Introducing Modern Logic
At Nyca, we are incredibly bullish on the future of fintech. However, we are also cognizant of the significant regulatory hurdles that fintechs face in their daily operations and the persistent need to fight financial crime within their products and services. Many fintech companies do not have the luxury of simply focusing on product build. Instead, fintech startups must dedicate a significant amount of time toward back office risk and compliance — including monitoring customers and transactions to avoid suspicious behavior, verifying customer identities, and remaining compliant with regulatory requirements.
Modern Logic enables fintechs to stand up customizable compliance and fraud programs efficiently, without diverting engineering talent away from what should be their main focus all along: building innovative and scalable financial services and products. Modern Logic’s solution is based on a no-code rules engine, allowing non-technical compliance and operations teams to create decision logic for onboarding and ongoing monitoring.
It’s important to bear in mind the origins of the regulatory requirements in the U.S. and why they exist. The regulations most relevant to this discussion concern customer due diligence, broadly comprised of two key requirements.
- Anti Money Laundering (AML) — introduced by the Bank Secrecy Act in 1970 with the purpose of identifying and preventing the use of proceeds from illicit activities; and
- Know Your Customer (KYC) — which, despite its ubiquity, was only introduced two decades ago by the Patriot Act in the aftermath of 9/11.
Working in tandem, AML and KYC ensure that financial institutions have verified the identity of their customers, are aware of their source of funds and are satisfied that there is no risk relating to criminal activity or terrorist financing.
While these compliance requirements have very noble objectives, their practical application, in particular to fintechs, can be difficult to implement with sparse resources.
Today, many fintechs are trying to create their own compliance and fraud programs while balancing product build. They are cobbling together data from various vendors and building hard-coded decision logic and workflow tools in-house that are both inflexible and time consuming to maintain. Compliance and product teams are battling for engineering resources, creating friction within these organizations. On many occasions we have seen fintechs with high false positive rates, tracking and managing manual exceptions in spreadsheets.
Enter Modern Logic.
Modern Logic’s no-code rules engine empowers non-technical compliance and operations teams to create decision logic tailored to a fintech’s unique product and business model. The rules engine can be easily connected to identity data from top vendors as well as internal company systems in order to write smart data-driven rules. By carefully balancing explainability and flexibility throughout the system, Modern Logic ensures rules can be easily audited by bank partners and regulators.
We’re excited about Modern Logic because it gives control back to founders and reduces the barriers to launching new products. Compliance teams can seamlessly manage their workflow with tools to manage exceptions, automate frequent tasks, and reduce manual work. In addition, the Modern Logic platform features built-in analytics to identify current bottlenecks and back-test proposed changes. Changes are all tracked by an easily obtainable audit trail.
We love the team.
Co-founders Mitchel Scott and Nick Latourette have known each other for over a decade and both have prior operational experience in the space, notably during their time at Palantir. Both Mitchel and Nick bring a real zest for tackling financial crime and compliance issues in financial services, as well as building tools to improve collaboration between engineers and business people. We couldn’t be more excited to work with Modern Logic as they build a solution to help fintechs make smart decisions about customers and transactions while bringing new financial products to market quickly and safely.
Modern Logic is hiring! Check out open positions here.
