A Safe Financial System for All; Why We Invested in Hummingbird
Despite an intensive and international effort to crackdown on illicit finance, over $2 trillion of dirty money is laundered globally every year. The UN estimates less than 1 percent of all money laundering is caught, even though compliance is getting more complex and expensive.
These illegal dealings—from criminal activity, narcotics, human trafficking, and terrorism—risk the security of every legitimate transaction, and our efforts to stop them impose a massive cost, acting as a drag on the whole financial system. The costs of compliance, together with the cost of fines for regulatory failings, reach into the hundreds of billions.
To make the financial system safer for everyone, we invested in Hummingbird, a modern platform for managing AML operations at banks, payment companies, cryptocurrency companies, lenders, marketplaces, and other financial services providers. We made this investment with an amazing team of co-investors from Homebrew, TTV Capital and others.
With this investment, and others we’ve made in RegTech and SupTech, we are betting that machine learning and other technologies transforming finance can fundamentally transform regulation.
Hummingbird gets a number of things right that many other firms in the regtech space continue to fall short on:
First, Hummingbird's two lead co-founders, Joe Robinson and Matt Buskirk, bring together tech savvy with regulatory insight and credibility. Matt has built compliance functions from the ground up, receiving accolades from law enforcement. Joe is an expert in both data science and design. For design, his mantra is to build B2B solutions like B2C solutions, so compliance professionals will just love using them.
Second, Hummingbird's platform was intentionally designed to support compliance teams that don’t have easy access to engineering and IT resources. API integration is not required to get started. Hummingbird offers investigators deep capabilities, such as interactive data visualizations, automatic location intelligence, time-sequence narratives of suspicious behavior, and relationship mapping between subjects. Investigators just follow the money and focus on fighting financial crime.
Third, Hummingbird takes security very seriously, building a culture of security that includes appropriate personnel controls and ongoing education, mandatory testing of all development, and end-to-end data protection from encryption to system architecture design.
Lastly, Hummingbird thinks of the total cost of compliance beyond what banks or financial providers will incur — they want to bring down the cost for the whole system. Most financial service providers are on high alert for illicit activity, which can generate false positives, lead to wasted investigations, rejection of good customers, and reputational damage. Providers, regulators and law enforcement suffer when investigations end in dead ends. These systemic costs, in addition to the costs on innocent victims of financial fraud, are all in Hummingbird's crosshairs. Building capabilities from a systems perspective makes Hummingbird a class apart from point solutions crowding the regtech industry today.
As our community pursues financial inclusion and health, we must remember that the failure of the financial system to address the high cost of financial crime impacts the most vulnerable and impedes our ability to realize an inclusive digital financial future. The best way to address those challenges is to deploy the best technologies for both providers and regulators.