the second line needs to articulate how effective the first line has been in maintaining controls - this is Cable's core value proposition.
- The third line of defense is less critical to our discussion but comprises a full-fledged audit of a bank’s compliance tools and controls.
The second line of defense is highly manual and often delegated to internal compliance personnel and outside consultants. This leads to significant inefficiencies and costs. The manual process includes pulling data from various systems to check the quality of a small sample of accounts or transactions, extrapolating if that data is representative of how the first-line tools perform, and assessing if they meet regulatory and internal requirements.
Cable automates this entire process, making it faster and more accurate. Integrating directly into the systems where banks and financial institutions store data, Cable provides a centralized view of first-line performance, automatically monitors Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) controls in real-time and streamlines the reporting of control effectiveness to regulators.
To say this solution dramatically improves efficiency and accuracy is an understatement. Cable empowers compliance teams to review all accounts instead of just a small sample, ensuring they can better manage controls and effectively mitigate fraud.
Cable's offering is well-timed, coinciding with increased regulatory pressure on banks and fintechs and a market downturn that brings with it increased fraudulent activities. The OCC's recent order for Blue Ridge to improve oversight of its third-party fintech partnerships and the establishment of a dedicated office for financial technology are clear indications of the heightened scrutiny in this area. When evaluating startups, Jump often asks, “Why now?” – and we believe these tailwinds position Cable well in the current market.
Aside from innovative technology solving a major pain point, we believe the true differentiator that sets Cable apart is the expertise and knowledge of its founding team, Natasha and Katie. With their experience at Monzo and Square, they bring significant industry knowledge and insights into the financial crime problem they are working to solve, making them uniquely capable of building a best-in-breed company.
At Jump, we're excited to partner with Natasha, Katie, and the Cable team to support their mission to revolutionize the financial compliance industry and drive the future of financial crime prevention.