New Ways to Cut Compliance Costs and Grow Deposits with Guests Sanjiv Sanghvi and Stephen Coburn

Payments On Tap Podcast: Season 1 - Episode 02

Episode Summary

In this episode of Payments on Tap, host Elyssa Morgan sits down with Sanjiv Sanghvi and Stephen Coburn from Avalo. Together, they explore how financial institutions can shift compliance from a cost center to a source of growth by embracing a Know Your Customer’s Customer (KYCC) approach. Sanjiv and Stephen explain why moving from institution-level trust to transaction-level verification helps banks and credit unions unlock new fee income and low-cost deposits—without needing to overhaul their core systems.

Sanjiv highlights the blind spots in the traditional model, where banks rely on their clients’ compliance controls instead of verifying each transaction’s parties and purpose. By digging into the details of each transaction and sharing information across institutions, banks can reduce false positives, lower compliance costs, and build stronger defenses against risk. Stephen adds that new technology enables these changes without massive capital investment. Tools now exist to help even small banks efficiently serve fintech and correspondent banking partners.

For leaders facing squeezed margins and rising costs, Sanjiv and Stephen offer a clear message: meaningful growth requires a deliberate strategy, cross-team buy-in, and the right technology. They urge institutions to define their goals, work closely with compliance teams, and build new lines of business that can scale. When compliance becomes a competitive edge, banks can create lasting value for both their customers and their bottom line.

[Article Mentioned] Beyond Institutional Trust: Why Traditional Due Diligence Has Failed | Avalo

Guest-at-a-glance

💡 Name: Sanjiv Sanghvi
💡 What they do: Board Member
💡 Company: Avalo Holdings
💡 Noteworthy: Sanjiv brings decades of banking experience and specializes in helping financial institutions turn compliance and payment operations into business growth opportunities.
💡 Where to find him: https://www.linkedin.com/in/sanjiv-sanghvi

💡 Name: Stephen Coburn
💡 What they do: Founder and CEO
💡 Company: Avalo Holdings
💡 Noteworthy: Stephen leads technology and solutions for banks, focusing on enabling fintech and correspondent banking partnerships through practical compliance and risk management tools.
💡 Where to find him: https://www.linkedin.com/in/stephencoburn/

Key Insights

Compliance Can Drive Growth, Not Just Cost

Many financial institutions still see compliance as a burden—something that drains resources and slows business. This view is outdated. By shifting from institution-level trust to transaction-level verification, banks and credit unions can turn compliance into a business driver. Using Know Your Customer’s Customer (KYCC) methods, teams can see beyond their immediate clients and assess risk at the transaction level. This approach opens doors to new business lines, such as fintech and correspondent banking partnerships, which can bring in low-cost deposits and fee income. When compliance becomes an active part of growth strategy, it helps organizations build trust, reduce risk, and compete for new opportunities without overhauling their core systems. In today’s market, turning compliance into a revenue engine is not just possible—it’s essential.

Transaction-Level Data Cuts Risk and False Positives

Legacy compliance tools often create more problems than they solve. High false positive rates and alert fatigue waste time and tie up staff. The root cause is a lack of context—systems only see basic information, like names and addresses, rather than the full picture of each transaction. When banks and fintechs share detailed data about the parties and purposes behind each payment, risk teams can spot real threats and let legitimate business move faster. Transaction-level data supports better due diligence, reduces compliance costs, and strengthens defenses against fraud and money laundering. By moving past surface checks and relying on richer information, financial institutions can focus on real risks and stop wasting resources on cluttered alerts.

Growth Requires Focus, Buy-In, and the Right Tech

Chasing too many new ideas at once leads to scattered results and missed targets. For compliance-driven business lines to make a real impact, banks need a clear strategy and the right people involved from day one. That means setting specific growth goals, involving compliance and risk teams early, and building a business case everyone can support. Technology no longer needs to be a barrier—modern platforms can run alongside core banking systems and connect through simple APIs, rather than requiring an expensive overhaul. When institutions focus on a meaningful market, invest in the right tools, and commit to scaling what works, compliance-driven growth becomes achievable. Success follows when leaders align on purpose, plan for scale, and use technology to make smarter, safer decisions.

Episode Highlights

Flipping the Compliance Script: From Cost to Revenue

00:00:44 – 00:01:41
The episode opens with a direct challenge to the old view of compliance as a back-office burden. The discussion reframes compliance as a potential revenue driver for banks, credit unions, and fintechs. By shifting from institution-level trust to transaction-level verification—through Know Your Customer’s Customer (KYCC) practices—organizations can create new growth opportunities. This approach not only builds stronger compliance programs but also unlocks new deposit and fee income streams, even allowing for deposit growth without added cost. The message is clear: institutions that treat compliance as only a cost are missing out on significant business value.

"Today we're flipping the compliance conversation on its head. So, whether you're a $500 million community financial institution or a global institution, the challenge is the same. How do you turn compliance from a cost center into a revenue engine?... If compliance only shows up as a cost, you're really leaving money on the table."

The ‘Reese’s Moment’ for Community Banks

00:06:52 – 00:08:43
The episode uses a memorable analogy—mixing chocolate and peanut butter—to explain the opportunity for community banks. Many smaller banks have become "one trick ponies," relying too heavily on commercial real estate lending. Meanwhile, large banks' strict risk controls have reduced correspondent banking relationships, cutting off access to U.S. dollar markets for smaller players. By bringing together fee-based business lines and stable, low-cost deposit strategies, community banks can stabilize earnings and improve returns. This "Reese’s moment" signals a chance to combine strengths and address revenue challenges, setting the stage for more resilient growth.

"I think we sort of are at that moment here with banking in a way. Most community banks today... their PE ratios are down considerably. That’s because these banks basically have become one trick ponies... At the same time, large banks... have been cutting out small global correspondent banks... So, one of those is chocolate and one of those is peanut butter, and we're here to help you think about how you bring them together so you can improve your fee-based income, improve and stabilize your deposit base, and drive higher returns on assets."

The Myth of ‘Set It and Forget It’ Compliance

00:04:10 – 00:04:47
A common myth in banking is that compliance becomes someone else’s job once onboarding ends. This "set it and forget it" mindset is outdated and risky. Ongoing engagement from the business line—not just the compliance team—is now essential. Today’s regulators expect active monitoring and ownership from all parts of the organization, even in depository-only and treasury management relationships. Breaking this myth is vital for staying ahead of regulatory expectations and building a culture of shared responsibility.

"Line businesses tend to believe that once onboarding is done, the line's work is done, and then it all kind of sits with the compliance team or other people to monitoring of the activity. What we've learned over the last 15 years is that the expectations of the amount of engagement our line people have to have, even in those treasury management or depository-only relationships, remains really steadfast."

Scaling New Business Lines Takes More Than Pilots

00:38:21 – 00:40:09
Launching a new business line—such as fintech or correspondent banking—requires more than a quick pilot or a "test and see" approach. Real growth comes when leaders set meaningful goals, involve compliance and risk from the start, and plan for scale. Dabbling in small initiatives leads to small results. For a new effort to move the needle, the institution needs to go all in, define success up front, and secure buy-in at every level. This disciplined approach separates the few banks that grow from those that stay stagnant.

"The worst thing you can do is just try a bunch of little things and not really commit to any of them... If you don't think you can [make this meaningful], I probably wouldn't waste my time with it... The worst thing that leaders do is they're so afraid to go that they start small and they never scale up. But the problem is if you never scale up, you never actually generate any of the economics that made the effort worthwhile in the first place."

Check back on Thursday for the next episode of the Payments on Tap podcast!