The events of September 11, 2001 and the ensuing years have shaped many aspects of life in North America and around the world, including the financial services industry. Since 9/11, bank requirements have changed dramatically in an effort to track and verify money-laundering and fraudulent activities in general, but in particular those that might be associated with terrorist groups and organized crime. As a result of a collaboration between an IT expert in the banking industry and engineering students pursuing graduate studies in robotics at Memorial University, a Newfoundland company is now a leading provider of anti-money laundering and fraud detection software in North America.
In 2000 David Kelly, an alumnus of Memorial University’s faculty of business, sold the substantial company he had built supplying information technology services to the banking industry. When 9/11 happened, Kelly understood firsthand the changes and challenges banks would face under stringent new regulations. While most large banks already had systems in place, it was small to medium size banks and credit unions that lacked a sophisticated way to track the flow of money. Recognizing a market opportunity, Kelly brought the idea to Memorial where, with the help of Springboard network member Genesis Group, he was matched up with a team of engineering graduate students who at the time were specializing in robotics applications for use in underground mining. The combination of Kelly’s market intelligence and business savvy with the students’ scientific and technical capabilities resulted in the development of a very sophisticated anti-money laundering software product, using the same principles of pattern recognition the students had developed in their robotics work.
With an initial angel investment from Kelly as well as guidance from Genesis Group’s business incubator program, the engineering students soon became entrepreneurs, creating a spin-off company called Verafin through which their software could be further developed and marketed. Through the mentorship of Kelly and the continued counsel of the Genesis Group, Verafin’s customers started to grow, first among the credit unions of Atlantic Canada and now they dominate the North American credit union market. In 2006, Verafin’s innovative product offering and solid business structure garnered a significant investment from Killick Capital, a Newfoundland-based venture capital firm.
Thanks to their successful alliances with the North American credit union associations, and a $5 million investment from RBC Ventures in 2009, Verafin has quickly made traction within the US market among mid-tier banks. Their products now help protect more than 600 financial institutions across North America from fraud and money laundering activities as well as providing the tools to meet compliance regulations.
Today, Verafin has annual sales of approximately $10 million dollars, employs 100 people in its St. John’s headquarters and CEO Jamie King, one the original group of entrepreneurial engineering students, was named to the Top 40 under 40 list by Caldwell Partners.
“This is a perfect example of what can be achieved by mobilizing the business community to work with researchers to bring knowledge out of the university into the marketplace,” says Genesis Group CEO, David King. “There’s a lot of potential out there and the key is making the connections.”