The significance of KYC and id verification in an rising fintech panorama like Africa’s can’t be overemphasized. As 1000’s of economic establishments serve thousands and thousands of Africans, stringent regulatory necessities are wanted to maintain hackers and fraudsters at bay, which is why investor curiosity in startups providing KYC and id verification providers is intensifying.
Smile Identity, a big participant offering ID verification and KYC compliance for African faces and identities, highlights this development. It simply obtained $20 million in Sequence B funding to additional its growth plans, amongst different roadmap actions.
The startup announced a $7 million Series A funding in July 2021. Silicon Valley investor Costanoa Ventures, one of many co-leads in that spherical, additionally co-led this latest Sequence B spherical with Africa-focused enterprise capital agency Norrsken22. Lexi Novitske, normal companion at Norrsken22, will be part of the corporate’s Board.
Collaborating traders embody existing ones corresponding to ValueStream Ventures, Intercept Ventures, Latitude, Future Africa and 500 Fintech — and new backers like Commerce Ventures, Courtside Ventures and Two Tradition Capital. The African KYC onboarding and id verification platform has obtained greater than $30 million from traders since Mark Straub and William Bares launched it in 2018.
In an announcement, Smile Identification stated the funding spherical will speed up the event and adoption of its AI-powered id verification tech, ramp up hiring efforts in East, Southern and West Africa with a deal with product and engineering, and develop into new markets, notably Francophone and Arab-speaking international locations. The corporate hopes that its conflict chest permits it to companion carefully with ID authorities and governments to create shopper consent requirements and implement native African information safety legal guidelines throughout the continent.
Smile Identification helps shoppers mitigate fraud and onboard new prospects extra effectively. A report by the corporate, “State of KYC in Africa,” famous that fraud charges on the continent reached an all-time excessive of 28% final yr. The commonest assaults, the report says, contain fraudsters offering pretend or stolen ID numbers or altered paperwork corresponding to driver’s licenses, passports and nationwide IDs. Or face mismatches, the place facial biometrics don’t match the legitimate IDs. So how is Smile Identification enabling its shoppers to catch this fraud? It’s a mix of various merchandise: id verification, digital KYC, consumer onboarding, liveness checks, face verification, doc verification and anti-fraud checks, however most significantly, id information deduplication.
Most of the fraud that Smile Identification notices — on behalf of its quite a few shoppers within the funds and cash switch area — ensues on the account opening or onboarding stage, the place shoppers have reported quite a few conditions just like the one talked about earlier. The deduplication product ensures that when the top prospects signal to a consumer’s platform, they’re mandated to take a selfie at onboarding in opposition to their IDs, making it simpler to determine the shopper higher utilizing their faces and reject subsequent new sign-ups within the case of fraud.
“Should you onboard a buyer and don’t verify biometrics, chances are you’ll be lacking 50% of the fraud. The biometric deduplication engine [our smart selfie], which is trademarked as our face recognition know-how, can be utilized each at onboarding and on the stage of deduplication and authentication,” Straub stated on the decision.
Once we covered the six-year-old firm 18 months in the past, it had entry to greater than 250 million identities and verification for 15 completely different ID sorts throughout six African markets whereas performing over 1 million id checks month-to-month. Nonetheless, the latest launch of its Doc Verification product has allowed Smile Identification to develop its capabilities; now, it could possibly cowl a billion identities and verification processes globally, the chief govt stated through the interview.
“The attention-grabbing replace now we have is the Doc verification, which analyzes a doc’s photograph and compares that to customers’ supplied selfie. And with that product, we are able to cowl all of Africa. So , as an alternative of masking 250 million folks, we are able to cowl over a billion folks. We’re speaking about over 230 ID sorts from greater than 100 international locations, together with all of Africa, the diaspora, a lot of Europe and North America,” famous the chief govt.
One other space of progress, Straub famous, was that Smile Identification processed over 30 million id verifications in 2021; that’s over half the KYC checks the startup has recorded since inception: about 50 million. The KYC verification upstart, which has since doubled its consumer base since 2021 and now serves over 100 companies in banking, fintech, training, agriculture and e-commerce, additionally claims to carry out between 2 to 2.5 million month-to-month id checks.
Smile Identification has additionally expanded on its Enterprise Verification (KYB) answer, which entails 30 detailed enterprise lookups corresponding to registration quantity, incorporation, administrators, beneficiaries and proprietor standing. The product is at present obtainable in Nigeria, Kenya and South Africa. Straub claims that Smile Identification grew its clientele throughout all these merchandise by greater than 100% during the last yr and tripled its revenues inside the similar timeframe.
The Sequence B money infusion means there’s extra work to be executed by Smile Identification — however for its smaller rivals (Youverify and YC-backed Identitypass and Dojah), they’ve their work minimize out to problem the Costanoa-backed upstart as a market chief. Whereas Smile Identification has a bonus as a type of first-mover with deep relationships and experience on the bottom, having launched years earlier than different startups, Straub says the agency — now current in over 10 international locations after just lately opening places of work in London and Cape City — is a market chief due to “an extremely various staff and best-in-class know-how.”
“We convey these two issues collectively and deal with delivering the most effective outcomes for our shoppers,” he added. “The outcomes are measured by protection of all of the several types of identities and international locations, go charges, consumer journey optimization, acceptable compliance,” he added. “Many African international locations at the moment are passing their information safety laws. It’s difficult to maintain up with all that in case you’re working in 5 – 6 markets, particularly in case you’re working digital monetary merchandise. We attempt to simplify all that, put it into software program, and make it obtainable on your builders in an effort to combine our software program and begin onboarding prospects whereas defending your self in opposition to fraud and staying compliant from day one.”