Veriff is this week thrilled to announce the arrival of Indrek Heinloo as our new Chief Operating Officer. Indrek joins us after 2 years with Estonian bank Luminor, and brings a wealth of incredible experience across different working cultures.
Indrek’s roles with McKinsey and Jumia have seen him working in Cairo, Casablanca, Lagos, London, Nairobi, Paris, Porto and others - and we couldn’t pass up the opportunity to ask him a little about his career so far, as well as his immediate plans in his new role in Veriff.
It’s an interesting story that leads me to Edinburgh, Scotland. I had been in McKinsey for a few years by then and just received a promotion to management level, when I was pulled into a very large transformation programme that they were doing for a banking client who was headquartered in Edinburgh. It was late November 2008, the subprime crisis had just hit and the banking industry was not at its best. Until then I had been dreaming of a corporate career in the UK, but it was then that I realized that working in dark, cold, rainy Scotland at winter time, looking how to improve efficiencies (read: to fire people), didn’t really match what I had in mind for a career. I then decided to make one of a few key changes in my life, which was to relocate to Africa, which offered a much nicer working climate. Both literally and figuratively - Nigeria was booming at the time, all businesses were expanding, the environment was extremely positive, and also it was quite a bit more warm than Scotland. I never expected to remain there for the next 8 years, but I guess at times life can surprise you with unexpected twists and turns.
I joined Jumia in Summer 2014 when they were about 2 years old as a company and just before they closed a €120m funding round at €450m valuation. At the time the company was operating well, but many things were still at quite a basic and manual level in terms of how the operations were managed, leading to constant challenges. Knowing that there is a huge growth phase ahead, the key challenge for me was to build operations in a way that would allow it to scale 10x and beyond - this meant investments into product improvements, technology, BI, people development, etc. In 2016 the company became the first African Unicorn, when it raised another €300m funding round at exactly €1bn valuation.
I have to say that sadly the company has been having a few ups and downs after 2016, but mainly this has been due to external factors, as the African markets were hit quite hard by the 2016 economic crisis and have never really fully recovered from that until now. I also left the company after the crisis came, but I’m happy that the guys who stayed managed to still see it through to IPO at NYSE, where it reached >€3.5b valuation. (NYSE:JMIA)
I think the most important learning for me was to witness firsthand the challenges that a company goes through during this growth phase of moving from a startup to a more stable business, and what it means for the organization, people, technology, and all other aspects of the business.
I think there are similar challenges between e-commerce and identify verification. Trust online is a very fundamental problem. The only reason why you can go online and buy from Amazon (or Jumia), is that Amazon (and Jumia), do a lot of work in the background to make sure that the seller who actually provides the goods is real, that the products are real and genuine, that they’ll actually be delivered and if there are any problems, that they’ll be resolved. Similarly, the reason why you can take a taxi with Bolt or make your credit card details available for a food purchase from a restaurant, is because the intermediary company (be it Bolt, Uber, Wolt, or whichever other) gives the feeling of trust. Most commercial transactions on the internet have similar risks - the transacting parties do not know each other, and cannot strictly trust each other, and an intermediary is needed to create trust. Veriff has cracked this problem in its own way, and I think that as our solution takes advantage of the most up-to-date technological capabilities, and therefore is quite useful. More and more business is shifting online, and this shift has further accelerated due to Covid-19, which is why I think Veriff is really in a hot spot right now.
Luminor, of course, is a completely different “animal” altogether. Traditional banks all have huge legacy technology stacks, and it was not different in Luminor. When the Baltic assets of DNB and Nordea bank were merged to form what became Luminor, we started with a legacy technology stack of more than 600 applications, running 6 core banking systems, and at the same time having huge gaps in terms of services that were previously provided by the Nordic parent organizations and had to be established now in the Baltics. For example, to make a USD payment from Luminor, there would have been many different ways how it could have been done, depending on whether it was done from ex-Nordea or ex-DNB and which country it would have been made from, and in none of the situations would Luminor have been able to make the payment without it passing through the systems of Nordea or DNB group and using the correspondent banking network of either Nordea or DNB. My job was essentially to cut off all dependencies on the ex-parent banks, so that Luminor could operate as a fully standalone bank, and at the same time to unify the way that systems were used across what previously used to be different banks. To do that, I established the programme office in Luminor, which oversaw 5 technology programmes, consisted of 50+ individual projects, engaging some 500+ engineers and a total of close to 1,000 people from 30+ different technology companies.
This scale of technological changes is quite different from what Veriff is about, and I think many of the learnings from there are not directly applicable to Veriff (not yet anyway), as the types of processes and controls that are needed would be too much of an overhead for a startup. But of course, there are some general learnings in terms of team and organizational dynamics, things to do and to avoid, that are generally applicable.
I believe that unfortunately it is the nature of human societies that there are always people who are up to no good. As long as this is the case, there will always be a “dark economy” existing somewhere. And as long as this exists, there will be a need to differentiate between the good guys and the bad guys. Technology is evolving, and everyone is taking advantage of that - both the good and bad people. This means that drug financing, corrupt money laundering, terrorist financing, and all other such activities become more and more sophisticated. Also, the shift to digital services is still very much ongoing, and will continue to do so for the foreseeable future. For example, the opportunity to open bank accounts fully in digital channels is something that only became possible in many countries a few years ago, and the majority of traditional banks don’t even offer these services yet. But they will. This will also mean that someone, who is into money laundering, can try, with help of technology, to open thousands or even millions of fake bank accounts in a day with little effort. And one can fight technology with technology only. Very soon, we can expect the arrival of really good quality deep fakes, and I’m sure that with technological advancement the battle will continue in more and more advanced ways.
To be honest, I don’t think there are any fundamental barriers. Simply, the pace of change is different and banking is an industry that is more traditional and more slow-moving. Certainly, what is holding banks back is their legacy and this is where fintechs have been able to move much faster, as they do not carry this legacy. But banks will catch up over time, and I think that all traditional banks will offer these services in 5 or 10 years time.
I think that the current management team of Veriff is doing a really stellar job at driving the company. So my focus is not so much about fixing anything in the immediate future, but rather to ensure that the company continues its growth path also in 12-24 months from now and beyond, and that all departments have plans in place to do what it takes to see the company through the next growth phase. This is the strategic part of my role. But, as I come in with a strong operational background as well, we’ll also play around the internal split of responsibility in the leadership team in a way to take best advantage of everyone’s individual strengths. Janer, who is the co-founder and has been acting as COO until now, will put his focus more into product development, which is his strength and the company can gain more when he spends more time in product. As a result, I will take up parts of his more operational responsibilities in other areas.