A global challenge

Aglobalchallenge

Digital identity verification provider Truilioo set itself a big task in ensuring everyone in the world can participate in the digital economy. Now that seems more urgent than ever. Hal Lonas and Garient Evans discuss inclusion, trust and the impact of a crisis-accelerated shift to online services

With more than a billion people lacking any legal form of identification, and therefore denied access to even the most basic financial services, the post-pandemic ambition to ‘level up’ society leaves many policymakers unequal to the task, however virtuous the ambition.

And, of all the available financial services, insurance is increasingly being seen as a critical tool for not only reducing the limitations faced by many people who are anonymous to the system; but also for helping those who have emerged from poverty to manage their risk and thus, hopefully, never fall back into hardship.

During the pandemic, the absence of such a safety net has been the painful reality for millions, especially in countries without public healthcare that’s free at the point of delivery, forcing families with no life or health cover to pay for treatment out of inadequate savings (if they have them at all), or else stare into a hungry abyss following the loss of a breadwinner. identity verification for five billion customers and 330 million businesses, in nearly 200 countries, through its GlobalGateway identification platform – it’s become the world’s largest identity verification marketplace.

In 2020, Trulioo was listed among Canada’s 100 fastest-growing companies, with an annual growth of 503 per cent. But the challenge – or, looked at through an investor’s lens, the business opportunity – is still huge. McKinsey forecasts that the identity verification (IDV)-as-a-service industry will grow to US$20billion by 2022 with a total addressable market growth of nine-to-15 per cent annually.

Throw into that mix the huge and many permanent lifestyle changes forced upon the world by the COVID-19 pandemic, and the result is a demand for digital IDV that has never been greater.

In early June, Trulioo completed a $394million Series D round, putting it at a $1.75billion valuation, led by TCV, one of the world’s largest growth equity firms,

It was precisely to avoid such human catastrophes that Canadian regtech Trulioo began building a digital ‘trust network’ back in 2011. Its mission was to ensure that everyone was someone in the eyes of the world – and, specifically, of financial institutions – by creating an online digital identity from multiple, verifiable data sources that are dynamically updated.

With more accessible personal information comes more ability for people to control their economic outcomes, it argued. They would be better able to access the resources they needed to prosper on an individual level, and this would unleash new levels of growth on a country-wide scale. Put another way, it was talking about the levelling up of the global economy, long before the phrase became a vote winner.

In the 10 years since it was founded, Trulioo has refined the technology with which it hopes to achieve its purpose, and expanded the territories in which it hopes to deliver it. It now provides real-time

with participation from existing investors. It gave Trulioo the capital to accelerate its goal to become an end-to-end identity platform, and it made two key appointments recently, to deliver it. Garient Evans joined as senior vice president of identity solutions, and Hal Lonas as chief technology officer.

Evans, who has more than 20 years of experience in credit, identity, fraud, document verification and compliance, has been brought in as Trulioo continues to develop ways to deliver even smoother digital identity verification. Meanwhile, Lonas, who has been a technology leader for 25 years, now heads up all aspects of Trulioo’s technology development, ensuring the adaptability of its technologies around data, privacy, security and the expanding ecosystem of identity verification, with a particular focus on the use of biometrics.

Joining Trulioo is never just a career move: you have to buy into its mission to democratise the digital economy. And Evans says that aim for him is ‘very personal’, even if the scale of what’s left to be achieved is mammoth.

“It’s not going to happen in my lifetime,” says Evans, “which means that Trulioo’s got a lot of work ahead!”

For Lonas, this particular moment in history, though, represents a critical opportunity to catalyse change.

“The pandemic has really accelerated us into the future,” he says. “The technological transformation of businesses is accelerating, and we’re in the right place, at the right time, to really help them and individuals take advantage this new digital economy.”

A REAL MELTING POT

For insurance, the pandemic prompted a spike in interest in health insurance and life cover, but also a shift towards usage-based insurance as habits changed – a move towards having a number of smaller policies for specific risks that signals a large uptick in the expensive (for the insurer) and time-consuming (for the consumer) process of onboarding and mandatory know your customer (KYC) and other regulatory checks.

The roots of mandatory identity verification in financial services were laid down by the USA Patriot Act in 2001, which sought to prevent, detect and prosecute money laundering and the financing of terrorism, and spawned similar KYC and anti-money laundering (AML) laws globally. As e-commerce developed, strict privacy legislation was also introduced by regulators to protect consumers’ personal data from being misused or falling into criminals’ hands.

E-commerce gave rise to the emergence of big techs like Amazon, which changed consumer expectations forever by offering fast, secure and convenient onboarding to the point where every business operating in the digital economy must now up their game. And, as Evans points out, their arrival has also fundamentally changed financial services.

“Now the tech providers are financial services,” he says. “In 2017, Amazon lent US$1billion in cash advances to its merchants. So the lines are blurred, between companies that were strictly technology, or e-commerce, or marketplace; now they are clearly participating in this market. Walmart even applied to be a bank about 15 years ago; they were denied that, but they have continued to offer financial services.

The technological transformation of businesses is accelerating. We’re in the right place, at the right time, to help businesses and individuals take advantage of this new digital economy

Hal Lonas

“And what all that has meant is more choice for consumers. Gone are the days when someone sticks with the bank where they opened their first account; now people have many relationships, maybe even dozens of relationships, spread across their financial lives.”

Evans suggests that the way financial institutions can compete with that is through a combination of strategy, technology and talent.

“For me, strategy is the intersection between customer need and product value. Some institutions are so obsessed with managing risk, that they’ve made their products really hard to get hold of; while others just have horrible technology that doesn’t allow the match between product value and customer need. But getting the strategy right is nearly impossible unless you have a flexible core technology.

“Gone are the days of set it and forget it; those who are responsible for user experience should view their work as being highly scientific, where they’re constantly testing resources, features and capabilities. If the underpinning technology doesn’t allow for that type of experimentation, the right strategy is going to be nearly impossible.”

Institutions have at least acknowledged the need for customer-centricity.

“When it comes to talent, the largest bank in the US has more than 800 job postings for individuals with the term ‘user experience’ in their profile, which is roughly 10 per cent of all of their openings,” says Evans. “The demand for talent to be able to drive a better customer experience, is just one sign of how financial services view this as an area of competition and core competency.”

But there is still a tension between build, buy or partner in order to innovate, he adds.

“Traditional banks are buying services from solution providers like Trulioo, where almost the entire onboarding experience is outsourced via APIs. You have some institutions that have tried to build their own offerings, with mixed success, and then you see some traditional institutions, like Goldman Sachs, having a tonne of success building things on their own, as with [its digital bank] Marcus. There are others that have just abandoned the effort to have a completely digital experience of their own.

“So, what you can expect to see is a tremendous amount of merger and acquisition activity playing out over the next few years, where traditional institutions that can’t do it themselves buy players that are truly innovative.”

SIZE DOESN’T MATTER

Trulioo, meanwhile, continues to plough an independent furrow, exploring every opportunity for contextual, proportionate, secure and fast IDV – and not just for large organisations. Authenticity and fraud prevention is just as important for a start up or small business, which arguably has more to lose and much to gain from digital verification software – smaller players in underbanked markets in particular.

Trulioo recently announced that it had developed facial recognition and document verification technology to enable smaller businesses to have the same level of online protection, and offer the same level of access to customers, as large corporates. The new features allow for ID documentation verification and biometric authentication for an added layer of security. This enables small and medium-sized enterprises (SMEs) to check the authenticity of government-issued ID documents and use facial recognition with liveness detection to ensure the person creating the account matches the photo on the ID document.

That technology is likely to play a major part in Trulioo’s drive to capture more business in the US, where documents like

driving licences, which vary hugely from state to state, are still commonly used for identity verification.

“Just look at the proliferation of documents in the States,” says Lonas. “We have been able to take care of that for our customers by building technology that makes a complicated set of connections seamless for them.”

Lonas is convinced that biometrics used for digital identification will become commonplace globally, partly because of the pandemic accelerating inclusion.

In a recent Trulioo blog, he wrote: “The development of biometric-based, digital and electronic identity and document verification services, has been critical in providing a means to effectively identify people online, enabling them to perform digital tasks in a safe and secure manner while operating remotely.

“Unsurprisingly, we have seen a large increase in demand for those services, with this trend likely to continue in the future, and, with it, the need for ownership and source of identity – something everybody has a right to.”

There is, however, a question over whether ‘identifying the world’ can be achieved without state-backed intervention. Lonas acknowledges the progress of the Indian Government’s Aadhaar project in capturing the biometric details of 1.3 billion people since 2009.

“India’s leading the way, and I think we can expect that kind of thing to become more prevalent, globally, in the future,” he says.

That raises another set of complicated questions about the storage and use of such data, and who owns the key to it.

The success of the Aadhaar project was underpinned by trust, which was called into doubt during the pandemic when the data collected was linked, unbeknown to the owners of those identities, to another programme involved in the vaccine roll-out.

Trust is one of five vital components identified by Trulioo for creating a successful digital identity ecosystem, the

We don’t think there’s a one-size-fits-all approach, so we explore things like biometrics, bank ID, device intelligence and document verification, to meet different needs Garient Evans

others being simple onboarding, user experience, security and fraud resilience.

“Everybody wants that low-friction, high-confidence, high-trust experience, but then sometimes that creates contradictions in the space,” explains Lonas. “Where do we set the dial to ensure the lowest friction with the highest confidence and trust? Making sure all consumers feel comfortable and confident with not only the onboarding experience, but transparency around the security of their data and where it’s going, is a balancing act. They want to know they are dealing with a trusted partner.

“In future, this is a perfect opportunity for artificial intelligence (AI) to help us process the amount of data we need, and spot the subtle signals that, amidst all the noise, make sure we identify people correctly.”

Evans agrees that the use of AI and machine learning will only expand as the need for effective data processing and analysis becomes ever-more critical.

“I’ve heard the quote that data is the new oil. And, much like oil raw from the ground, it needs to be treated in a particular way to make it valuable,” Evans says. “It’s not enough to have fantastic data; you need to be able to derive actionable insights from it. To prevent money laundering and terrorist actions, and accurately identify individuals is a never-ending exercise.

“To meet compliance requirements, a financial institution must be able to mine data and transactions and then investigate and report on anything it finds that the laws say is has to do something about.

“Cutting-edge institutions will bring in onboarding experts and work with third parties in the identity space, like Trulioo, to secure customer interactions and ensure their compliance. These organisations rely on us to test new technologies and new capabilities, and bring them the best possible solutions.

“They realise that building a network of really advanced global technology like ours would take them a decade to do, as it did us. We don’t think there’s a one-size-fits-all approach, so we explore things like biometrics, bank ID, device intelligence and document verification, in order to meet different needs and we’ll continue to be a flexible marketplace for these solutions.”

That’s one mission accomplished, then, even if identifying the entire world does take a while longer.

Everyone is someone:

And Trulioo aims to demonstrate it