This is an excerpt from our guide Enhancing Sponsor Bank Compliance: Guide to Synctera’s Risk and Compliance Tools. This is part 1 of 3 and you can view the entire guide here.

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Banking-as-a-service (BaaS) infrastructure has enabled a surge of financial innovation and a new way for banks to grow their business by increasing core deposits and generating revenue through non-interest income and other fees. However, the complexities of managing BaaS programs often create operational challenges that hinder effective oversight. Because legacy core systems are not traditionally set up to effectively manage these partnerships, sponsor banks are often left grappling with fragmented communications, manual operations, and dispersed data that allow issues to fall through the cracks. Ultimately, these issues can prevent sponsor banks from compliantly scaling their BaaS business.

The Synctera Platform is designed to address these challenges by:

• Providing complete data visibility to enable teams across the entire banking organization to glean actionable insights
• Unifying communications and key workflows to promote collaboration between sponsor banks and customers
• Streamlining payment and compliance operations through a set of purpose-built tools

The Synctera Console, the user interface for the Synctera Platform, is the access point to a wide variety of these risk and compliance tools that help banks streamline BaaS operations and accurately report program and compliance-related data to their regulators. Let’s dive in with a few highlights! 

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Cases: Communicate in a centralized and trackable location

Banking is an industry full of exceptions and nuances that sponsor banks and customers must investigate and solve – together. Cases is a tool that facilitates direct collaboration between sponsor banks and customers. It serves as the central repository for workflows that require communication and collaboration between sponsor banks and customers, keeping partnerships aligned at every stage of growth. Cases aids in facilitating everything from compliance-related investigations to requests for marketing asset approval. Here are some of the most frequented workflows that are resolved through Cases:

1. KYC and KYB Alerts: automated alerts during the end-user onboarding process that require customers to approve, reject, or request additional information from the applicant.
2. Fraud Alerts: automated alerts based on pre-configured fraud monitoring rules, such as transaction frequency (e.g. five or more transactions in 5 minutes) and number of different receivers per sender (e.g. 10 receivers per sender in the past 24 hours).
3. AML Alerts: automated alerts based on anti-money laundering rules and regulations, such as threshold rules (e.g. transactions >$ 10,000) and unusual transaction patterns (e.g. sudden increase in deposits or withdrawals).
4. Information Requests: request created by a customer or bank to request information from the other party.
5. Transaction Disputes: track end-user card and transaction disputes, upload supporting documentation, and centralize communications between the customer, sponsor bank, and Synctera’s Compliance Operations team to reach a resolution.
6. Partner Monitoring Request: automated alerts to the customer based on a bank’s Ongoing Monitoring schedules, which are used to automate the collection of ongoing due diligence documents, such as customer complaint logs and executive team changes.
7. Marketing Materials: customers can submit marketing assets, request approvals, and receive feedback from their sponsor bank to ensure that marketing messaging is compliant with all applicable regulations.

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Insights: Data visibility for regulatory reporting, key risk indicators (KRIs), and payment operations support

With customer, account, and transaction data flowing through the Synctera Platform, sponsor banks need a data analytics tool that empowers a wide range of internal stakeholders to access the insights and information they need to succeed in their roles.

Synctera Insights supports just that – allowing everyone from bank executives to BSA / AML analysts to tap into their programs’ data, either at an aggregate view or by drilling down into specific partners, to make better-informed decisions and monitor compliance-related metrics. Pre-built reports are provided to enable sponsor banks to better manage compliance and payment operations, but they can also build custom reports of their own.

Here are some examples of out-of-the-box reports sponsor banks leverage through Insights:

• ACH File Settlement Validation: validation data for ACH postings on the Synctera Ledger.
• Card Settlement Reporting: detailed information on the number and value of transactions on each card network daily, with the sum of gross amounts, various fees, and net settlement amount.
• NACHA ACH Return Rate Reporting: ACH return reporting with return reason codes. 
• AML Case Summary: dashboards to identify trends and alert sponsor banks when there may be an increase in rules being triggered.
• Case Resolution Overview: detailed overview of all cases between sponsor banks and their customers with filters for case type, status, and customer.

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Reconciliation: Keeping track of every penny

Every time a transaction occurs, data is recorded across multiple systems, including those of technology providers, banking partners, and various payment networks. Reconciliation plays a critical role in ensuring that this transaction data is consistent across all systems and is essential for maintaining accurate records of money movement and account balances.

The Synctera Platform makes it easy for sponsor banks to keep track of every penny flowing in and out of their programs, in one centralized interface. Synctera’s reconciliation engine auto-reconciles >98% of transactions, enabling banks to spend less time manually matching transactions. Within the Console, there is a snapshot of account balances so banks can quickly see if there are any discrepancies. For transactions that are not auto-reconciled, the Console makes it easy for the Synctera Payment Operations team to match Synctera Ledger transactions with those from payment networks, like Fedwire, Automated Clearing House (ACH), or the card networks.

The Reconciliation section of the Console includes:

1. Daily Snapshots: quickly and easily view the reconciliation status and balances of a program. It’s a bank’s first stop to investigate any differences between balances, in collaboration with the Synctera Payment Operations team.
2. Open Items: view all of the transactions that were not auto-reconciled by Synctera’s reconciliation engine. This tab is used to manually reconcile transactions that require further investigation and bring them to resolution.
3. Post-processing: review transactions that can’t be automatically attributed to a specific customer’s account. Easily review the transaction and attempt to match it to a customer’s account based on the transaction file data.
4. Reconciled: view a list of all of the transactions that have already been reconciled, both automatically and manually. This section of the Synctera Console also provides the ability to undo reconciliations that might have occurred in error.

In addition to the Console’s reconciliation tooling, Aging Analysis reporting is provided in Synctera Insights to support the fact that reconciliation happens in different time horizons. For example, a card transaction that is posted on an end-user’s account might be settled in a few days. On the other hand, an outgoing ACH created on the Synctera Platform should be reconciled on the same day. Aging Analysis reporting helps uncover the full amount of unreconciled transactions at risk for the sponsor bank.

Along with the data transparency provided through the Synctera Console and Insights, Synctera’s bank partners are also provided with daily extracts of all account and transaction information. These extracts provide the bank with complete access to all money movement history and end-user balances in the event of any system disruption. 

A Daily Snapshot of Reconciliation.

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Disputes: Manage card and payment disputes with ease

To adhere to various regulations, sponsor banks and customers are required to resolve disputes for debit, credit, and ACH transactions. There are several ways for sponsor banks and customers to handle disputes on the Synctera Platform.

First, the Disputes API allows customers to build the card dispute process into their product, allowing end-users to create new disputes and upload supporting documentation. When an end-user initiates a dispute, a dispute case is automatically created in the Synctera Console and is populated with the necessary information, such as transaction details and investigation deadlines.

Alternatively, the customer’s support team can submit debit, credit, and ACH disputes on behalf of an end-user directly from the transaction listed in the Synctera Console. Once submitted, a dispute case is created, allowing sponsor banks to track and monitor its resolution.

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This is an excerpt from our guide Enhancing Sponsor Bank Compliance: Guide to Synctera’s Risk and Compliance Tools. This is part 1 of 3 and you can view the entire guide here.

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