What inspired the road-trip and “Ermintrude” story behind Ermi’s name, and how did that spark the idea for a new transaction-monitoring tool?
Ermuntrude was a land rover, purchased for a camping trip where we drove to Oslo, camping in multiple cities along the way. I’m not sure anything inspired the trip, we just needed a holiday! We called the car Ermuntrude because she came from a farm and smelt a bit like a cow… A friend suggested the name and it just sort of stuck! I sold it after the trip and Me and Jamie then went on and worked on a series of vehicles together.
It was whilst we were working together on one of these (A sportier number, an MX5!) that I explained to Jamie an issue that one of my clients was having at work. At the end of an audit, the client was told they needed to implement a transaction monitoring tool urgently within a month, or they would loose access to their core bank. None of the existing tools could be integrated in time as the clients payments platform was in house developed and just couldn’t connect. Jamie is highly experienced in building tools which can work at scale, and he suggested he could build something within a month.
Ermi was born and implemented within a single month.
After 20 years in financial crime compliance, what gaps did you see in existing AML tools that drove you to build something simpler and more accessible?
As we mentioned in one of our blogs recently, a lot of modern TM tools are built for high tech startups with a lot of capital or VC money. None of the tools appear to be built for existing smaller firms. Years in the industry have taught me that criminals will target the firms with weak or limited controls. The smaller, established firms who have been around for a long time are also those who might have a limited number of employees manually screening transactions. A lot of firms (10-15%) of firms are still using a manual spreadsheet to assess their transactions and this can cause issues as firms might miss things, struggle to manage things which can cause complexity (Such as FX conversions or keeping geographical risk lists up to date) end up being missed.
These firms may also lack the expertise to properly integrate one of the mainstream tools, but they can nearly always put all of their transactions into a spreadsheet so.. we came in to fill the gap!
How did you design “Ermi for Startups” to balance ease of setup with FCA readiness, and why choose a fixed £6,000 package?
This came from my own experience of trying to build a startup. I worked with an existing and established vendor to do this. We needed to show the regulator a series of screenshots and process flows, basically to show them I was ready to be regulated. But, that cost me a fortune – easily 50-100k in the first year in integration and setup fees, and then the tool was just sat there burning money until I got a licence and some business, which was an undefined d, it could be a year, or 18 months before I saw a return. The vendor provided no support to write any rules or documentation, it was all on me.
My other issue with vendors is the lack of transparency in pricing. They don’t want to support startups because of the huge integration efforts and costs, so they price accordingly. For a small scale package (100,000 transactions a year) I was recently quoted 25p per transaction. How are you meant to make a profit on that as a firm when most consumers want Faster Payments to be free?!?! But even when they are cheaper, they never have a price list. I have to sit through 5 vendor demos, send them volumes (Which are all predictions) and then hope I use all of the credits I’ve paid for…
My contempt for this process was enough to drive us to launch a better package.
Being a regulated firm and predicting all of these things and creating a budget it a mess, so we thought we would make it simpler and offer a fixed price deal. Ermi’s integration costs are deliberately kept low, super easy and simple for us to do. We can do it for you in less than a day. So there is no reason for us to charge a £25k integration fee. We also have super low ongoing costs to maintain your service during this waiting period, we can afford to let people access our tools for a sensible fee!
For fully licensed firms, what features make the “Ermi for Licensed Firms” package stand out against incumbent monitoring platforms?
Our core features are an out of the box rule set, specially designed for international payment firms, designed over years of experience (and a masters degree in organised crime and terrorism preventions!) which is sufficient for most firms in the payments space. These rules are already risk based, specifically have different rules for individuals and corporates and include things such as Geographic risk assessments for high risk countries. We also offer customisation and consultation to work on new rules for our clients, so if you’re business it outside of our usual, we will help you develop new rules which are pertinent to your business.
Also unlike our competitors who require you to send transactions in the currency of the transaction AND send them a base currency, we do all of the currency conversions for you meaning that if your clients trade Euro to USD, you don’t need to tell us what that’s worth in GBP every time.
Outside of the rules, our main feature is that our pricing is unlimited. If your firm grows, there is no Overage fee to pay and no surprise bills. We’re fixed fee and we will be genuinely grateful to see you grow!
Can you walk us through how “Ermi as a Backup” integrates with a client’s systems during primary-system outages or migration periods?
Our integration is so simple, as it’s just the client sending us a CSV of their transactions. We work with the client to do the integration and then if a clients existing tool fails, or if they need cover for an outage, they can just send us the report which is already configured to work with us. They sent us all of their historical transactions (Which would take ages via an API!) and we can create profiles, looks for outliers and flag the suspect transactions within an hour of them letting us know they need our help.
Our unique batch system and minimal data requirements mean we can easily step in when a client needs. We don’t even need to integrate, really. A client can have a report setup on their system to download a CSV (From their trading platform or perhaps even a tool like Power BI or Tableau ) and this can be shared with us via Google Drive if they have an account. It’s entirely possible for a compliance team to manually do this without IT support, making us the easiest self service backup process! Our tool just detects the file is there and runs.
Even more unique is that our backup fee includes useage! If you just need us for a few days, you don’t pay any extra – After all you have enough to deal with given your systems offline without a massive bill from us!
How does your direct integration with Excel, Google Drive, AWS S3, or Azure reduce IT overhead for compliance teams?
API Integrations cannot be done by your average human. Even Compliance officers (Who are awesome) probably need a developer to integrate their platform with those tools, setting up API calls, waiting for a response, working out how to get FX rate data…. The MLRO cannot self service. The other issue that requires a developer is security, storing API keys and then working out how to handle the responses. MLRO’s also need to login to this case management tool to work through clearing responses and then, most likely raising a case with a client manually via email or through an account manger via a CRM. It’s not a complete process setting up a fully automated API based monitoring tool.
At my last firm with a little technical skill I was able to create a file using power BI and automate sending this to Ermi using S3 and YouTube Videos. We could even have just manually sent it every day if we wanted using Google Drive. Our hope is that any MLRO at any skill level will be able to use the tool without having to wait in an IT backlog or having to wait for a specialist. It also allows those firms who are still manually imputing their transactions into a banking platform (A surprisingly high number of such firms still exist!) to work with us.
Also, a final benefit here – these tools are all best in class tools with security built in. This helps ensure that underlying consumer data stays safe, even if this is integrated in house by someone with limited skill.
What drove your decision to eliminate per-transaction fees, and how has the fixed-price model resonated with early users?
I think I covered this above really, its my own annoyance with the way most of these tools are priced and the fact that I always felt like the sales guy the other side wad judging how much they could hose me for… But also, lets be realistic these firms are using big databases which cost more to run the more they scale. Ermi doesn’t have this issue so, I have no reason to charge more.
Honestly though, it’s probably been more of a hinderance to us than a benefit. We have lost clients by being “Too cheap” as firms are too used to paying hundreds of thousands. But we have stuck to our guns, we want to make a difference and detect financial crime (A key driver in all of Ermi’s life) so, we can’t morally just up the price as then we would be excluding potential users who need the tools.
How do you keep Ermi’s rule sets automatically up to date with evolving global AML regulations and DORA requirements?
Ermi uses a series of global indicators (Such as FATF) to produce lists of different countries to keep ourselves up to date. By keeping myself in industry, I also get insights from different trade bodies and groups about emerging trends so that we can build in new rules which are relevant to current trends. WE also regularly keep in touch with our clients to assess their needs, because these are business owners who are in touch with the risks to the business, were not just at trade shows trying to sell – were leading trade bodies and engaging with regulators to know what is coming up and how to build our tools to face these challenges.
Ermi uses a human friendly code structure called Cucumber which allows me to translate requirements to our developer team in clear language too, which creates a unique product owner/subject matter expert/engineer symbiosis. Looking ahead, what enhancements or new packages are you planning to ensure Ermi continues to serve businesses at every stage of growth?
Looking ahead, what enhancements or new packages are you planning to ensure Ermi continues to serve businesses at every stage of growth?
Were always looking for new challenges – so actually rather than new packages we are more likely to build Ermi for a different element of the financial services industry or to find a different set of risks. Ermi is a pretty unique, ultra efficient Needle in a Haystack finder and she currently does AML for payments and FX firms… but she could find a lot more interesting things. We once programmed her to search for Exo Planets and she once searched for fraud in Google Adword clicks. So we’re hoping that we can find a unique and interesting problem to solve or a client with a need for something specific. We love an interesting problem, so our next “package” might be a One Off investigation or remediations project tool for firms with a unique thing they want to hunt for.
