Behind the Idea: Napier

Recently named as the best AML/CFT solution by Regulation Asia, Napier’s intelligent compliance platform is transforming anti-money laundering systems and is leading the fight against financial crime.

Julian Dixon is the CEO of Napier, and has more than 20 years of financial services experience gained at major investment banks including Deutsche Bank, JP Morgan, and Commerzbank. His roles have ranged from front-office sales leadership to private equity.

What has been the traditional company response to financial technology innovations?

One of the driving factors behind setting up Napier was the fact that the incumbent AML market was saturated with legacy technology providers that were falling short in their abilities to deliver to stakeholders.

The number of fines that organisations using this outdated technology were receiving was also on the rise, which suggested a clear problem with the processes that were in place. We saw an opportunity to create a new product that had technology at its core and the aspiration of using it to solve some of the biggest issues that we identified as inherent in legacy systems.

How has this changed over the past few years?

I think in recent years there has been a change in thinking and organisations are starting to embrace the use of machine learning and AI in compliance. You cannot underestimate the levels of criminal activity within the finance sector.

Those who have prospered from illegal activity have an unlimited budget, an appetite to continue and access to sophisticated technology. Compare that to your average AML officer in a bank and they are completely outgunned. The only way that you can begin to solve this is through the application of technology.

Is there anything that has created a culture of change inside the company?

One of the things that distinguishes Napier from our competitors is that we only develop software to solve problems in financial crime. We see this as an ongoing, infinite war and are continually spending our R&D dollars on looking at how we can develop new technology or further enhance our products.

The evolution of this change starts within our R&D department, but throughout the organisation change is defined and derived from our people. Napier’s a RegTech start-up so there’s a lot of energy and innovation here.

What FinTech ideas have been implemented?

Our role is to dovetail the Napier system into an organisation’s application of policy and procedure. We have a full suite of end-to-end products including transaction monitoring, payment screening, client screening, onboarding screening and risk-based scorecards. Over the past three years, we’ve also been building a product called ‘Client Activity Review’ (CAR). This was developed to meet the requirement to have a regular risk-based approach to understanding a client’s overall activity.

CAR looks at behavioural changes within the system, which is where I think regulators should be focusing their attention. We know that 100% of money launderers manage to penetrate the system. We are looking at what happens to them once they’ve got through the series of stringent checks and have been onboarded, as that’s when they can go rogue.

Do you see any industry challenges on the horizon?

I believe one of the main industry challenges is the wall of regulations. How can financial institutions and software vendors cope with that growing wall? Clearly, we can’t fully predict the future of regulation, but the aim is to build adaptable systems that can change very quickly.

Another challenge is around the amount of data that’s being produced. Legacy systems are often finite in their ability to ingest data and use it sensibly and within a reasonable amount of time. By adopting modern ‘big data’ technology in theory we’re able to scale infinitely.

Can these challenges be aided by fintech?

Yes, I believe they can. Making simple changes to legacy systems can be complex and take months because of the lack of scalability. It requires technical coders to create the new rules followed by numerous testing scenarios before they can be implemented. The Napier system, on the other hand, can easily be added module by module or even overlay current systems. This makes it very adaptable, simple to use and suitable for far more rapid deployment.

When you’re dealing with upwards of thousands of alerts per day, the support and savings this technology generates quickly becomes invaluable. And that’s what our solution does using traditional rules-based alerts enhanced by AI.