Our start-up of the week is London-based Onfido, which uses machine intelligence and AI to help companies verify that people are exactly who they say they are.
Founded in 2012 by Oxford graduates Husayn Kassai, Eamon Jubbawy and Ruhul Amin, Onfido has helped clients such as Morgan McKinley, JustGiving and Hassle.com to run background checks.
Onfido has offices in London, Lisbon and San Francisco.
‘We believe 2bn fellow humans across the world shouldn’t be excluded from the world economy because they’re unbanked. We know there’s no longer any reason for the identity exclusion [that] leads to financial exclusion, as the technology now exists to robustly and remotely verify anyone in the world’
– HUSAYN KASSAI
“The regulatory burden facing financial services has been steadily on the rise since the financial crash of 2008, and it doesn’t show signs of slowing any time soon,” explained CEO Husayn Kassai.
“But as financial services continue the migration online, the processes for addressing the regulatory requirements are struggling to keep up.
“Current know your customer (KYC) and anti-money laundering (AML) regulation and solutions were built for an offline world, where, for instance, customers being onboarded by a bank would need to have their ID documents and identities verified in person.
“Now that most customers interact with financial services online, that process is getting much harder to manage, driving up manual overheads and causing in-house compliance teams to balloon – in Citi’s case, to a staggering 30,000 staff.”
Kassai explained that Onfido responds to these challenges by delivering next-generation identity verification.
“Our unique, layered, machine-learning-based solution enables businesses to verify the identities of users and ensure that they are who they claim to be, without the need to meet them face to face.”
In particular, Onfido specialises in streamlining the KYC and AML process for regulated businesses including fintechs, banks and e-gaming platforms.
“Through intelligent automation and a machine learning-powered ID document check, Onfido’s solution helps businesses onboard more customers, increasing revenue and reducing manual overheads,” said Kassai.
“We are also used by leading businesses in the sharing economy for user verification.
“In the UK, the Home Office recently increased the penalties for hiring employees or contractors without a right to work, handing out £50m in fines in 2015/2016.
“Ensuring a robust process for checking right to work can be challenging when you have a national network of stores/restaurants. To help businesses centralise their audit trail, Onfido has built a robust solution for verifying workers remotely, with clients including Uber, Deliveroo and Care UK.
“Our solutions are global and our active ground sales operations currently cover UK, Europe, the US and India.”
Kassai explained the foundations of the business he set up with Jubbawy and Amin.
“Eamon and I both studied economics and management, and knew each other from the course. We first started working together in 2011 as I was elected as president of the Oxford Entrepreneurs society and Eamon as vice-president. I met Ruhul while I was looking for a software engineer for a previous project called ReferenceBox.
“All of us had experience working in the city during and after university; myself at Merrill Lynch, Eamon at Credit Suisse and Ruhul at Mitsubishi UFJ.
“It soon became evident through our own first-hand experiences how lengthy and complex the background checking process could be. Further market research with banks and consultancies proved the scale of the problem: turnaround times, cost and human error were the recurring pain points. It was clear that this was a problem looking for a technological solution. And so the idea was born.”
In August 2012, with £20,000 seed funding from Oxford University, they launched Onfido.
“I’m now the CEO, Eamon COO and Ruhul CTO. I also sit on the advisory committee of the Oxford Seed Fund and the All Party Parliamentary Group on AI.”
Kassai said that the key strength of Onfido’s proprietary technology is that it is built using machine learning.
“This means that with every ID document processed, the technology becomes more intelligent and robust, as opposed to static solutions, which become more outdated over time. Once a pattern is recognised and learned by the machine, it will scan every single subsequent document for this pattern.
“This means that one fraudulent document discovered may lead many other unrelated documents to be detected as fraudulent if they follow the same fraudulent pattern. The software can therefore verify documents in a matter of seconds with the highest degree of accuracy, wherever in the world they are from.
“Our full-stack solution combines identity record checks with document, facial and street-level checks to perform identity verification. This cascade approach allows us to accurately verify more individuals than traditional solutions, meaning that businesses can onboard more people onto their platform and increase revenues. Onfido clients have reduced drop-off and seen uplift in the number of identified users by 42pc.
“We offer global coverage, with our document and facial checks live in 195 countries worldwide. Our simple, easy-to-integrate technology solves a range of business problems without the need for multiple reviews or integrations. With Onfido’s SDK for document capture, image quality is verified at the point of capture, removing the need for manual review, and our global API can be set up by a single developer in as little as two days.”
Kassai said that Onfido’s platform is integrated with a range of databases to offer faster turnaround times, global coverage and higher match rates.
“Alongside our identity verification solution, Onfido also offers a comprehensive range of background checks including criminal record, right to work and anti-money laundering.”
According to Kassai, what sets Onfido apart is its long-term vision for bringing identity verification to the masses and its goal to become the provider of trusted identities for human interactions of all kinds.
“We believe that voting in an election is a right, and shouldn’t have to involve queueing for hours. We believe new migrants to a country should be an active part of the economy from day one, and not have to wait for six months to be validated by credit reference agencies in order to get a job or rent an apartment.
“We believe that as a generous and open country, we shouldn’t be fearful of accepting more refugees when technology now allows us to verify an individual in their country of origin and then reverify them when they arrive.
“We believe 2bn fellow humans across the world shouldn’t be excluded from the world economy because they’re unbanked. We know there’s no longer any reason for the identity exclusion [that] leads to financial exclusion, as the technology now exists to robustly and remotely verify anyone in the world.
“We are building a machine learning-based ID verification and regtech platform [where] performance is enhanced with volume. In essence, our sustainable advantage improves with every check, and we’re making it our mission to build the trust engine to power human interactions worldwide.”
Fast growth for young regtech player
Things are going well for Onfido. Since 2012, the company has received more than $30m in funding from investors including Salesforce Ventures, CrunchFund, and Idinvest Partners.
“In April of 2016, we secured Series B funding of $25m, bringing total funding to over $30m. The funds were used to scale our global offering, further develop our machine learning-based technology and continue building a specialist international team to support increased customer demand.
“Onfido has experienced 5 times year-on-year revenue growth every year from 2012, and now services 1,500 clients worldwide, including market leaders Deliveroo, Uber, JustGiving, Tesco, Care UK, BlaBlaCar, Monzo bank, Nutmeg, GoCardless, LendInvest and Crowdcube. Over the last year, we have secured a handful of seven-figure contracts [that] choose us for our unparalleled match rates, fraud detection, flexible API and end-to-end service.”
Kassai added that the Onfido team has grown by more than a third since March 2016 to 150 staff, including a 70-strong tech team with 12 specialist machine learning engineers.
The company has also enjoyed a number of high-profile accolades over the last 12 months, including:
- Tech City UK’s Future 50
- the Mayor’s International Business Programme 2017: Highest Investment
- Startups Awards 2016: Young Entrepreneur Of the Year, Tech Business Of the Year, Sage Startups Business Of the Year
- Digital Entrepreneur Awards: Young Entrepreneur Of the Year 2016
- EY Entrepreneur of the Year: Regional Winner (London and SE) 2016
- Forbes 30 Under 30 2016
- UK’s 10 Fastest-Growing FinTechs 2016
- FinTech 50 2016
- Innovate Finance Global Summit Pitch360: Best Regtech Solution
“We were also named among the 10 fastest-growing fintech start-ups in the UK (Techworld.com), the Top 50 fintech start-ups in Europe (Startups.co.uk) and one of the top companies to watch (Financial Times),” said Kassai.
Kassai admitted that one of the main challenges start-ups such as Onfido face is the competition for talent. “The sophisticated nature of our technology means that we spend huge amounts of time ensuring we are hiring the very best engineers, researchers and customer support professionals globally because everything we’ve achieved is down to the quality of the team behind it.
“This will be made harder as the UK leaves the EU. Onfido is a very international company – we have 57 nationalities represented and 46 languages spoken within our team – and that will suffer without access to EU talent. There aren’t enough UK graduates with the skills we need, which not only makes it difficult for us to recruit, but also makes it harder for us to compete with EU businesses [that] have a stronger talent pool.
“Aside from the fact that we’d become a less attractive employer to talent outside the UK, the amount of paperwork and red tape we’d have to go through in order to recruit from abroad would leave us trailing our competitors. Like many other tech companies, agility and speed are among our major advantages, and we can’t afford to forgo them.
“On a similar note, adapting the company to work effectively at different sizes is always really a challenge. Onfido will have to be a different company at 100 versus 200 versus 400 people. It doesn’t just scale up evenly. You need to think carefully about the culture, the balance of the company and how teams work with each other, especially as we become a more global team.”
The customer is always right
Kassai said the UK has a vibrant and growing start-up scene with good access to capital thanks to EIS and a more innovative regulatory environment such as the FCA.
“Fintech is about tech-enabled financial services that focus on customer needs and often cater to new markets, usually with new business models, most commonly: spending, sending, lending. They offer new services in unchartered territory, which can lead to exploitation, so there is the need for close and evolving regulation – hence the FCA sandbox offering a forum for continuous feedback and engagement between fintech, regtech, incumbents and regulators.
“Regtech is about translating regulation into API code in order to streamline compliance. In practice, this is needed for start-up fintech providers as they don’t have the resources to hire an army of compliance officers. Citibank has around 30,000 people carrying out compliance. New tech such as machine learning can help ensure compliance with fewer resources so that instead of only onboarding less than 70pc of ‘good customers’ with a credit history, fintechs can onboard under 95pc automatically and put their more limited human resources to better reviewing the less than 5pc that require human judgement.”
Kassai’s advice to fellow founders is clear: “Try to focus on the customer needs – the best self-starters tend to constantly focus on the problem that they’re solving and how they can ensure that they will remain the best solution to that problem.
“Equally, take advantage of the many markets across Europe (as the largest trading block), and expand as soon as circumstances permit.”
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