Accend (YC S23)

An interesting stat I came across: 60% of commercial banks spend over 33% of their compliance budgets on KYC. For 20% of banks, this number jumps up to 50%. Fintechs and banks are spending HUGE portions of their compliance budgets on doing due diligence on businesses and customers. This just goes to show that: 1/ Due diligence is extremely important. 2/ It’s a huge cost center. At Accend (YC S23), our job is to streamline business onboarding and enhance compliance — and so for us, it makes sense to focus on the most important and fundamental task at hand: due diligence. This is existential to a financial institution’s presence. Because if you onboard customers without doing due diligence, guess what happens? You get into trouble, your customers will lose trust, and you'll have less revenue. And nobody wants that.

One of Brex's values when me and Yutong worked there was to “inspire customer love.” I only really understood this after we started Accend (YC S23) - how paying attention to the smallest sign of what delights can inform our roadmap and help them get more value out of our product. That’s now our core focus. Our product is entirely modeled on how humans would do manual reviews during business onboarding. For example: We produce highly accurate industry classification codes for every business — ranging from NAICS codes to SIC codes to NACE, and even MCC codes We also customize our models for each customer and the list of industries they can support to align with their specific risk appetite. This helps us have 90%+ accuracy on industry risk scoring — a performance that’s unparalleled in the industry. An example of this in action: one of our neobank customers ran thousands of businesses through Accend that they had previously onboarded. Through our industry risk scoring product, they were able to decide whether to keep working with risky customers or to offboard them completely. The fact they could use Accend not only to onboard new customers but also temperature check their entire history of decisions was a real moment of inspiring customer love for that neobank. And for us, the best feeling to be able to help them course-correct past misjudgements.

I think it’s a shame when people miss out on the RoI of investing in compliance. A lot of the times, they don’t see all the benefits of compliance because they see it as just a checkbox activity. An example: I sometimes come across fintechs that rely on high level registry checks and don’t do deeper due diligence on a business’s web presence, industry risk or reputation. For me, that’s a huge red flag 🚩 It signals that a bank or fintech thinks of compliance as something that’s only meant to make regulators happy. So, like anyone that’s just trying to pass a binary yes/no test — they do the minimum it takes to pass. Instead, I like to think of compliance not as a shield — but as a foundation. It helps stops fraud. It builds your reputation. It earns customer trust. I've seen businesses flourish when they make compliance a core pillar of their strategy because their customers stay longer, they spend more, and tell their industry peers. That's real ROI! In the long game, compliance isn't a cost. It's an investment that pays dividends for years. An effective compliance strategy has long-term payoffs that are very much tied to financial performance — customer trust and loyalty increases revenue and lifetime value.

Me and Yutong Pei realized very early on at Brex that the KYB process is excruciatingly long and unwieldy — and it changes depending on financial institutions and the type of business being onboarded. A lot can go wrong: - It’s expensive and slow to manually research new customers and draft compliance narratives accordingly. - Compliance checks are often error-prone compliance checks, and so are audit trails. - KYB teams juggle tons of tasks! They don’t have time to assess complex regulatory requirements and risk profiles. And there are consequences: - Drop-offs can increase. If it takes so long for a bank or fintech to make a decision on a customer, the customer will simply go to someone else to open an account. No one wants to wait around. - Hiring more people doesn’t always work. It can actually lead to even more errors. - Outsourcing doesn’t always work either - No one wants to be associated with an organization that makes mistakes. Mistakes lead to an increased risk of regulatory fines and reputation damage. With Accend (YC S23), a large part of what we’re doing is just raising the bar. Our highly customizable AI model generates accurate insights into industry risks on your specific risk appetite — with a 90%+ accuracy rate. When it comes to compliance, we don't want our customers to just tick boxes. We want them to excel at it.