The news: US identity-decisioning platform provider Alloy has raised $100 million in a Series C funding round, attaining a valuation of $1.35 billion, TechCrunch reports.
What does it do? Alloy helps banks and fintechs with AML and KYC by automating functions like identity decision-making during new customer onboarding and transaction monitoring (and automated credit underwriting is in the works, per TechCrunch). It counts Ally Bank, Brex, and Evolve Bank & Trust among its over 200 clients.
Alloy plans to use its new funding to build out customer identity profiles that can be used to mitigate risk.
The timing of the fundraise is opportune: Digital account opening has surged on the back of the coronavirus pandemic. 2021 will be a high watermark year for accounts opened via digital channels, per Insider Intelligence forecasts, placing a premium on strong onboarding identity verification.
Furthermore, in recent months several high-profile fintechs have struggled with AML issues, which could raise awareness of the problems that come with not properly complying with money-laundering regulations.
Why it matters: Alloy’s pitch to neobanks in particular may be strengthened by the digital-only banks’ need to assuage consumers’ wariness about making a neobank their primary bank.
A sizable swath of US consumers don’t want to move their primary banking relationships to digital-only players due to security concerns, per a new survey from PYMNTS and Optherium.
That concern could lead neobanks to put a higher premium on stronger compliance efforts and partnerships. They may also be open to working with third-party solution providers like Alloy that can help neobanks reduce fraud and money-laundering incidents harmful to their reputations.