AI Native Bank P3

Hi Friends,

Last week, we talked about using AI to reinvent the core pillars of banking for HOAs (named Commonground), and today we’re focusing on one of the foundational building blocks: onboarding.

Why? Because effective banking starts with smooth and compliant onboarding process, and that’s exactly what CommonGround would aim to offer. 

For the moment, I'm setting aside the wild maze of figuring out the Partner Bank and BaaS space. Let's just assume I managed to partner with a provider like Synctera or Unit or a Community Bank that understands the value of building in this space. Cool?

From a bank's perspective, opening an account for a Homeowners Association (HOA) is anything but straightforward. It involves a series of complex steps, multiple document verifications, and regulatory requirements that can slow the process significantly. Here's a high-level look:

1. Customer Identification and Due Diligence
   • Application Process Initiation: The bank needs to collect an official application, including the HOA’s details (name, address, purpose of the account, etc.).
   • Know Your Customer (KYC): The HOA's identity needs verification through a combination of documents:
     • HOA Governing Documents: Articles of incorporation, bylaws, or management agreements that detail board members and their authority.
     • Tax Identification Number (TIN): To confirm tax compliance.
     • Board Meeting Minutes: Evidence that the board has authorized the opening of the account, along with a list of individuals allowed to operate it.
     • Identification Documents: Verification of authorized signatories' IDs to ensure they match the details provided.

Now, while these steps are necessary to comply with regulations and mitigate risks, they’re also the reason HOA onboarding has traditionally been a drawn-out and painful process. But with CommonGround’s AI-native approach, we’re changing the game.

‍

1. AI-Guided Application Process
The moment an HOA starts the onboarding process with CommonGround, our AI system takes over to guide the applicant through the entire journey. The application form is intuitive—only asking for relevant information at each step, reducing back-and-forth. The system even pre-fills details from uploaded documents where possible, reducing errors and cutting down on manual entry time.

1. Orchestration: Where the Decisions Are Made
At CommonGround, orchestration would be the heart of the onboarding process. It’s where data flows in from all verification sources—automated document checks, KYC, governance data—and decisions are made based on rules deployed.

Rather than relying on a single provider, the orchestration layer integrates multiple data streams and delivers a dynamic risk assessment. It can flag inconsistencies in documentation, governance, or individual identities, ensuring nothing slips through the cracks.

• Decision-Making in Real-Time: An orchestration layer dynamically consumes data from various sources and makes decisions based on preset rules and AI insights. For risk evaluation, the orchestration layer processes all available information—from governing documents to board member identities—and flags any risk factors. Providers like Sardine and Effectiv are leaders in orchestrating AI-driven decisions for risk and compliance, integrating multiple sources of information seamlessly.
• Adaptive Onboarding Flow: The orchestrator ensures that verification steps are efficient, adapting to the information provided by the HOA. If something checks out perfectly, the process moves forward; if there's a red flag, additional steps are initiated.

Providers like Sardine and Effectiv bring AI-centric orchestration to the table, helping to optimize decision-making for onboarding and compliance. They allow CommonGround to use intelligent automation to assess risk holistically, rather than relying on fragmented, manual checks. 

2. Automated Document Verification
Next, our system verifies all necessary HOA documents, leveraging Parcha to provide comprehensive coverage:

• HOA Governing Documents: CommonGround’s system, supported by Parcha, scans and validates articles of incorporation, bylaws, and management agreements. It ensures that all relevant details are correctly captured and cross-referenced with local records for compliance—streamlining the traditionally manual and tedious verification process.
• Board Meeting Minutes: Using Natural Language Processing (NLP), our AI extracts key information from board meeting minutes to confirm account authorization. This ensures every board member’s authority is well-documented, providing a clear audit trail for the onboarding process.
• Tax Identification Number (TIN): Parcha also handles TIN verification, confirming tax compliance instantly and reducing the need for manual follow-ups.

Whenever possible, it’s smart to use providers that offer the widest coverage. Parcha’s ability to handle both document consumption (incorporation and ownership documents) and Tax ID verification makes them an excellent all-in-one choice for this use case.

However, it's rare for one provider to fulfill the needs of an entire domain. Given this complexity, an AI agent may also be employed to fill any gaps or to manage more nuanced checks. Providers like Greenlite, Arva, or Remo are useful options in this increasingly crowded space.

3. Instant KYC for Board Members and Signatories
For each board member or authorized signatory, Know Your Customer (KYC) verification is essential. Traditionally, this could take days, but CommonGround uses Plaid’s expanded suite of identity solutions to simplify it:

• Identity Verification: Plaid has extended its offerings to include Identity Verification, which helps validate government-issued IDs in seconds, making the process faster and less prone to human error.
• Sanctions Lists & Compliance: Plaid Monitor also cross-checks each individual against sanctions lists and databases, ensuring compliance and minimizing risk.

The IDV space is heavily saturated, with many established players capable of providing reliable verification. In this case, Plaid’s comprehensive coverage for identity verification and monitoring makes it the preferred choice, eliminating the need for manual intervention or custom AI agents.

4. Streamlined Risk Assessment and Compliance
The key to onboarding is not just speed, but also mitigating risk effectively. At CommonGround, our orchestration layer plays a vital role in consuming all the data points—from document verification to KYC—and assessing risk based on predefined rules and AI models.

What This Means for HOAs

With CommonGround's AI first approach, onboarding is no longer a headache. HOAs can expect:

• Faster Onboarding: From weeks to days (or even hours). AI automation accelerates document processing and KYC.
• Reduced Manual Work: AI extracts, verifies, and pre-fills information, reducing the time the HOA board spends on repetitive paperwork.
• Higher Transparency and Security: Compliance is automated and logged, providing a clear audit trail, and ensuring that everything aligns with regulatory standards.

This deposits and savings solution isn’t just about keeping money safe—it’s about empowering HOA Boards to take an active role in financial stewardship. By treating HOA deposits like a treasury management system, we set the stage for a stronger, more financially secure community.

‍