In this week's episode, I interview Co-founder & CEO of Cable, Natasha Vernier.
Natasha shares her experience building a financial crimes team from scratch at Monzo which lead to her co-founding Cable. She discusses the importance of effectiveness testing in financial crime compliance programs and how her company is automating assurance.
You’ll also hear how Cable is helping their customers to measure and optimize CIP, KYC, IDV, sanctions screening and ultimately to reduce financial crime around the world.
RESOURCES:
Connecting with Natasha Vernier
Natasha Vernier’s LinkedIn: https://www.linkedin.com/in/natashavernier/
Cable’s Website: https://cable.tech/
Companies & Resources Discussed
Cable is an all-in-one effectiveness testing platform that helps regulated companies comply with financial crime requirements. As discussed in the podcast, Cable provides transparency related to its cap table diversity. Read the blog post “An Update on Our Cap Table Diversity” for more information
Katie Savitz, is the Co-founder and CPO at Cable
Monzo is a challenger bank that can be described as “...a bank that lives in an app. It helps you budget better, takes the stress out of spending abroad, and even lets you earn interest on your savings.” It has had a banking license in the UK since 2017.
UK Financial Conduct Authority regulates the conduct of nearly 45,000 businesses in the UK to ensure that financial markets work well.
Lloyds Bank is a full-service personal and commercial retail bank headquartered in the UK.
HSBC is a British universal bank and financial services group headquartered in London, England, with historical and business links to East Asia and a multinational footprint.
Coinbase is a US-based company that operates a crypto currency exchange platform.
Airbnb is an online marketplace for short and long-term rentals of rooms and private residences.
Block (Square) is a global technology company with a focus on financial services. It comprises Square, Cash App, TIDAL, and TBD. It builds tools to help more people access the economy.
KPMG is a global organization of independent professional services firms providing audit, tax and advisory services. It operates in 143 countries.
JumpCapital is a thesis-led venture investor specializing in scalable software opportunities in fintech, crypto, IT and data infrastructure. Tarun Gupta is a JumpCapital partner working with Cable.
Stage 2 Capital - is a VC firm that follows a pod model, investing through a two-person investment pod. Each pod combines the strengths of 2 partners: one with traditional VC/finance experience, and another with GTM operator experience. Dan Heck is an investment partner working with Cable.
LocalGlobe is a seed stage investment fund located in the UK. Remus Brett is a general partner.
CRV is a Silicon Valley based venture capital firm.
Unit 21 is a provider of Fraud and AML solutions that enables companies to detect, investigate, and report bad actors throughout the customer lifecycle.
Alloy is a global end-to-end identity risk solution that helps banks and fintechs automate and manage their decisions for onboarding, ongoing fraud & AML monitoring, and credit underwriting.
Socure is a provider of digital identity verification and fraud solutions. Its AI and predictive analytics platform applies artificial intelligence and machine learning techniques with trusted online and offline data intelligence to verify identities in real-time.
Sardine is an all-in-one fraud detection, compliance, and risk management platform. Sardine offers a Continuous Fraud Intelligence Platform, purpose built to protect businesses and consumers from sophisticated fraud attacks.
Hummingbird provides a compliance and risk platform that empowers financial institutions to conduct fast, accurate financial crime investigations.
Actimize (NICE Actimize) NICE Actimize is the largest and broadest provider of financial crime, risk and compliance solutions for regional and global financial institutions, as well as government regulators.
Griffin is a banking-as-a-service provider. Its offering makes it simple, quick, and cost-effective to develop and launch financial products.
Treasury Prime is a banking-as-a-service provider. It builds API banking technology that improves the economics of banking to empower transformative financial services.
Axiom Bank is a retail and commercial bank located in Florida.
Snowflake is a data management company that enables every organization to mobilize their data with Snowflake’s Data Cloud. Customers use the Data Cloud to unite siloed data, discover and securely share data, power data applications, and execute diverse AI/ML and analytic workloads.
BigQuery is a GoogleCloud offering. It is a fully managed, AI-ready data analytics platform that helps you maximize value from data and is designed to be multi-engine, multi-format, and multi-cloud.
ComplyAdvantage provides the financial industry with AI-driven financial crime risk data and fraud detection technology. The company identifies thousands of risk events daily from millions of structured and unstructured data points.
The Travel Rule is a Bank Secrecy Act (BSA) rule, often called the “Travel” rule, which requires all financial institutions to pass on certain information to the next financial institution, in certain funds transmittals involving more than one financial institution.
FULL EPISODE TRANSCRIPT
Steve Craig: Welcome to the PEAK IDV EXECUTIVE SERIES video podcast, where I speak with executives, leaders, founders, and change makers in the digital identity space. I'm your host, Steve Craig, Founder and Chief Enablement Officer of PEAK IDV. For our audience, this is a video first series, so if you're enjoying the audio version, please check out the video recording on executiveseries.peakidv.com. You can watch the full episode, read the transcript, and access any of the resources or links discussed in today's conversation. I am beyond thrilled to speak with today's guest. She is Natasha Vernier, Co-founder and CEO of Cable. Cable's mission is to reduce financial crime in the world by building products that automate the effectiveness testing of financial crime controls.
Prior to co-founding Cable, Natasha established and led the financial crimes team at Monzo, one of the first UK challenger banks to become authorized and regulated by the UK Financial Conduct Authority. Natasha's expertise includes accounting, banking technology. She regularly speaks on topics including compliance and banking and technology, leadership, and entrepreneurship.
Welcome, Natasha. Thank you for making the time to be on the podcast!
Natasha Vernier: Hi, Steve. Thank you for having me.
Steve: Well, let's jump in and get started. For those that may not have heard of Cable, can you share more about the company? What's your typical elevator pitch?
Natasha: We are making regulatory compliance easy for banks, fintechs, crypto companies, and so on. And we do that. by, as you said, automating the effectiveness testing of currently financial crime controls, and later this year, other areas of compliance controls too.
Steve: Excellent. And prior to Cable, for your time at Monzo, you were there about four years, the fastest growing UK bank in history, I see you joined as employee number 17, what was it like building a financial crimes team from scratch?
Natasha: It was-- it was a lot of different things because it-- it-- it felt like despite only being, yeah, nearly four and a half years at Monzo-- a lifetime. I learned so much and things changed so much. We were growing so fast that the needs of the team and the things that I had to be doing were so different at different points in time.
At the outset when I started working on the financial crime work at Monzo, it was just me. And that-- at that point in time, I had never built a team before. I had never worked in financial crime before or anti financial crime, as I should say, and so the-- the first few people that came and worked with me on those problems were a data engineer, a software engineer, and a customer operations specialist who was really good at speaking to customers about the difficult kinds of conversations you had to have around investigations and financial crime related matters. So that early team was very much me trying to figure out what being a leader meant, getting people doing the right work. It was very operational.
Over time, that obviously became very different. And one of the biggest challenges I remember from my time at Monzo was we had this-- we had this change and it was in early 2019 where we had been growing so fast by this point, we were a regulated bank, what we had to do for our regulators, for our customers and for internal reporting and all of our different board committees.
We had to really step up the financial crime team. And I had to go about hiring deep financial crime experts into this team. And I, as I said, I had never done financial crime before, I was running this team; I was head of financial crime. The team at that point in time was probably 10 or 15 people. And I had to go about trying to bring in people who had been doing financial crime for their whole careers to report to me.
And that was a real change in how I set the team up, how I thought about being a leader, how I hired people. And we were able to go and get-- there were four key people that we brought in. One had been at Lloyds for 20 years. One had been at HSBC for 15 years running investigations there. One had been at Coinbase and then Airbnb running the whole BSA AML world in the US. And one had been running fraud for all of Europe at Square.
And I brought these people in to be the leadership team to have the deep financial crime expertise. One of the person from Square that I mentioned was, of course, Katie, who's my co-founder here at Cable. And that was-- that was a really difficult, exciting, interesting change in how to build a team and what it meant to be a leader.
And it was-- it was definitely interesting hiring and managing people who were, without a doubt, more-- more brilliant, more-- more skilled, have more experience in this thing that I was leading. It was a very interesting time.
Steve: That's amazing. You were putting together an all star team to, as you said, combat financial crime or anti financial crime. As you started to network with your peers in the space, maybe at other fintechs and with traditional banks. And as you brought these candidates in, who had a lot of experience, were there any moments, ‘aha’ moments that became future seeds to found Cable?
Natasha: There were a few seeds that, as they happened, I did not realize they were the seeds of Cable. But looking back, they clearly were and the first of those happened, gosh, right at the start. This, we're now talking probably, you know, around summer 2016 when we were preparing the policies and procedures for our application to become a bank. And this first seed was, we were trying to work out how we would build controls, what controls we needed in place to comply with the regulation and be effective at stopping financial crime.
And I was reading the regulation and I had never built financial crime controls at a bank, before, I'd never worked at a bank. I have never worked at a bank other than Monzo. And so I was coming at this from, well this is what the regulation says we have to do, and I have some understanding of technology, and therefore this seems like a-- a good customer forward way of building this thing that we need.
And then I would have conversations with somebody who became a really great mentor of mine. She was called Gemma Rogers; she is called Gemma Rogers. She-- she had worked for many years at HSBC and she was coming at this from the point of view of, well, this is how banks do KYC. And so I was coming at this from the point of view of, this is what the regulation says. And she was coming at it from the point of view of this is how KYC is done. And we ended up with a really interesting set of controls that really tried to push and challenge and change the way that banks do stuff. And the reason this-- this was the first seed for Cable was because compliance officers almost by nature are conservative people.
There are a lot of people who work in compliance who are lifelong compliance experts. They've been doing this thing for 20 years and Cable is the first company to automate the effectiveness testing of financial crime controls. And the reason why we're the first to do that, in part, I believe, is because of the conservatism and how long people have been working in compliance, usually, it means that it's hard to see new ways to do things. And so this-- this juxtaposition of the first principles thinking based on the regulatory requirements with no prior context of building controls, with this is how banks do controls, was really the first time that I saw and realized that stuff could be done differently.
And it wasn't crazy stuff. And it was just because we were coming at this with a brand new mindset. So that was the first seed, I think, that really, looking back, was the start of thinking about Cable.
Steve: That's a tremendous advantage, not having had the status quo, not having worked in different banks and been in that mindset of this is how it has to be done. So you were able to really think about how to solve this problem in modern time.
I watched a presentation that you did while you were still at Monzo in 2019, where you talked about preventing, deterring, detecting financial crime and putting those programs in place. How do most regulated organizations go about testing the effectiveness, like making sure they're doing those things properly?
Natasha: Manually dip sampling a really tiny percentage of their accounts and transactions. And that's what we did at Monzo. And that's what every bank I speak to does unless they have Cable. So at Monzo, when I was there, my team was focused on building these controls. There was another team who was independent from us in the second line of defense at the bank, and they were responsible for testing what we did.
We would have meetings once a month where they would say, you know, we've manually reviewed ten of our, at the time, four and a half million accounts. And here's how well the controls are working against these ten accounts. And then we would pay KPMG a hundred grand to manually review a hundred accounts of the four and a half million we had.
And that is the same story. That I hear at every single bank that we speak to. Understanding if controls are working, understanding their effectiveness, testing those controls, it is manual. I spoke to one of the largest banks in the US a while ago, and just in their lending team, they have 1,500 people manually testing controls.
Steve: That's a very large workforce doing work that, manually, is susceptible to mistakes and things that could slip through.
Natasha: Susceptible to mistakes, absolutely, but-- but, almost more importantly, when you find an issue through manual testing, there is a high chance that it actually started three months ago or six months ago. So not only do you then have this process and this challenge of trying to understand is this the only instance, what other accounts have had this exact same problem? Now we have to go find that out. But then you have this huge, expensive, painful, long remediation process because you're not finding issues as they occur.
And those are all problems that are solved with-- with automation.
Steve: Yeah, yeah, you're really on your back foot. You're being reactive versus as proactive as you could be. Shortly after that presentation, about a year after that presentation, you started Cable. It looks like it was summer of 2020 and I'm always interested to hear pandemic founding stories. Because going back to that time, it was turbulent and there was so much unknown. Why did you decide to start a company in the middle of the kickoff of the pandemic?
Natasha: Probably a mixture of stupidity and naivety. It was-- it honestly-- the timing was driven much less by the-- the world events and by COVID and much more by my-- my family events. My wife was pregnant at the time, and I left Monzo at the end of April 2020. And I knew that I wanted to-- to explore whether Cable was possible when I left. And the driver really was my-- my child being born soon. It was less about COVID, it was more of, to do this, I will have to take a pay cut. I will be working more, longer hours, harder than I've ever worked before. It will probably be more stressful. The-- any financial reward will seem further and further away. And so if I'm ever going to do this, I have to do this before-- before we have the baby and before the realities of being parents actually sunk in. Because, if we, certainly -- now looking back -- if we had had our daughter and then I had had this idea, I think both me and my wife would have said no way.
So it was much more driven by-- by family and family planning and timing than it was by COVID.
Steve: Excellent. Well, let's talk more about Cable as a company. Can-- can you mention your co-founder? Can you share more about your co-founder and your team today?
Natasha: Yeah. So Katie Savitz, as I mentioned, she was at Square, now Block, of course, for-- for about seven years. She set up the European office in Ireland when they expanded to Europe and she led fraud for Europe there. She came and worked with me at Monzo in the-- the leadership team in the financial crime team and at Monzo was responsible for a lot of the operational work that our team was doing.
When I left Monzo, she was still there and I was writing and rewriting this business plan and talking about what this could become. And I kept calling her and I kept saying “What do you think of this idea and what do you think of that idea?” And then one day I was like “Katie, you should just be my co-founder” and she went “Yes, oh wait, should I think about that?” And-- and that was-- that was how that happened. Our team today is about 27 people. We are split now across UK, Europe, and North America. I now live in California. Most of our customers are in the US. Most of our pipeline is in the US, but we still do have customers in the UK. So that's how we are sort of centered.
Steve: Great. And you recently raised it in the last year, series A, $11 million, congratulations. I was looking at the Twitter thread on that, that you have, and you talk about getting that done, start to finish -- seven weeks. Could you describe how you raised money in that time frame in such a challenging environment?
Natasha: I can absolutely tell you what happened. But I will preface this all with a lot of this was obviously down to luck and good timing and fortune of already knowing some investors and-- and having those relationships. I do not claim to be a masterful fundraising CEO yet. I'm sure that will have to continue to-- to change over time.
At the beginning of 2023, we were looking at our runway and thinking that we would kick off a fundraising process at the start of Q2. That was the goal that we had. I was actually in Chicago in February, very early February, and I had a meeting with the Jump Capital team. And I had been speaking with Tarun there, one of the partners, for a long time, nearly a year. I knew that he was very interested in what we were doing. But, it's very difficult with VCs to understand the difference between truly interested and understand a lot about what you're doing and committed to the way that you want to build a company and how you want to do things, versus, like, typical VC interests. Because VCs are wonderful at making you think that they're interested, when actually they're not. I thought that Tarun was actually interested. That was the first type of interested I mentioned. And so when we had that conversation in very early February, I definitely made it known that I liked them as a-- as a firm. I liked Tarun, and there was an opportunity there.
So, I think it was a-- a week or two later, they asked if they could have the opportunity to preempt any round that we were doing. And I think at that point I said, well, we're going to be kicking off in Q2, so if you want to, if you want to preempt, you need to do so very, very quickly. That led to a number of calls over the course of two weeks where they were trying to learn much more about the business.
We shared some information with them, like an early, early small data room. At the same time, I had been speaking to Dan Heck from Stage 2 for over a year, I think, from his previous VC firm. And this really goes to show that actually it's a lot more about the person than the VC firm itself. Dan moved and ended up at Stage Two and we stayed in touch.
And he introduced me to his partner there, Liz, and we were talking, really liked them both. Dan really understood what we were doing. Liz got up to speed really fast. And they also mentioned that they would love a chance to preempt. And I said, well, actually another firm is looking at this for a preemption. So if you want to do this, you have to meet their timelines. And I need to-- we need to do this in the next week or two. So it was-- it was good fortune, good people at the right time that we managed to get these two firms, Stage Two and Jump, both looking towards a preemption at the same time. Three weeks after that -- those initial conversations -- we received term sheets from the both of them. We did a little bit of negotiating over-- over a few days and pulled together the rounds such that they could co-lead it. And then I said, “We're only doing this if we can close this in four weeks, we need it done by this date in April.” And to their credit, they got it done, and that was a lot of them driving their lawyers to meet the deadlines that I was wanting to work towards. And I'm very grateful that they did that because fundraising is so distracting. And I wanted to-- once I had chosen the people I wanted to work with and committed to that, I just wanted to get the deal done, the money in the bank and start to move forward. So, that was how it -- yeah -- that's how it got done in seven weeks.
Steve: Amazing background, and as you described it, it sounds masterful. It sounds like you were doing all the right things. So although you said not a master, I would say you did a really great job.
Well, and preparing for this conversation and looking into the investment and just the company overall, there's a blog post you have on your website about cap table diversity. And this is something that I really haven't seen in the market. Maybe people are doing it, but not talking about it. Can you share how this influenced your decision making when you're selecting investors?
Natasha: Absolutely. So this was something that we started thinking really hard about actually very soon after our pre-seed round back in 2020.
I had never raised money before that round. I've never raised money apart from with Cable. And so I did not know what I was doing with that first round. I was lucky enough to get eight angel investors who were all very well respected, interested in angel investing and Cable and they introduced me to the first VCs that I spoke to for that pre seed round.
We ended up closing that round with LocalGlobe, with Remus Brett from LocalGlobe leading it, who's been a fantastic partner. And as soon as the money was in the bank, I-- I pulled my head up and I said, this is great, but also they were eight white men and Remus is a white man. And I suddenly realized that I had put absolutely no thought into the diversity of the cap table at all.
And I was just so focused on trying to get some money in the bank and get Cable going that I had completely failed to think about diversity and what that meant for the company. So, very quickly after that seed round, that pre seed round, it was clear to me that any future fundraising I wanted to do, I wanted to balance out this cap table as quickly as possible.
I started having conversations with a more diverse pool of angel investors very soon after that. I asked for a lot of introductions, those were very-- very forthcoming. And, not only did I want to have a diverse pool of investors because I thought it would be good for-- for outcomes. But I also wanted to look at like the diversity of skill set amongst those angel investors as well.
I have never sold anything before. I have never built anything myself before. There were a whole range of things that I knew that we would need to be doing and that I would need to be doing the early versions of that, I thought, that I would benefit a lot from having people around the table who had done that stuff before.
So we started having really early conversations with all of these angel investors as we pulled the seed round together, which was in 2021. And as it turned out, we got preempted in that round as well by CRV and the partner meeting that was also a woman. And so the bulk of that money for our seed round ended up coming from a female partner at a firm.
And after that seed round, I think we were 52% female in terms of number of investors. We were also more than 50% female from amount of money invested. If we consider the lead partner from those VC funds and diversity across the other-- other vectors that were also much improved. We took that same approach with our series A. We actually did not need to take on so many angel investors because our cap table at that point was already pretty diverse. And it is something that we continue to think about and will-- will continue to think about as we raise more money.
Steve: That's great. Many companies think about diversity first in employees. But then employees, you also have to think about the management and leadership, and then that goes to the board directors, and of course, that leads to investors. So really thinking through that is a phenomenal way to build a company, I think, and I hope, more people follow in your path, and I'll link to that blog post so people could read it.
On the topic of culture, can you share more about Cable's core operating principles, like how you're building the company from a people perspective?
Natasha: Yeah, so one of the very first things that we did back in early 2021, when I think we were four or five people, was we decided to come up with a way of talking about our culture that was not just using the words culture and values.
I think values are very often, in large companies, ignored. No one really knows what they are. They're more for investors in the public markets than-- than actually the people working there. And so we started… decided to use some different words to try to explain and evidence how much more important they were to Cable than-- than perhaps people had experienced at previous companies.
So we wrote what we call our operating system and our operating system is made up of now four operating system principles. Be kind, be clear, be fast, be responsible. And each of those operating system principles has what this means for us at Cable, ways that we think people should be acting to-- to try to meet these operating system principles, and also what it does not mean.
Because being clear does not mean that we can share absolutely everything about everyone at Cable with everybody. And being kind does not mean that we can't give each other tough feedback, or that we can't say no to people. And so we wanted to be really, really clear about what these things meant and, importantly, did not mean as well.
Our operating system has taken a number of different iterations over the years. We've actually updated it twice, most recently just at the end of last year. And, and that's because, whilst I think it's really difficult to separate out the CEO and who they are, and the co-founders and who they are fundamentally from the way that a company culture is built for all of the pros and cons that that brings. I think that it does change over time. Your culture does change as you add more people, especially senior leaders who are-- who have influence and hire teams themselves and bring in people from previous companies and so on. And we hired some senior leaders last year, Candace, our Chief Revenue Officer and Josh, our Head of Ops and Finance, and certainly they have impacted our culture. And so it would be remiss of us not to reflect that in our operating system. So it has been updated, but it is still absolutely core to what we do. We interview everybody that joins Cable. The final stage of that interview is an operating system interview. And it is really a core part of how we think about things at Cable.
Steve: I really like that you call it an operating system because it makes me think at least about operating systems on our devices, and those do get updates. They get minor updates and major updates and it's an evolution. When I think about the overall operating parameters of the company, you have people, you have process, you have technology.
I'd love to shift into the technology side and talk about some of the key components of your overall product offering.
Natasha: Yeah, the product today is really made up of two parts. We have our Partner Hub product, which is how banks, especially banks that work with fintechs in the banking-as-a-service model, the embedded finance model, really how they can collaborate with their partners, their fintechs, their programs, on compliance, onboarding, financial crime risk assessments, enterprise wide risk assessments, sharing actions, communicating, and so on. It is how banks can go about doing all of that work. The more, what would normally be, email based work or sharing of documentation work.
That product is focused at solving all of those problems. It is also useful for things like vendor due diligence, so companies can use it if they're not in the banking-as-a-service model. It is a useful tool to help track actions and compliance issues. The other part of our product is really the part of the product that is very different from anything else on the market today. That is our Automated Assurance product. That is where we are taking in account level data and transactional level data from our customers, and we are monitoring it at all times for breaches of regulation, failures of controls, and any risks. By which we mean trends or changes or anomalies in the data that could indicate that financial crime controls are not working effectively.
Now, the real magic happens because the Partner Hub and the Automated Assurance product are integrated. And so if there is a breach of regulation or a failure of control in any of the data, because we're monitoring all of it all the time, then that is automatically reflected in the company's financial crime risk assessment.
So this really tackles some of the very specific requirements that regulators have talked about in consent orders over the last two years in particular. And in particular with regards to banking-as-a-service and this nested model, those are the two fundamental pieces of the product.
Steve: Excellent. Excellent. It's fascinating. The-- the audience of this podcast generally is a digital identity providers, practitioners, investors. How should we think about Cable's role with respect to the customer identification programs, KYC, IDV, sanctions, just overall customer risk layers? How does that fit into what you just described?
Natasha: Yeah, absolutely. So the way that we think about the world is by looking back -- the world of financial crime I should clarify -- I don't, don't think I have much to add to the conversation about the way of the world today. The-- the regulation is clear that you need financial crime controls in place. And then you need to independently test their effectiveness. Now, I do not believe that anybody can build controls and also independently test their effectiveness in good faith. So, the likes of Unit 21, and Alloy, and Socure, and Sardine, they're building financial crime controls. They cannot tell you how effective their controls are independently. They cannot satisfy that regulatory requirement, which is why we do not see them as competitors. We see them as fantastic partners to Cable. The way we work with our customers and think about those other vendors or in relation to those vendors is not that we are saying to one of our customers, you know, we're going to tell you if Socure is the best. That's not how we work.
What we do is we say, “Okay, bank or fintech or crypto company, you-- you use certain vendors. You might use more than one vendor in these particular areas. Not only do you need to know that they're effective, you also need to know that your implementation of those vendors is effective because so often it's actually the implementation where issues occur.”
You need to know that when your team of analysts at your bank are interacting with those tools that those analysts are doing the right things as well. So it's not just about thinking about these vendors and-- and us deciding which of them are good or not. They're all good. What it really comes down to is how do our customers implement those vendors?
How are they utilizing the information from those vendors, from those control providers? How do the analysts work against the policies and procedures? And how can we tell you across that whole spectrum of work if you're effective at meeting your regulatory requirements?
Steve: The providers you just mentioned, many of them focus on that customer onboarding step that some of them call it the day zero, those components where you're first getting to know a new consumer. And I really think that those are foundational to start. Like if you're starting a challenger bank, you need that, but what are the other important pillars of a financial crime stack as the company's mature? What are some of the other pieces?
Natasha: It has always been the-- the onboarding checks and then the transaction monitoring that you need on day zero. I think it's-- I think it's probably still fair to say that transaction monitoring can take a few different forms on day zero. If you are a large bank releasing a new product, or if you have a-- a large waitlist and you know that there are going to be significant volumes on day one, then you may well want to start with a transaction monitoring vendor, like a Unit 21 or someone else.
But I think it's also a valid route if you're starting out with a new fintech to actually build some basic transaction monitoring rules in house to understand where your risks lie before you bring in a transaction monitoring vendor. I think those are two different routes that in different situations make sense.
Beyond your onboarding vendors, which cover, of course, not only KYC and CIP, but also sanction screening and PEP screening and being able to assign customer risk assessments. There's the transaction monitoring piece. The other two components that we see most often are case management. So this is where your Hummingbirds might come into play. Larger institutions might use Actimize and so on. Case management can be really useful. Some customers want it on day one, but again, it could be something that you add later when you've got volume. And then the fourth piece, which is where we are, this automated testing piece that sits over the top.
What we used to say to people was “You need to get set up with your onboarding day one vendors. You need a transaction monitoring in place, and then we become relevant.” And I think what has happened over the last few months in particular, is that the regulators are changing that paradigm. The-- the requirement from regulators to make sure that controls are working to be able to evidence that your controls are effective is now top of mind. And so our view is that actually having that understanding of effectiveness on day one is important, is what the regulators are steering us towards.
Steve: We've been talking about providers and earlier you mentioned some of the other actors in the ecosystem, the partner banks, banking-as-a-service providers, embedded finance, and then of course, fintechs themselves. Where are you seeing the demand start and how are they engaging with Cable, like which of those would you say?
Natasha: So a lot of demand right now from the banking-as-a-service, embedded finance banks that is probably not surprising given the recent consent orders and all of the-- the news and the guidelines that have been coming out from the OCC in particular.
We also have, as you-- as you mentioned-- we have fintech customers, we have crypto companies as customers, we have payments companies as customers, they are all experiencing more scrutiny from the regulators and they are all trying to get ahead of any-- any exams that could highlight deficiencies in their testing programs. This is becoming the hot topic. Nested relationships are more complex and more risky and that's why payments, as I say, we've just-- we've signed our first payments customer. Payments is interesting because there are nested relationships there that are a much more sort of traditional, much more baked into how finance has been done for a long time, but they're going to receive more scrutiny.
Now people are looking at embedded finance with-- with a closer-- with a closer lens that is also going to be true of any other type of nested relationship. So payments is an area that we think we're going to see a lot of interest, program management, any-- any nested structure.
Steve: You list companies on your website that are using Cable and the list is really impressive, Griffin, Treasury Prime, Axiom Bank. What departments or teams within those companies are usually involved in working with you and evaluating and then, of course, implementing.
Natasha: Yeah, it's actually a really interesting question because it's something that we talk about a lot internally as we think about our go to market process.
For embedded finance banks, banking-as-a-service banks, it's very often the business lead for banking-as-a-service or embedded finance that is the one that wants us most because we enable their compliance teams to move faster. We enable their compliance teams to onboard more customers more quickly, onboard more programs to communicate more effectively with their boards, with their stakeholders.
And we give everybody in that world more visibility into what is happening. That is a little bit different if we're talking about banks who are using us directly or fintechs or crypto companies or payment companies. In those situations, it is very often the compliance officer who brings us in and is the first champion of Cable internally. It does depend what kind of customer we're talking about.
Steve: And typically for the buyers or the champions, those that really want to bring you in. What are they evaluating when it comes to the return on investment or specific metrics that they want to see pre and post?
Natasha: We spend time with our customers or our prospects, helping them understand the ROI of Cable because it is a-- it's a new product and it is a different way of working. So it comes down to two sides of that equation. Of course, making them more money, revenue generation. So that comes from, we can help-- help them on board their partners, their programs, fintechs more quickly. We can save them significant time there. We give them more insight into those partners on day one. So not only can they onboard those partners more quickly, but then those partners can grow more quickly with less guardrails around them.
And then on the other side of the equation, of course, you've got cost savings. So where a bank has -- I mentioned one of the largest banks in America having 1,500 people in their-- their manual testing team. Other banks might have, you know, tens of people testing accounts. Our pitch there is that we can save a lot of those people from doing this mundane work of reviewing dip samples of accounts. And we can reallocate those teams to high value areas of work. We will give them the problems to go solve instead of them spending 90% of their time trying to find the problems to solve, and then not having much time to fix them. We can also save teams from having to hire more people with their growth plans.
So if a company says, “Okay, well, we're manually dip sampling 2% of our accounts today. And in an ideal world, we would be testing significantly more than that, but we just can't because it's not feasible. We'd have to spend $10 million on new employees, but our growth plans say that we're going to double our account numbers or our number of programs next year to maintain that 2% of testing.” They are going to have to double that team.
And so we're saying to them, “Actually, not only can we solve that problem for you, you don't need to double your team. We can actually do this testing across 100% of your accounts for you. So you get to solve both of those problems that you would like to solve. And the investment is significantly less than you doubling your team next year, or trying to meet much, much higher testing samples.”
The third piece… so you've got the revenue generation, you've got the cost saving. The third piece, which is, -- has been interesting to watch -- it's-- it's inclusion, exclusion. Inclusion over the years is the-- the way that we help banks avoid-- reduce the risk of fines from the regulators. So we talk a lot with our customers about fundamentally what we're doing here is helping you lower the risk of regulatory issues.
You walk into your regulatory exam knowing that you do not have a regulatory breach. In the BSA AML world, which without Cable is just impossible to do. And that confidence that we can give compliance officers -- that reduction in risk is -- is hard to put a number on, but is incredibly important. It's becoming much more important as we talk to customers now.
Steve: It's very-- it's a very powerful value proposition. And you have so much visibility to the controls and practices, really the state of the art.
I'd love to double click on the cost element specifically around manual, because in the industry, we often think about digital transformation is new technologies and new experiences. But sometimes it's just moving from manual to automated processes just for more efficiency.
If I were a chief risk officer or chief compliance officer, and I've signed on to be a Cable client, what's the first implementation experience, like the first few weeks or months in becoming a customer.
Natasha: What we tend to see is that the Partner Hub product, the onboarding of programs, the use of our risk assessments, our actions, our workflows, and so on, that requires no integration whatsoever. So the day after we sign, we give our customers access to that. That can be used immediately out of the box. And that's a really great way to dip your toe into what it is Cable can do.
For Automated Assurance customers, the next thing that comes up is integration, data integration. We are integrated with a variety of different data warehouses like Snowflake and BigQuery, with other vendors like Alloy and Treasury Prime. And we can pull data from those sources assuming that our customers give us access to those-- to those data sources.
So that's really, really easy for customers to get moving with. We also have an API so customers can actually do the integration work if they would prefer to send us data in that way. So, integration is next. After that comes an understanding, a shared understanding of our customers interpretation of the regulatory requirements.
So we have a view of what the regulatory requirements are for the different jurisdictions that our customers are in and the different products or services they're providing. But as you know, banks will have their own risk appetite, their own interpretation of the regulation and the Cable product is highly configurable. It will work in a way that is set up to-- to absolutely match our customer's view of the world, how they think about risk. So we make sure that we align with them on their regulatory requirements and we understand their additional controls they have in place. We then make sure that we can get all of that information, any issues that we find. And we've-- we've never not found breaches or failures in our customer's data. We're always able to find value there. And, once we do, the final step in that integration onboarding process is confirmation that we have understood the data correctly. So, we give our customers access to the Automated Assurance app. They-- they look at the-- the issues that we found, the data that we've surfaced. They confirm that that is-- that's correct. And then we move forward from there.
Steve: I love that you mentioned that Cable has a perspective on the regulations and that you discuss with the client and figure out where their mind is versus what you've seen.
I want to talk about the bigger picture of compliance and you've got a really powerful stat on your website that $4 trillion of money is laundered every year globally, but we catch less than 1% of that. What do you think is preventing companies from catching more? What's your perspective on that?
Natasha: My view is because nobody knows how effective their controls are. So we know that the biggest banks in the world spend a billion pounds a year on financial crime technology and people. But, as you say, the UN estimates we catch less than 1%.
We have spent a ton of money buying CIP vendors, buying screening vendors, buying transaction monitoring, but nobody knows how well they work. And if you don't know how-- how well something is working, you cannot optimize it, you cannot make it more effective. That is exactly the problem that Cable is solving.
So In my mind, it all comes down to… and you can see this actually really interestingly in the -- if you read all of the fines given for financial crime reasons by all of the regulators -- you can see this trend over time. Ten years ago, the fines were given predominantly for companies, for banks, not having controls in place. So that was when we saw this big increase in control vendors. You saw the Alloys, you saw the Unit 21s, the Comply Advantage, it's all being built. There were so many control vendors available, Socure of course. And the problem was no longer that banks did not have controls in place. The biggest reason for fines now is ineffective controls. And so now the controls are in place, but nobody knows how effective they are. And that's why the shift now, as we're calling it here at Cable and how we're talking about it, is to compliance 3.0, which is about effectiveness of those controls.
Steve: On the topic of shifts coming out of the pandemic, we're seeing more globalization, more cross border commerce, people are living and working in different places. Now there's a digital nomad visa in most countries. How do you think these trends where people are spending money in different places and money shifting across borders, how is it making the job of a compliance officer or a money laundering reporting officer harder?
Natasha: Oh, so much harder. It's also making it really difficult for financial services companies, I think, to-- to solve all of the needs of their customers, because there are restrictions on where different banks can actually-- can actually transact or how money moves between different countries. And so it certainly adds complexity.
All of this is a data problem. It is really difficult for compliance officers to know what is going on with any single customer in a lot of banks. We hear that some banks, they have to use 20 systems to actually understand one single customer. If a compliance officer has all of the data that they need to truly understand the profile of the customer, where they're transacting and how they're transacting, Then a lot of this is simplified and actually where they are physically in the world and how they're traveling and how they're living is, is a much smaller problem. It's all a data problem. If we can solve giving compliance officers the data that they need to make decisions, then actually, this is not a massive problem.
Steve: One of your-- your newest capabilities in the platform is transaction assurance. And you touched on earlier, is-- is this help with this scenario of-- of this cross border transaction?
Natasha: Yeah, absolutely. So transaction monitoring, you know, everyone-- everyone I think knows what that is-- is about having rules or systems in place to be able to identify potentially suspicious transactions. And that's a regulatory requirement, and it is so that we can alert the authorities to any potential money laundering or terrorist financing.
Transaction Assurance, which is our latest product that we've released, is about providing assurance, doing the testing, that any regulatory requirements with regards to transactions are being met. So that means we can tell our customers “Have all of your transactions actually gone through your transaction monitoring system. When they've gone through that transaction monitoring system, have they all been dispositioned within your SLAs?” That's a regulatory requirement as well. If you are making international transactions there are sanction screening requirements on that. “Have you performed sanction screening for every single one of those transactions?” We can tell our customers about that.
And as you think about the Travel Rule with regards to crypto and so on, we can help assure that all of these requirements are being met. So certainly as you think about a more-- more globalized payment network where people are making more international transactions and spending money in different places, it does increase the risk or the-- the ability for compliance officers to meet their requirements with regards to those transactions. And certainly Transaction Assurance helps.
Steve: With these challenges and the shift that you mentioned earlier, are there any details you could share about where Cable's headed this year, your roadmap for 2024?
Natasha: Yeah. This year is-- is, in big part, about building out some more functionality in the Partner Hub for our customers who are desperate for more help there.
We have been building very closely with some of our customers in design partnership relationships. I'm excited to continue to release some more products and features there over the coming months. There is also a pretty good chance we're going to-- to go out beyond the financial crime arena with regards to our Automated Assurance product. Not yet sure whether we'll end up doing credit assurance first or-- or disputes assurance or which area of compliance we'll go into, but it is likely that we'll start doing that too.
Steve: When you speak with investors and you're talking about the bigger picture vision of where Cable's headed, what's your vision for the company, five years or 10 years out?
Natasha: Yeah, it's all about data. We are a data company at heart and a lot of the compliance officer problems today are because of bad data. Compliance teams are the first team in the company, in a bank that touch data with regards to customers, because as you already said, they are the ones that onboard customers. They receive that customer data. They do stuff with it. They make decisions on it. And from that point onwards, the data is utilized by all the different teams in the bank. Compliance effectiveness is about data. And a lot of the bank's overall effectiveness and other teams is also about data.
We're a data company. In 10 years time, we'll be solving data problems to enable banks to-- to work in this modern financial services world that we're in now. So data is where we're heading.
Steve: Great. Great. Well, we're almost at time, Natasha. Thank you so much for this conversation so far. If you've seen any of the episodes of EXECUTIVE SERIES, I like to go a little bit further than just the LinkedIn profile, go beyond the person mentioned in the press release.
You talked earlier about starting a family around the same time that you started Cable, or maybe starting families which drove you to start Cable. How do you juggle the responsibilities of being a venture backed CEO in this space with raising a young family?
Natasha: Probably very badly if you ask my wife. It is-- it is only possible because of her and the sacrifices that she's making to enable me to do this.
Absolutely, it's difficult. I-- I start work very early. We have people, as I mentioned in Europe and the UK, so I want to not only maximize crossover time with them, but also, I eat dinner with the kids every night. So being-- starting earlier means I can finish earlier, meaning I can spend some more time with my family.
I think the other thing is that we are all working from home and we're a remote only company right now and children appear on calls. It's actually lucky no one's walked in since we've been talking, and that's okay. And that's-- that's something that we sort of-- we embrace at Cable. There are-- there are lots of people at Cable who have kids and we-- we embrace that and try to make time for people to have their family commitments as well. It is definitely challenging though.
Steve: What do you like to do when you do have free time for leisure with your family? Any particular hobbies or activities that you do?
Natasha: Well, I don't know if you have kids, Steve, but my kids are three and one, so mostly I like to sleep, which is-- is more and more difficult. But otherwise, so if I-- if I have time alone or just with my wife, I love to cook. I do a lot of cooking. That's how I relax. We-- we have friends over, I like to have dinner parties and so on. I also love to exercise. Started… I've just moved to California actually last year from the UK and so I'm very much enjoying the fact that I can go running in shorts and a t-shirt in February, which is not something that I have been able to do before in my life.
So I like to get outside and I have a dog, which requires walking, so lots of-- lots of activity, reading, cooking, and if I can manage it, some sleep.
Steve: I hear you on the sleep, and I do have two kids, an 11 year old and a 5 year old, and they're getting to the stage where they like to sleep in too on the weekend. It was not like that a few years ago, so there's light at the end of that tunnel for sleep, certainly.
Natasha: We are-- we are waiting for that. This morning, our three year old came into-- into the bedroom fully dressed for the day. That's the first time she's ever done that, so things are definitely changing.
Steve: Yeah, when you get those 5am, 6am wake up calls, you're like, the sun is not out yet. Why are you up? Well, [Natasha: yeah] wonderful, thank you so much for sharing that.
To close out on the podcast, for those that are watching or listening, what types of conversations would be interesting for you to have with anyone who would reach out?
Natasha: I love to talk about financial crime, compliance, banking, all of those things. I also love to talk about just building companies and interesting things that are happening there. So, lots of different conversations. Financial crime is where I'm a big nerd though. So all of those fun conversations are my-- are my thing.
Steve: How should people engage with Cable through your website or maybe LinkedIn? How do you prefer?
Natasha: Yeah, LinkedIn, our website is Cable.tech. -- we are CableTech on LinkedIn. I'm Natasha Vernier on LinkedIn and I'm Natasha@Cable.tech if you want to get in touch directly.
Steve: Excellent. We'll be sure to put links to all of those resources.
Natasha, thank you so much for sharing your time, your story. I'm truly inspired by the work that you're doing and I look forward to seeing Cable's continued growth and success in the market.
Natasha: Thank you so much for having me. It was really fun to chat.
Effective Compliance with Co-founder & CEO of Cable, Natasha Vernier