The booming biometrics market has seen a lot of success stories over the last several years, but in the financial services sector, FacePhi is one that really stands out. The Spain-based firm was one of the first to wholeheartedly embrace the concept of selfie-based authentication via facial recognition, launching its flagship Selphi authentication solution back in 2014. Since then, enthusiasm for selfie-driven biometric onboarding and authentication has skyrocketed, thanks in large part to the mainstreaming effect of Apple’s launch of Face ID in 2017. And as a result, FacePhi has seen major growth, reporting a 66 percent increase in turnover and a 49.5 percent jump in EBITDA in its latest fiscal update.
That growth is where the conversation started in a new interview between Mobile ID World President Peter O’Neill and FacePhi CEO Javier Mira. Their wide-ranging discussion also went on to tackle FacePhi’s groundbreaking work on biometric ATMs, its comprehensive new inPhinite multimodal platform, its continuing growth in the financial services sector and potential expansion into new areas, and even tentative plans to launch new regional offices in Asia and elsewhere. Read the full conversation below to get a sense of what makes FacePhi such a special case in the ongoing biometrics boom.
Read the full interview with Javier Mira, CEO, FacePhi:
Peter O’Neill, President and CEO, Mobile ID World: You’ve had quite a successful year. Your revenue and profit are up, up, up. Please tell us about this growth.
Javier Mira, CEO, FacePhi: Well, as you might know FacePhi started its business development in 2014 with the signature of the first two banks within the LATAM region. Since that moment, the trend for biometrics being used in mobile devices has grown a lot – we only need to analyze the number of devices using biometrics as their authentication method. So that is why the company FacePhi, from 2014, has been really prepared to meet these demands. We tried to put ourselves in a position of leadership for using biometrics, and specifically facial recognition on mobile devices or e-channels such as web-banking. We managed to be in the right place at the right time with the best tech, business model and strategy.
So, from 2015 to 2016 we grew from two banks to ten banks using our technology. At that moment, we were aware that we had good technology, a good company, and a highly potential business strategy in front of us
– success was in our hands. So, later on what it happened was that when any bank was asking to use facial recognition to authenticate, or for transactions, or for identification, our name appeared as the tech company being used by key-players on the market, and therefore FacePhi was recognized as a leader in facial recognition for e-channels within the financial sector. It helped us to grow in a fast but stable way.
That is why today we have more than 30 banks and all of them are really happy about using this type of technology; they are really satisfied with the investment they made in biometrics because of the savings and the user experience they have today. Now, we are just moving forward and providing not only different biometrics but experimenting with different facial recognition applications within the banks, using our technology. Today we have banks using our technology in ATMs, in branch offices, in some kiosks, and in order to issue a credit card. So, the experience has been very positive and has helped us to have good growth.
Peter O’Neill: You mentioned the ATMs; I know that you’re working with the CaixaBank in Spain with their ATMs. How is that going, and what are the future plans around that particular area?
Javier Mira: Well, that was a major challenge for the company and for our engineers because obviously the algorithms that FacePhi uses were really developed to be used on the device and probably on the laptop or PC, but you have different challenges when you want to use this technology in an ATM.
It is very simple to explain. When you use your device, you use your hand to put the device in front of your face. When we are using an ATM camera, the same person will have different measurements depending on the height of the person. It is really complicated to focus in front of the camera and then the ATMs have different lighting conditions, in some cases they have some very particular glass or anti-fraud glass. So, you have different things added into the equation which you have to combine with the algorithm for facial recognition and with the user experience in order to make the client feel comfortable. At the same time, you have to incorporate liveness detection technology to obviously avoid the use of a picture or even a video being used in front of the ATM.
So, with CaixaBank, and joining efforts with our partner Fujitsu, we were able to solve all of these problems and to start making some POCs. In the end, the result was fantastic. CaixaBank agreed to deploy the technology in their ATMs. Fujitsu manages all CaixaBank ATMs, so that helped to make the deployment of the technology faster. And the first phase until June the 30th is expanding to some of their Flag stores that they have in Spain. In the second part of the year, they want to deploy the technology as much as possible.
Peter O’Neill: During this past year also, FacePhi launched a new security platform called inPhinite. How does this new product fit into your overall corporate strategy?
Javier Mira: inPhinite is the result of the many conversations that we have had with our current clients. They had very positive experiences with facial recognition and their customers too, in terms of the transition from using PIN codes to the use of biometrics. So, they started using facial recognition as a first step, but at some point, they showed interest in adding more biometrics but respecting the same user experience. At that moment, FacePhi took on the challenge and developed inPhinite, a new platform which includes several biometric and other identity management related techs. Today, thanks to our alliances and partnerships with some companies we are able to offer voice recognition, signature, touchless fingerprint and behavioral biometrics, among others.
inPhinite gives the clients the option to choose a biometric technology depending on the scenario. Facial, voice, or whatever. That’s been very good and it has made FacePhi really attractive to banks in relation to all biometrics, not only to facial recognition.
Peter O’Neill: It’s good to be able to offer that sort of end to end biometric solution. No matter which way a bank wants to go, you can satisfy that need now. Is that correct?
Javier Mira: Yes, that is correct. When you use a mobile application from a bank to make a transaction, you have different steps, so if you are using one biometric as the first factor, you cannot use the same technology or system for the second factor or the third factor. So, ultimately, within the digital transformation strategy, banks are willing to avoid any use of PIN code or OTP by adding new biometric technologies and combining them.
So, again we are providing a platform where it is not necessary to include all of the biometric technologies at the beginning, but they can incorporate the different biometrics step-by-step as they want, to use for different scenarios or for different factors.
So, inPhinite is really flexible, secure and scalable, and it is responding very well to the demands of the clients.
Peter O’Neill: Can you please tell our readers about your latest win in Uruguay with HSBC bank? You have done work with HSBC already, so maybe you can tell us about all of that.
Javier Mira: Well it is true that we signed and renewed a HSBC contract with Uruguay, I think it was a couple of months ago. In that case, they want to use and are deploying the technology of two of the products that we have. One is obviously Selphi, which is facial recognition to make authentications, but the other one is digital onboarding with SelphID. With SelphID, the bank is enrolling new customers or doing the eKYC methodology in order to acquire new customers. They are exactly the same products that HSBC Argentina acquired some time ago.
So, we are very happy and we are very grateful to HSBC Uruguay and Argentina. We are trying to move forward with HSBC by closing independent agreements with different countries and markets, and hopefully in the future to be able to close a global agreement with them.
Peter O’Neill: When we met at Money20/20 several months ago, we spoke about some of the new global markets that you are interested in. How is your expansion coming along?
Javier Mira: Well, we started about a year ago analyzing the possible businesses in the Asia region and we went to Money2020 Singapore in 2018 to analyze this opportunity. Last March, I was again in Singapore, just visiting some partners that we have there and we are very happy about the results in one year. We just signed a couple of business partners that are very interested in reselling or integrating our technology in their own platforms to offer the same technology to banks.
We are studying the possibility of opening a branch office in Seoul, Korea, in order to be capable of offering support from the domestic side in the region. So, it will be something that´s very interesting for us. We want to replicate the success that we had in Latin America in some of the markets in Asia.
Peter O’Neill: I know that you have had great success in the financial vertical, are there other vertical markets you’re starting to explore? If so, can you tell us about those?
Javier Mira: Yes, we have a lot of demand from different sectors but as we are a company that is still a small company, we do not want to lose the focus that we have on the financial sector. We are making some advances in some other sectors. For example, insurance companies or giving civilians access control. We are doing some small things and small projects that we feel that we can manage, but depending on how we see the company moving in 2019 we will start obviously with some new structure to attend to those new verticals that today for us is complicated.
We want to keep the leadership position in the financial sector and specifically the areas where we are really strong and I think we should not lose this position. On the other side, obviously, we need to pay attention to new verticals. I think that step-by-step we will be able to touch on some of these in the next 18 months probably.
Peter O’Neill: We have been in this industry for almost 20 years and I have seen companies that have some success in a vertical and then became attracted by another vertical, and another vertical and all of a sudden, they have lost focus. So, I think you are doing the right thing because you are seeing tremendous success in the financial area and I think you really ought to capitalize on it.
Plus, I think generally in our industry that financial is the vertical market that has the most amount of interest. Governments, border control, and national ID programs, they are important but, financial is moving quite quickly now.
Can you tell us what is next for your company, please?
Javier Mira: Well, I would say that we are a little bit more mature than a couple of years ago, and we are really looking at the potential that the company could have if we can implement some structure in some of the markets.
So, the idea is to open a branch office as I said in Asia, probably in Seoul, Korea, but we also want to open a branch office in Latin America, which is our main market today, and FacePhi is also willing to open a branch office in the US, as this is a market that we need to pay attention to. We think that with the cases of success that we have, with the numbers we manage in terms of transactions and users, and with the incorporation of new biometric technologies, the company is really prepared to move a little bit forward.
Peter O’Neill: Well Javier, thank you very much. You have an extremely busy schedule I know, and I do appreciate you carving out some time for us today.
Javier Mira: Thank you Peter, always a pleasure.