IDnow hopes to bring video authentication to UK banks’ onboarding

via FinTech Futures

IDnow, a German identity verification fintech, is hoping to bring its video authentication solution to banks in the UK.

Whilst UK banks are less pressured by regulators to adopt video onboarding, banks in wider Europe have already deployed IDnow’s live video onboarding.

These include Commerzbank, German banking-as-a-platform service solarisBank, N26, UniCredit and UBS.

More secure than a selfie, IDnow’s live video solution can link the potential customer with an agent in real-time. The agent can then do further checks on whether the customer is in fact real.

Whilst onboarding is not as strict in the UK as it is in countries like Germany, the verification process can still act as a hotbed for compliance pitfalls which lead to hefty fines.

In 2019, the world’s banks were fined a collective $10 billion for non-compliance issues, according to Fenergo. The fine total included anti-money laundering (AML), Know Your Customer (KYC), and sanction violations.

IDnow’s offering

IDnow, which launched its first product in 2014, is currently engaged with a number of UK banks on the subject of deploying video authentication.

“For UK banks, it’s more of a security issue than a regulation one,” the fintech’s business development head for the UK, Charlie Roberts, tells FinTech Futures.

The start-up offers three services. As well as its video authentication, it offers auto identification and an eSign solution which adds video-based calls into the workflow.

Automated identification uses biometric technology through 3D face authentication to capture a selfie and perform a liveness test.

The eSign solution is in partnership with DocuSign. In order to meet the eIDAS guidelines for a qualified electronic signature, video based authentication is required.

The fintech has ten call centres across Germany, France and Bucharest. Banks can either use their support staff, or they can use IDnow as a software-as-a-solution (SaaS) provider and deploy their own agents.

How banks use IDnow

The IDnow solutions can be supported in two operational models. Full-service, so using IDnow’s agents to complete the onboardings. Or via a software-as-a-service (SaaS) solution where the bank uses its own agents to complete identifications.

Banks can use the software to verify new customers on a video call. The agent follows a custom workflow of questions to meet regulatory requirements.

At the same time, they authenticate the identity of the customer with their government issued identity document and the biometric technology.

Banks can also build in other questions – be that to gather data for sales, or to tick further compliance boxes.

“We’re quite flexible around regulations,” says Roberts, noting that BaFin – Germany’s financial regulatory authority – is known to be one of the strictest regulators in the world.

IDnow’s customers mainly sit in Germany, but Roberts says it does have clients across 65% of the EU member states.

The start-up charges banks based on the number of identifications. It will only charge for complete identifications – Roberts says competitors will charge regardless of whether the verification goes through.

Funding and coronavirus

In October 2019, IDnow landed $40 million from lead investor Corsair Capital. The funding round bumped total raised to date to more than $53 Million and is underpinning the fintech’s European expansion.

Roberts says coronavirus has caused IDnow to see a 30% increase in sales. And from a data standpoint, he says crypto-related transactions have gone up roughly 75%.

Peak verification times have also changed. Instead of 17:00-18:00, most customers are trying to get verified between 14:00 and 15:00.

“We were prepared for lockdown,” says Roberts. “We approached BaFin and got temporary approval to have agents home-based to continue operating as normal.”