Neobank bunq has hailed its ”David vs. Goliath court case” victory against the Dutch Central Bank (DNB) as recognition of the importance of the innovation it brings to a “centuries-old industry”.
According to bunq, it’s the first time a bank has sued a regulator over such a fundamental issue, as banks “prefer to settle disputes with DNB behind closed doors”.
The Dutch Central Bank had originally prohibited bunq’s use of AI and machine learning to conduct AML monitoring, which bunq considered a “long-term detriment to its own users and, on a larger scale, the stability of the banking system as a whole”. It is why it “decided to take DNB to court”.
After the Dutch court ruled in favour of bunq, the bank said the victory would ensure broader cooperation between the financial industry and online players, as “effectively tackling fraud can only be done if these work together”.
A message to customers
In a letter to its users, Ali Niknam, founder and CEO of bunq, said: “Being innovators at heart, we’ve always argued for more effective ways to combat fraud and money laundering. The stability of the banking system depends on it. Our engineers built risk-based methods and incorporated advanced technology based on Artificial Intelligence to combat fraud smarter and more efficiently.
“For the longest time, the Dutch National Bank (DNB) rejected our methods, instead forcing us to adhere to their antiquated approach, to ‘do as they say’. Fraud detection at traditional banks kept relying on questionnaires that boiled down to asking people ‘Are you a fraudster?’.
“It would have been easier to follow the DNB’s rule-based approach, putting the safety of you, your money and that of the entire banking system, at increased risk. We were however keenly aware of the long term consequences DNB’s methods would have.”
According to bunq, DNB changed its policies a month before this verdict with the release of a study that advocated a more efficient anti-money laundering methodology. In its report, DNB pushed for a different approach that uses certain technological innovations, such as machine learning.