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Salv, the anti-money laundering startup founded by ex-TransferWise employees, picks up $2M seed

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Salv, an anti-money laundering (AML) startup founded by former TransferWise and Skype employees, has raised $2 million in seed funding.

The round is led by Fly Ventures, alongside Passion Capital and Seedcamp. Angel investors also participating include N26 founder Maximilian Tayenthal (who seems to be doing quite a bit of angel investing), former Twilio CTO Ott Kaukver, and Taavi Kotka, former CIO for Estonia (the actual country!).

Founded in June 2018 and initially offering consultancy, Estonia-based Salv has built a software platform that helps banks find and stop financial crime. The idea, says co-founder and CEO Taavi Tamkivi, is to move AML beyond just compliance to something more proactive that actually does defeat crime. That’s quite the promise, although he and his co-founders have a lot experience to draw from, both within fast-growing startups and AML.

Tamkivi built the AML, fraud, and Know Your Customer (KYC) teams at TransferWise and Skype. COO Jeff McClelland also worked in the anti-fraud team at Skype, followed by a stint at TransferWise, first as an analyst and then in HR. And CTO Sergei Rumjantsev was also formerly at TransferWise, leading the engineering team responsible for KYC and verification.

“This was a highly demanding role, especially given how fast TransferWise was growing, how many new markets were coming online, and how central user verification is for compliance,” Tamkivi tells me. “Under Sergei’s leadership, the team made the verification process incredibly smooth over time for genuine customers. But also robust enough to protect TransferWise from on-boarding bad actors”.

Bad actors within financial services are aplenty, of course. Yet, despite the European banking sector spending billions tackling the problem, it is estimated that only 1-2% of global money-laundering is detected.

“AML should be all about stopping money laundering but, particularly in the last decade, layer upon layer of regulations have been added for banks to comply with,” says Tamkivi. “This would be great if that meant that there was no more money laundering, but sadly, that’s a long way off. Today, between $1-2 trillion a year is still laundered. But the excessive regulations mean that nearly all of a bank’s compliance team’s effort goes into compliance. They have very little energy left to actually focus on improving their financial crime-fighting abilities. The software they’re using is similar, focused almost wholly on compliance, not crime-fighting”.

That is where Salv wants to step in, and Tamkivi says the main difference between the startup’s AML software and other existing solutions is a much greater emphasis on crime-fighting rather than a box-ticking compliance exercise.

“We’re aiming to create a transformation similar to what’s happened in virus scanning,” he says. “10-15 years ago virus scanners on everyone’s PCs were an enormous hassle, consumed tons of resources and stopped you from getting work done. The same is true in financial institutions today. They’re using outdated, heavy software and processes to handle AML. But today, virus scanning still happens, but nobody’s worried about it. It happens in the background, with few resources. We’ll do the same in the AML world”.

In addition, the Salv CEO claims that the company’s software is faster than competitors’ offerings, both in terms of set up time and integration, and making changes to the rules the system adheres to.

“Our system, by contrast, takes a month or less to set up and minutes to modify the rules,” he says. “As a result, our customers can take everything they learn today from new criminal patterns, encode it in automated rules tomorrow, and repeat that cycle every day to protect their bank. Moving fast is the only way to keep up with the innovative organised criminals moving millions or billions around the world”.

To that end, Salv already counts Estonian bank LHV as its first customer. “They offer a full suite of banking products across Estonia,” says Tamkivi. “They’re also active in London, in particular, supporting fintechs. We have another couple of customers in the Lithuanian fintech scene. One of those is DeVere e-Money”.

More generally, Salv’s product is said to be suitable for Tier 2 and Tier 3 banks, as well as regulated fintechs and challenger banks.

Meanwhile, the business model is straightforward enough. Salv charges a monthly subscription, while the price varies based on the number of active customers a bank or fintech has.

Read more: https://techcrunch.com/2019/12/03/salv/

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A founders guide to recession planning for startups

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We are living through one of the nation’s longest periods of economic growth. Unfortunately, the good times can’t last forever. A recession is likely on the horizon, even if we can’t pinpoint exactly when. Founders can’t afford to wait until the midst of a downturn to figure out their game plans; that would be like initiating swim lessons only after getting dumped in the open ocean.

When recession inevitably strikes, it will be many founders’ — and even many VCs’ — first experiences navigating a downturn. Every startup executive needs a recession playbook. The time to start building it is now.

While recessions make running any business tough, they don’t necessitate doom. I co-founded two separate startups just before downturns struck, yet I successfully navigated one through the 2000 dot-com bust and the second through the 2008 financial crisis. Both companies not only survived but thrived. One went public and the second was acquired by Mastercard.

I hope my lessons learned prove helpful to building your own recession game plan.

Read more: https://techcrunch.com/2020/01/24/a-founders-guide-to-recession-planning-for-startups/

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Revolut partners with Flagstone to offer savings vaults in the UK

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Fintech startup Revolut lets you earn interest on your savings thanks to a new feature called savings vaults. That feature is currently only available to users living in the U.K. and paying taxes in the U.K.

The company has partnered with Flagstone for that feature. For now, the feature is limited to Revolut customers with a Metal subscription (£12.99 per month or £116 per year). But Revolut says that it will be available to Revolut Premium and Standard customers in the near future.

Savings vaults work pretty much like normal vaults. You can create sub-accounts in the Revolut app to put some money aside. And Revolut offers you multiple ways to save. You can round up all your card transactions to the nearest pound and save spare change in a vault.

You also can set up weekly or monthly transactions from your main account to a vault. And, of course, you can transfer money manually whenever you want.

Metal customers in the U.K. can now turn normal vaults into savings vaults. The only difference is that you’re going to earn interest — Revolut pays that interest daily. You can take money from your savings vault whenever you want.

Revolut promises 1.35% AER interest rate up to a certain limit. If you put a huge sum of money in your savings vault, you’ll get a lower interest rate above the limit. Your money is protected by the FSCS up to a value of £85,000 for eligible customers.

Read more: https://techcrunch.com/2020/01/23/revolut-partners-with-flagstone-to-offer-savings-vaults-in-the-uk/

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True digitalisation of the B2B payments space is only just hitting its stride –…

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By Andres Ricaurte, Senior Vice President and Global Head of Payments, Mphasis

In the past few years, as fintechs have increasingly come into play on the global stage, not only have they shaken up the way in which traditional business is done – but they also shone a light on the need for significant innovation in the payments space.

For banks and other financial services providers, global payments revenues were $1.9 trillion in 2018, of which half were B2B. The sector represents a significant growth opportunity and is attracting major attention from emerging digital players. One thing is clear – banks and technology players are no longer separate entities but two interchangeable sides of the same coin.

As payment digitalisation continues to take place, how can providers ensure that they adopt technological advancements in 2020 to address some of the industry’s most challenging pain points and create unique angles to stay ahead of the curve?

Planting the seeds for success

Looking back over 2019, we saw B2B payments continue to move towards modernisation, particularly as businesses began to look at their end-to-end processes more holistically, utilise data more effectively, and replace their old systems with more nimble digital solutions.

One of the major trends has been the merging of accounts payable and accounts receivable data, feeding into a growing requirement from customers for a higher level of visibility and control to drive better business decisions. As a result, providers must start taking a wider view that encompasses both of these critical processes, to deliver more meaningful insights and help businesses optimise what have typically been two separate sides of the same coin.

Certainly there have been some teething issues to resolve, such as inconsistent tools and processes for businesses to share information with their buyers and suppliers, as well as associated privacy and cyber security issues that arise from the adoption of more open data frameworks.

While some progress has been made, particularly through the creation of ‘closed-loop’ buyer-supplier networks and ecosystems, there is significant room for improvement. Software and financial services providers alike are finding their feet in terms of capitalising on data to create truly intelligent and context-aware B2B payment solutions.

What other key trends will 2020 bring?

In the year ahead, I anticipate that AI and machine learning will play a huge part in shaping the future of B2B payments. As businesses continue to digitalise payments, invoicing and other trade-related processes, richer and larger data sets will increasingly become available. These technologies will pave the way for real-time data analytics and actionable insights. They will also help drive operational efficiencies through cutting down on the cumbersome (and error-prone) manual labour traditionally used to perform functions like cash flow management and forecasting. 

Additionally, SaaS adoption will gain even greater momentum, especially in the areas of treasury, accounting, order to cash, and procure to pay, which will change how corporates consume financial services and choose payment providers.

We will also see major disruption in how employees pay for day-to-day expenses thanks to the rapid adoption of B2B mobile capabilities, new payments form factors and innovative configurations for expense accounts. One of the knock-on effects is that traditional cards and expense reports will start becoming obsolete.

Last but in no way least, digital currencies will remain on the worldwide agenda. Leading financial services institutions and governments alike are evaluating and testing the pros and cons of blockchain technologies in re-designing the money supply chain. Consequently, it’s likely that new use cases for payments and settlements will not just appear, but begin to see early stages of market adoption.

Overall, while progress in payment digitalisation will be different across sectors, geographies and segments, embracing a digital-first, data-centric approach across all aspects of B2B trade and commerce is a must-have for businesses looking to future-proof their operations.

Source: https://www.fintechconnect.com/paytech/articles/true-digitalisation-of-the-b2b-payments-space-is-only-just-hitting-its-stride-what-can-we-expect-this-yea

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