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What you need to know about COVID-19: August 7, 2020
A culture of change
"Innovation is the central issue in economic prosperity."
-Harvard professor Michael Porter
If Porter is correct, Newfoundland-based tech company Verafin is on the right track.
Just last month, the financial crime management software company secured one of the largest-ever growth financing deals for a Canadian software business: $515 million debt and equity funding to boost fraud detection services for banks.
In 2003, Verafin was three Memorial University engineering graduates: Brendan Brothers, Jamie King, and Raymond Pretty.
The co-founders had developed software to help robots navigate underground in dangerous environments, something they envisioned being applicable in the mining industry. But a chance meeting with Memorial alumnus Dave Kelly – who explained problems with banking industry fraud – gave the trio what Brothers called a “eureka moment” when they saw the applications of their technology. Today the firm has roughly 500 employees.
How did they do it? By taking innovation seriously.
“When we think about innovation, we don’t just think about it within the product, we think about it in terms of how we’re organized as a business, and how we operate as a business.”
From the very beginning, when the company was incubating at the Genesis Centre, innovation was at the heart of every part of the business – right down to the desks where they worked.
“We were trying to figure out the best way to get people to work together,” recalled Brothers.
They found their answer in custom-built tables shaped like crescents and rectangles that they could move together in different arrangements for group work.
Today, the company occupies a large office building on Hebron Way in St. John’s, NL.
Brothers said the open concept is purpose-built for collaboration.
“This is iterations and iterations of offices.”
But the key to being innovative, according to Brothers, is creating a culture of change. It’s been a part of the Verafin model from the very beginning.
“Anybody who comes into this business and doesn’t like change, or gets nervous when things around them change, they very quickly identify that this is not a place for them to work,” said Brothers. “If you look at our development team, there’s like 350 people, they’re constantly moving from one problem to the next. So, we move people around in groups all the time to give them exposure to different things, but also to help bring new ideas forward.
“We created this culture of innovation and rapid change, and I think that’s something that we tried to do very early on, and continue to be able to do. And I think that’s part of the reason why we’ve been so successful.”
Still, Verafin’s main goal is to identify bank fraud and money laundering. Brothers himself admits these are not easy problems – certainly not something a well-built office and adaptable team can tackle alone. Their answer is to have a product that is constantly changing because fraudsters are always changing, too.
“Anytime you get really good at trying to detect one type of fraud, for example, the fraudsters realize they can’t get away with it, and they just either pivot or they’ll change and they’ll try something new.”
Verafin’s product is designed so that every week it releases a new version to its nearly 3,000 clients made up of banks and credit unions across Canada and the United States.
“If you think about the apps you have on your phone, they’re constantly updated all the time, and you just accept the update, and new things happen. That’s not really the way that banks have typically thought about software, but we’ve been able to actually convince them the benefits of being able to be that reactive.
So, if a fraud pattern changes, or if they need a new way to solve a problem, well, next Monday there’s a new version of Verafin out, and that will solve that problem.”
Brothers said the company also would never have grown to its current size without a vision.
“We set off with a vision, and our vision is to create the world’s most effective crime-fighting network.”
He said they are now looking to expand internationally.
“If you don’t start off with that vision, I think you’re limiting yourself in terms of what you might be able to do.”