Africa’s mobile penetration is growing impressively at around 46% as more people go online for the first time. As a result, this has increased market opportunities for startups, especially Fintech and e-commerce, who want to offer a variety of solutions to meet the financial needs of the public.
But in order to do so, these businesses must, among other things, perform certain identity checks and KYC to prevent fraud. Many platforms support this KYC process, one of which is IDannounced today that it has raised $2.8 million in seed funding just months after graduating from Y Combinator. Rounds also take place several months after starting. Raised $360,000 in Pre-Seed Investments Last November, it raised a total of $3.1 million in funding.
According to the report, African companies $4 billion loss per year to cyber crime. The global figure for this case is one trillion dollars. Fintech and digital businesses in Africa are therefore required to perform rigorous KYC and verification checks on their customers.
However, the love of Lagos-based Identitypass’s employees in reducing high morale wasn’t what got the company started. According to co-founder and CEO Lanre Ogungbe, the team was initially building a platform that would require consumers to pay using biometrics (face, fingerprint or voice) and cards. However, while developing the platform, we encountered a problem performing validation checks. So pivot decision.
“At the time we build it, [the payments solution], nobody on the market had the kind of infrastructure we wanted to use. We wanted to create a replacement for certification. That’s it.” The CEO said in an interview with TechCrunch.
The team reached out to fintech to ask how they could tackle fraud and identity issues, and saw demand in the sector grow. Ogungbe said the most important feedback was establishing thresholds for settings and deals involving in-house compliance teams. Customers must pass additional investigation checks to transact above the latter threshold.
On the other hand, some of these fintechs didn’t have a good KYC process in place precisely because customers only needed to fill out very few data points during the onboarding stage. Ogungbe said. “Today we have basic authentication using either OTP or 4-pin passwords, but by launching Identitypass, we wanted to bring more authentication options to the market.”
Next, Identitypass has access to various agencies and authorities across the country to obtain the necessary licenses and certifications to authorize verifications at a full range of verification points. Released as one data point in January 2020. But today, 200 active businesses across fintech, e-commerce, education and mobility connect to 18 data points to verify the identity of their customers on the platform. These companies are based in Nigeria, UK, Kenya, USA and India.
“At the core of our business, our digital business in Africa makes it easy to identify and verify who our customers really are,” the CEO said.
“Before we hit the market, someone could pick up someone else’s BVN and use it to rate a lending facility. “But with technology like ours, we can do this kind of verification to let you know that the person submitting your BVN, phone number or bank details is not the owner.”
Identitypass has processed over 1 million unique verifications since launch. These endpoints are government-approved IDs such as national IDs, driver’s licenses, international passports, bank identification numbers (BVNs), phone numbers, vehicle numbers, debit cards, security watch lists, and tax records. Depending on the number of endpoints to which the business connects, tHe charges between 10 and 20 cents each time the identity verification and verification platform runs.
Recently, a two-year-old company launched a SaaS platform in addition to its API. Ogungbe said this new product (software rather than a plug-and-play solution) gives Identitypass an advantage over the same players in the market: fellow YC-batchmate Dojah and the old startup Smile Identity.
“Today, we stand apart from anyone in the market because we are the only provider of both API and SaaS-based solutions for validation. Incidentally, we have more data points than most providers in the region. And the way we use data and biometrics for verification is unlike any other in the market.”
This confidence in being a “market leader” is driving the company to a new area: selling to international customers. In the call, the CEO cited the case last month when US-based Mercury restricted the accounts of some African startups due to compliance concerns. He said that such incidents could be prevented in the future if IdentityPass boarded a company like Mercury and tested individuals and businesses from Africa.
“We will not stop here,” said Ogungbe. “We will also work with many regulators to develop a best-in-class data security framework across Africa. Finally, we will work with multiple alliances to form stronger and more strategic partnerships in different countries in Africa.”
Powered by this seed funding led by Mac Venture Capital, IdentityPass plans to expand its existing infrastructure, launch new areas related to compliance, security and data collection, and enter new African countries. Y Combinator, Soma Capital, True Capital Fund and Sherawani Capital are other investors.