Salv is one of the latest Estonian-based startups making international waves. With a mission to fight financial crime, the anti-money laundering (AML) software is positioning itself as an essential component in the financial sector. And it’s doing so by offering financial institutions a digital solution which takes a more proactive approach than simple compliance.
If this seems like a big ask for banks to want to implement, it is. But with a company that was founded and run by former Skype and Transferwise employees, Salv has the right talent to make their vision a reality. Coming onto the scene with an innovative and useful product at the same time as the prolific Danske Bank scandal in Estonia doesn’t hurt either.
With Salv’s leading-edge technology, banks or FinTechs can better leverage the smarts in their team, automate away many of their repetitive tasks, and move faster than the criminals. It’s no wonder that the startup which was formed less than 2 years ago has already raised 1.8 million euros in seed money and counts banks such as LHV as its first customers.
The e-Estonia Briefing Centre recently caught up with co-founder and CEO Taavi Tamkivi to see how Salv’s startup backgrounds and unique technology have begun disrupting the financial world in the Baltics and Scandinavia.
How would you describe your company’s ethos?
We’re a team of people who share the mission and get excited by the fact that we can help reduce the amount of financial crime in the world.
Many of you come from well-known Estonian startups. What are some important things you learned from those experiences and which have you brought with you to Salv?
It’s easier to say what we didn’t bring from TransferWise and Skype. Almost everything we do is coming from these places.
How to resolve problems, how to focus on the quality of the product, how to scale the business, what are the factors needed for that, how to select the right talent, and how to engage or include investors, partners, and how to run business from Singapore to New York. All these skills and values were part of daily life for the last 10 or 15 years, so it’s very natural to enact them now in our own company.
The banking and financial sectors are usually thought of as more traditional and not very open to innovation. Have you found this to be the case? And is it difficult to get them to accept a product like Salv?
The short answer is yes. The bank’s licenses and whole life depends on the quality of AML procedures and technology, so compared to other businesses and segments, it’s a super complex and a long sales cycle.
But saying this, the market is changing. In Estonia and other countries, the regulators are pushing for more innovative solutions. Because in the payments industry, there are more advanced technologies coming out like e-money or e-wallets, API integration, or open banking standards. All of that is great for us as consumers, but banks are under huge pressure by regulators to control these new payment schemes. And physically they cannot do that with the existing technology. They need to look for new solutions in the market to allow them to react. It’s hard, but banks are in this situation where there’s no choice and they need to go after the new technologies.
What are some of the biggest challenges of working with such a “slow moving” industry such as finance and banking? Do you see your company as a “disruptive” presence in this sector?
If I’m talking to a startup person, yes, I say that I’m trying to disrupt the sector. If I’m talking to someone in the banking sector it’s very hard to use these terms, because disruption means higher risk of stability.
It helps if I bring examples from my past, how these revolutionary technologies have kicked in. When I talk about communication technologies, Skype ultimately changed this world. The same thing happened in FinTech when Transferwise came on the scene.
And now my sector is called RegTech. Which are helping institutions to improve the way in how they meet regulations and how they fight crime. This RegTech is pretty new, but we’re currently in the middle of the same sort of revolution that we saw 15 years ago with Skype, and 10 years ago with Transferwise. It’s the same pattern happening and when I explain that to people, they usually understand.
The Danske Bank scandal really shook the financial sector in Estonia. What changes have you noticed since that broke?
I’ve written a few articles where I thanked the Danske case. Because it actually helped people realise what the point of all these hundreds of thousands of pages of regulations that companies need to fulfil. So far, the approach has been to fulfil these laws. We’ll hire more people and we’ll pay for more technology just to stay compliant and that’s it. And it’s been super ineffective against actual criminal money.
Basically, thanks to Danske Bank, people in this community started to think differently about the problem of crime fighting. And understand the meaning of the laws they need to follow. Not just what is written down, but actually what is the problem it’s trying to solve.
You’re working with the financial inspection and ministry of finance in Estonia to advocate for better AML solutions. What spurred this involvement and what are your plans for such solutions?
With regulators we are introducing them to technology which allows banks to exchange information about possible criminals in a way that it doesn’t go against GDPR. There are modern technical solutions that are already available which we are demonstrating to the regulators so they know these things are actually there and it’s not unrealistic to request it from the banks.
What’s next for Salv?
Currently, we are in this classical product market search mode. We have some very small Fintech customers, and one of the largest banks in Europe, plus we’re working with everything in the middle of that. We’re learning from these relationships what the best segment for us is and where the problems are that we can help them with. And of course we keep adjusting our technology based on these learnings as well.