How Apex Fintech Solutions takes fighting financial crime to new heights

Look under the hood of some of the world's most popular investing apps, and you'll find Apex Fintech Solutions. Recognized as one of the most innovative companies in the world, Apex serves over 220 clients, including many nontraditional, consumer-facing financial companies — such as online broker-dealers, traditional wealth managers, wealthtechs, professional traders, and consumer brands.

Its business revolves around validating, executing, and finalizing transactions between buyers and sellers in a financial market.

When an individual investor buys a stock or other financial instrument through an online broker, Apex acts as the behind-the-scenes engine. It withdraws the cash from the investor's account and ensures that the money reaches the seller and the buyer receives the shares they purchased.

Apex serves many blue-chip brands and is a key enabler for fast-growing fintech firms in the trading space, such as Ally Invest, SoFi Wealth, Public.com, and Webull. By helping these companies deliver seamless digital experiences to customers — while handling the high volume of transactions they require — Apex has earned the nickname "the fintech of fintechs."

A high volume of highly variable data

As part of fulfilling its clearing service, Apex maintains a robust financial crime risk management program that ensures compliance with various know-your-customer (KYC) and anti-money-laundering (AML) regulations. That means monitoring both its 200+ direct clients and its clients' customers, amounting to 24 million brokerage accounts in all.

An inability to respond quickly to new opportunities

Apex already had an existing system in place designed to help them stay ahead of financial crime. But unlike a retail bank, Apex has a unique business model and a very diverse client set. Its existing system didn't allow it to move quickly when new opportunities arose — for example, when the company wanted to add new products or business lines. Apex's existing off-the-shelf, out-of-the-box solution was difficult to tailor and configure. It required a lot of custom coding to accommodate Apex's wide variety of clients. It also didn't integrate well with Apex's other systems. "At Apex, we pride ourselves on being able to move quickly," says Justin Morgan, head of financial crimes compliance for Apex. "So, we need a system or platform that can keep up with us. The financial crime system we had was like a huge cruise ship, and we needed a speedboat."

Too much manual effort for analysts

The existing system also placed a heavy burden on Apex analysts, forcing them to live in a world of swivel-chair processes while manually performing much of the heavy lifting associated with their investigations.

Too many false positives

Another challenge: false alarms. With Apex's existing system, 80% of the alerts analysts received were false positives, or cases where a legitimate transaction is flagged as suspicious, shutting down the transaction or locking an account down completely. These unnecessary alerts cost investigators valuable time, lowering morale. And they eroded customer trust, adversely impacting Apex's reputation and image. Many of the canned alerts, such as those pertaining to debit card usage, were not relevant to Apex's business. One solution was to customize these alerts or build new ones specific to a brokerage. But custom code required tech resources from both Apex and the solution provider. Even making small changes to alerts and thresholds was a significant and costly undertaking.

Build, modify, or buy?

All these challenges placed a heap of pressure on Apex, leaving its leaders to face a few broad alternatives: should the company build its own system, adapt its existing one, or bring in a new one from an outside partner?

Determined to look for a new financial crime software suite – and a partner better aligned with its core values – Apex chose Genpact for our nimble and tech-forward solution and approach.

Apex decided to use riskCanvas™, Genpact's propriety cloud-based financial crime software suite, built and deployed on AWS (Amazon Web Services). The key reason? Flexibility. Apex's analysts could easily drag and drop different components to meet their needs without having to rely on internal or third-party tech resources to overhaul the computer code.

First, Genpact took the time to understand Apex's business and operational model. This included getting to know all the major players in the company's risk function — from analysts to managers to supervisors. It also entailed becoming familiar with Apex's data, including how the company accesses and stores its data and how frequently Apex sends its data to regulators.

Then, Genpact tailored riskCanvas to Apex's needs, designing custom alerts and integrating it with other Apex systems.

Next, Genpact provided Apex with the education the company needed to continue to be successful on its own.

In Apex's case, the new system provided transaction monitoring, case management, and entity risk scoring.

The transaction monitoring module allowed the company to create new and better monitoring rules. The new solution also meant the previous five case management systems were reduced to one, creating a single, one-stop shop with an all-encompassing view of individual clients. Some industry veterans dub this the "holy grail" outcome.

The Apex monitoring system could now see activity for a single customer across multiple accounts at different financial institutions. To achieve this holistic view, the data-driven tool used IP addresses, login information, and funding sources to help identify real fraud and differentiate it from benign trading.

Meanwhile, Genpact riskCanvas™ introduced risk scoring at the entity level. This gave Apex better transparency into the residual risk across its portfolio. If a set of individual customers at one of Apex's clearing services clients were particularly risky — for whatever reason — Apex would now be able to see that risk on an individual customer level and then roll it up to the client level. This feature gives Apex the ability to align the residual risk across its portfolio with the company's risk appetite and tolerance. And it empowers Apex to serve as a trusted advisor to its clients and make more thoughtful, enterprise-level, risk-based decisions for the company.

Genpact's efforts showed fast and positive results. First, the custom alerts led to a 45% drop in the number of false positives, which means analysts now have fewer cases to investigate. And when they do, they can resolve them 60% faster, thanks to more integrated data and simpler workflows.

So, Apex analysts can now focus on higher-quality alerts with higher probabilities of identifying actual fraud rather than being distracted by the red herrings of false positive alerts. Analysts now also have access to all the necessary data on one platform.

The increased efficiency freed staff to go deeper in certain areas, be more forward-thinking and proactive in their work, and take on new and more tasks and assignments. The what-you-see-is-what-you-get interface allowed Apex to change alerts and thresholds quickly, easily, and on the fly. "I staked my role and reputation on switching Apex from our behemoth legacy financial crime software system to Genpact's riskCanvas. It's paid off, and it's paid off big time," says Morgan.