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Estonian FinTech Salv gives banks secure information exchange

Salv is an Estonian software company building tools that fight financial crime. Their latest anti-money laundering (AML) tool, AML Bridge, is being piloted by the four biggest banks in Estonia: LHV, Luminor, SEB Estonia and Swedbank Estonia.

In their three-year existence they have pivoted three times, the most recent one still in the works. Salv is an example of a company whose clientele and products have, in general, been the same after every pivot. Nevertheless, the co-founder and CEO of Salv Taavi Tamkivi sees them as adaptations. In its short operating life, the company has raised two financing rounds totalling about 3.3 million euros.

Consulting business grew into a tech startup

Salv was founded in the summer of 2018 by Taavi Tamkivi, Jeff McClelland and Sergei Rumjantsev, all of whom had previously worked at Wise (former TransferWise). McClelland and Tamkivi were even colleagues at Skype before that where Tamkivi was the lead of the Revenue Assurance and Fraud Data Science team and McClelland the lead of Fraud Analysis team. McClelland ventured out to become an analyst and the People Experience Team lead at Wise. Tamkivi continued in the field of AML and compliance. While on paternity leave from Wise, Tamkivi took a year off work to enjoy being a dad. During the leave, increasing numbers of friends and former colleagues contacted him for help in things related to AML and payment fraud problems in general.

“I decided to help them out just as a hobby of mine. I offered my services on an hourly basis. At some point I noticed that the interest has grown quite significantly, and I couldn’t handle all of them myself, so I asked some people to help me out and we founded a company also,” explained Tamkivi, describing the first steps of building Salv.

He recognised it wasn’t accidental that people reached out to him. Very smart people and interesting companies were in trouble with these issues. Once registered, Salv offered consulting, data analysis, customer and transaction data analysis services.

Company moved along quite quickly. Just three months after he had consulted first clients, Tamkivi hired his first employees. Initially they provided data mining knowledge under the name of Dataminer, as hourly workers. That stage lasted for nine months.

“We realised that the things we helped to solve on an hourly basis could be solved technologically with a scalable product. That was our first pivot turning a service sales company into a product company. The help we offered was essentially the same, but the form of how we did it changed,” said Tamkivi.

Looking back, he describes the first nine months as a manual validation period. They used that time to accumulate capital that was later used to finance the hiring of developers. During their first pivot the problem they addressed remained the same, but the method to solve it changed. Also, the team did not alter in any way.

Under a strict definition of the term ‘pivot’, Salv’s first pivot didn’t necessarily qualify, but Tamkivi says they pivoted because it was their conscious decision to make the value proposition methodology a scalable one.

Filled market made them pivot again

Six months later Salv took on its second pivot. The payment fraud market was already filled with providers and Tamkivi realised that, although their product was better than that of the competitors, standing out was difficult.

In December of 2019, Salv secured a seed fund of investment in the approximate amount of 1.6 million euros. The round was led by Fly Ventures, alongside Passion Capital, Seedcamp and a few angel investors.

The Salv CEO noted that, even back then, the company’s software was faster than competitors’ offerings, both in terms of setup time and integration.

“We believed that our product was stronger, but the competitors had been on the market for five years already. Then we pivoted from a payment fraud product to an anti-money laundering tool.”

Compared to payment fraud solutions, AML problems are much more complicated. But the team and functionality remained the same as the problem Salv solves shifted to address greater complexity.

At the moment the team consists of about 35 people mostly working from Tallinn and Tartu, bringing together 8 different nationalities.  The company has attracted clients from England, Romania, France and the Baltics. The most notable being Estonian bank LHV, but also global players like SunFinance, DeVere and others.

Salv’s service sector, known as RegTech, refers to a group of companies that use cloud computing technology through software-as-a-service (SaaS) to help businesses comply with regulations efficiently and less expensively.

Looking back at his career, Tamkivi acknowledges that RegTech is currently in the middle of a revolution such as he witnessed 15 years ago in Skype, and 10 years ago in Wise. In comparison, Salv’s system took a month or less to set up and minutes to modify the rules for the customer. Thanks to that efficiency, the banks can protect themselves more swiftly because they could build automated rules inside the system that take into effect the newest criminal patterns.

Yet another shift in the company

Salv is working on yet another idea that Tamkivi would rather not call a pivot but product development.

“About a year ago we noticed that financial institutions such as banks don’t have a secure and efficient tool to exchange relevant financial crime related information with one another. With AML Bridge we offer a secure solution that banks AML teams can use to exchange vital fincrime related information while still following all needed regulations.”

Tamkivi explained that the biggest problem banks face today is the lack of data to make accurate and fast decisions. He gave the example of a possible fraud case (which are currently an emerging problem all over Europe), when one bank raises the alert on a suspicious activity, but there are no quick means today to inform other banks about it and thus more often the fraudulent money moves along to its final destination unstopped.  Currently there aren’t any tools on the market for banks to exchange this kind of information with others in a secure and fast manner.

There are high technical demands for such a product because of the regulations applicable to banks. They can’t share information about their customers with anyone else.  And even when they can, the information shouldn’t get into the hands of a third party.”

Information is only shared on a need-to-know basis and the whole process is fully audited. “Ultimately when banks have access to more quality data and can make faster decisions, it means less good customers get caught up in possible delays or checks and less bad players will eventually slip through the system,” Tamkivi elaborate.

Tamkivi does not want to call their latest innovation a pivot since one of their investors insisted that, when the user and technology remain the same, this is called ‘finding a product market fit’.

AML Bridge pilot has proven successful in Estonia, as in addition to the four initial banks (Swedbank, SEB, LHV and Luminor), more local banks have shown interest to join the network to improve their financial crime prevention methods.

But as crime doesn’t stop at borders, Salv is already expanding AML Bridge to other countries, with plans in progress to build up a Baltic Bridge and discussions ongoing with stakeholders in the UK. Financially speaking, AML Bridge demonstrated its resounding success when, early in December 2020, Salv announced closing a funding round of 1.5 million euros. The money is being used to expand the pilot to other European countries.

As Salv is planning to seek additional funding in 2022, they were one of seven startups that introduced themselves to potential investors at the Unicorn59 event this summer.

If you are interested in investing in Salv or some other Estonian startup, feel free to contact us via e-Consulting in order to schedule an appointment with one of our investment advisors, happy to help you on your journey to start building your unicorn in Estonia.

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