Our founder spent 15 years as a regulatory attorney for leading financial institutions and fintech companies. At one point he led 100 lawyers helping major banks through the Mortgage Crisis.
As he witnessed first-hand, a major contributor to the Crisis was the lack of visibility institutions had on how small companies they relied on were performing their tasks and treating consumers. That includes upstream partners like mortgage brokers and originators as well as vendors like law firms, collection agencies and property managers. The harm to consumers from third party actions made headline news: inappropriate underwriting practices, excessive fees, unlawful collection practices and insufficient proof for foreclosure, among others. At the end of the day, despite spending millions of dollars on structures to control internal compliance and risk, the banks still lacked visibility on their third parties' practices.
He then switched his attention to advising innovative companies trying to help under-banked consumers, and that's when he saw the flipside of the problem: Small companies lack the resources for accurate compliance with complex, high-risk, multi-source consumer protection laws.
The problem affecting both the banks and their third parties was a dependence on manual methods and expertise to manage this compliance and risk. The law is too complex and manual expertise is too scarce and expensive for the scale required. As the 2008 Financial Crisis and the ensuing Mortgage Crisis showed, small company compliance issues create grave risk at scale for consumers, banks and the financial system.
Our founding team saw a way to address this problem by automating the way those third parties get the tailored information and documents they need to achieve and demonstrate compliance, and the way financial institutions monitor and support their customer, vendor and partner compliance at scale. The result is LexAlign.