The Munich-based FinTech IDnow is a video identification service provider for banks, insurers and even telcos. Rupert Spiegelberg is IDnow’s CEO and explains in an interview how the ident future is going and what fully automated identification procedures are bringing.
Mr Spiegelberg, in 2018, the security technology provider G & D participated in IDnow. What is more important for IDnow, the investment in millions or the opportunity to open doors with a large partner, which you might be locked out of as a startup?
G + D has provided great support to IDnow over the past year, and not just through its investment. Our partner has also helped us access parts of the financial services and telecommunications industry, which is more difficult for us as a smaller company in general – especially in markets outside of Europe, where we are even less brand-aware.
One goal of the cooperation with G & D was also to develop fully automated remote identification solutions for international markets. Are there already first products that they have developed in the network?
We’ve released AutoIdent, the most secure and fastest remote identity verification solution on the market today.
AutoIdent uses technology from a variety of areas such as machine learning, computer vision, face recognition, and security feature detection to enable our customers to securely and quickly identify their customers in seconds without human intervention.
Complementing our VideoIdent and eSign products, all delivered within a single platform, means that we are the only company in the world today to offer such a comprehensive KYC platform that meets the online regulatory requirements of all European and other regulatory agencies.
We are thrilled with AutoIdent and have seen it contribute to accelerated process execution times and higher onboarding rates for new customers.
What is actually behind IDnow Autoident? Does the process for a complete customer identification comply with the German requirements of BaFin?
The German anti-money laundering (AML) rules for remote identity verification currently required by BaFin require an agent (identity specialist) as part of the identification process so that we can not yet offer AutoIdent financial services customers with corresponding AML requirements in Germany.
However, other regulators in Europe have already approved AutoIdent for AML purposes, so maybe BaFin will eventually follow suit.
However, AutoIdent is used by German financial services companies for other use cases, such as capturing identities in the store. It has also been accredited by European Telecommunications Authorities for hosting prepaid mobile subscribers. We also see a great deal of interest in AutoIdent across Europe for a variety of applications beyond AML regulation, such as insurance, mobility, online marketplaces and gaming.
G & D is also a member of the Verimi consortium, but there is the competitor WebID, supplier for video identification. Will there soon be a barter?
We have a very good relationship with our friends at Verimi, but unfortunately can not comment on this issue.
Where we are at WebID. One year ago, there were reports of a patent dispute between your companies. The last verdict a year and a half ago went in favor of IDnow. How is the state of affairs?
Yes, the court decided at first instance that WebID violates our patent. We are currently awaiting the final decision on appeal, which is expected in the summer of this year; We are confident about our chances of success. If we win again, our injunctive relief against WebID would be upheld.
In addition, we are glad that we successfully defended our patent against the legal attacks of WebID and Deutsche Post before the European Patent Office. Our patent was upheld with changes. An opposition appeal is pending.
In addition to WebID, there currently seems to be no significant VideoIdent competitor in Europe. Would you agree with that?
The main concern of IDnow is to make the networked world a safer place. With a quick and secure identity check we are only at the beginning of this journey. Digital Identification is a billion dollar market that is still in its infancy as companies are just beginning to make their products and services available online.
With AutoIdent, VideoIdent and eSign (the ability to create digital signatures for online contracts), we’re already helping users create their digital identity quickly and securely.
The next step is to manage these digital identities throughout their lifecycle. In this context, we have a number of exciting projects in the pipeline.
That’s why VideoIdent is only a small part of our competitive environment. We currently do not see any competitor on the market that can offer the full range of identification solutions from AI-based automation solutions to video identification procedures from a single source.
Is the need for Video Ident solutions in all European countries the same or are there priorities? An office in Paris has just been opened.
The regulatory environment in Europe varies greatly as there is still no harmonization in this area. Some national regulators consider VideoIdent to be the most appropriate solution for their market, others AutoIdent and yet others a hybrid version of both. By offering both agent-based video identification and a purely AI-based AutoIdent process on a single platform, we are able to meet regulatory requirements across Europe.
We are already operating in 23 countries and are constantly expanding our service to other geographic markets. The French market is something special for us because it is one of the largest in Europe, which is why we opened our first international office there.
In Belgium, Finland and, above all, Estonia, there is a functioning electronic identity card infrastructure. Is there even a market for Video Ident available?
At IDnow, identity verification research and development teams focus on two things: speeding up identity verification while ensuring the highest security standards. In this sense, the strategic direction is to integrate all forms of identity verification, which reduce friction losses and increase security, on our platform. We believe that electronic ID systems will soon be part of this process.
The IDnow platform can combine all types of identity verification workflows. For this reason, VideoIdent is not replaced by eID or other identity verification methods, but rather as a supplement to these newer identification methods. For example, we have received requests from companies in countries that have already set up eID systems and are now looking for a VideoIdent solution to provide additional security and market coverage.
What are the consequences of Brexit for IDnow?
EU remote identity verification legislation is being implemented very differently in European countries, and so we have had to develop tailor-made workflows for each country, including the UK. Brexit will not change that, though we expect the differences in processes to increase over time. We see the UK as an exciting market for IDnow because in one of the most advanced online economies in the world, Internet security is a big topic. We are seeing an increasing demand for smooth, secure remote identity solutions. Not just from financial services providers, but also from other sectors, especially online platforms where issues like consumer safety and trust in the transaction are critical to the deal.
For banks and financial service providers in the UK, the biggest issue will be that they will no longer benefit from the passporting schemes governed by EU directives and the freedom of trade guaranteed by the EU Treaties.
At the moment, many UK companies are taking advantage of loose UK rules to provide services in the EU. But they are already preparing for a post-Brexit world that requires the opening of offices within the EU.
These offices must comply with EU regulations, and we are happy to help them comply not only with their British requirements, but also with the stricter and more diverse European KYC requirements.
What about other regions outside Europe? The United States is repeatedly regarded as a growth market. For example, could IDnow make the leap across the Atlantic in the wake of N26?
Europe continues to be the world’s largest remote identity verification market due to stricter regulatory requirements, and we are therefore increasingly focusing on expanding our products and services across the continent. We are also currently seeing great interest in our products from the US, Asia and the Middle East, and are exploring opportunities in these markets.
Do you consider Video Ident to be a viable business model on its own in the long run?
We focus on providing our customers with the fastest, most secure identity verification solution for the ultimate in ease of use and conversion rates. At the same time, it must be ensured that they meet the legal requirements in every market in which they operate.
We are agnostic, whether we allow this through AutoIdent, VideoIdent or other offerings, as long as we can deliver the best customer experience within the legal requirements. Our clients are often large multinational companies with many branches in different countries. They want a KYC platform that complies with all local regulations. The point is that we can offer you the right product for each market and application on the same platform and within a contract.
We believe that the future lies not in VideoIdent alone, but in a platform-based approach that allows customers to choose the right workflow for the right use case to meet applicable regulations. VideoIdent will remain part of this product mix for some time.
Founder scene and financial scene have been leaked numbers, according to which N26 for a video identification paid only 4.50 €. Are such prices at Video Ident even economically representable?
Unfortunately, we can not comment on individual customer contracts.
What else can we expect in 2019?
2019 will undoubtedly be a big year for IDnow as we continue to drive the expansion of our product range as well as our international growth. The addition of AutoIdent to our offering has opened up new vertical industries and geographic markets, significantly expanding our capabilities.
We are in the midst of the digital identity revolution, one of the key components of the global digital transformation, and we are well on the way to building a global powerhouse in this area.
As a result, IDnow will have much to say in the coming months about new customers, products and new markets.