Selfie-based onboarding and authentication has been one of the fastest-growing segments of the biometrics industry in recent years as a range of organizations – especially those in the financial services sector – have come to recognize its benefits in verifying end user identity through digital channels. And Onfido has been at the vanguard of this trend, establishing itself early on as a leading solutions provider offering highly sophisticated technology.
As a result, Onfido’s business boomed over the past year, after the COVID-19 pandemic pushed many more organizations’ operations into digital channels, prompting a spike in demand for reliable onboarding and authentication solutions.
Naturally, the impact of the pandemic was the starting point for a recent interview between FindBiometrics Founder Peter O’Neill and Onfido CEO Mike Tuchen, who was appointed as Onfido’s chief executive in November. After offering his insights on Onfido’s response to the pandemic and the “really big tailwind” that resulted in terms of digitization, Tuchen discussed some of his company’s exciting work in the areas of cryptocurrency and delivery services, Onfido’s important efforts to fight algorithmic bias in AI, the company’s major partnership with Salesforce, and more.
Read the full FindBiometrics interview with Mike Tuchen, CEO, Onfido:
Peter O’Neill, Founder, FindBiometrics: As a provider of mobile biometrics for ID verification, Onfido’s technology is well-suited for the environment of remote work and digital transformation that sprouted in 2020. What was Onfido’s initial response to the pandemic, and how did it evolve over the course of the year?
Mike Tuchen, CEO, Onfido: Well, in 2020 we saw the digital world accelerate. Initially, I think like most companies, we didn’t know what to expect, but we very quickly saw that there was a pretty big need for companies to digitally identify their employees and customers which has resulted in a dramatic increase in demand for our product. Our first thought was, how can we set ourselves up to help our customers make the transition that they were now being forced to make? Because what was happening was, as the physical world came to a standstill, the move to digital, which has been going on for the last decade, started to accelerate. Obviously, the stay at home world of the pandemic has resulted in orders of magnitude more online use. But at the same time, as more customers go online, we’ve also seen increased amounts of fraud. Our identity fraud report 2020 showed that fraud was up 41 percent from last year .
The second thing I’d point to is that we then had to evolve, and help our customers evolve, with this changing landscape. And what we’re seeing is businesses that have innovated to be digital first are reaping the benefits, and we’re helping them get there. For example, in financial services, branches are closing. Retail has seen explosive growth in home delivery and products like alcohol require digital age verification, which is one of the obvious use cases for digital identity verification. And we really don’t see this going back to how it was. Consumers are getting more accustomed to home delivery and we’ve seen surveys that show only 40 percent of consumers are going to return to their bank branches post-COVID.
So it’s more and more critical that if you’re a bank, you provide an end-to-end digital experience. We’ve seen mobile banking registrations triple while mobile banking traffic rose 85 percent in April of 2020. Crypto, of course, has been accelerating dramatically, as has digital healthcare. And we’re seeing new AML (anti-money laundering) regulation coming into effect. So overall, this has been a dramatic acceleration of the move to digital, which, for our business, has been a really big tailwind.
Peter O’Neill: We just finished our 18th annual Year in Review, the largest review of our industry and we asked a lot of the questions that you mentioned. It’s quite remarkable what this year has done in terms of accelerating all those trends. I know you mentioned healthcare, and you also mentioned cryptocurrency. This year we’ve already seen some exciting news about your work in the worlds of cryptocurrency and content creation. How does your digital onboarding fit into these new use cases?
Mike Tuchen: The crypto market really accelerated last year and that acceleration is continuing into 2021. This had less to do with COVID and more to do with the price of Bitcoin. Bitcoin, from its low point in Q1, literally grew by a factor of eight over the course of 2020. So as the price of Bitcoin came up, more and more people wanted to invest in Bitcoin, or started to use Bitcoin. It’s not a new use case, but it really accelerated. So, it’s a combination of traditional KYC (know your customer), and AML (anti-money laundering) use cases. Regular standards have evolved to be just as strict with traditional FinServ. So, we’re working with those customers to support their enormous surge in volumes, while keeping them secure and compliant.
As I mentioned, we’re also seeing broader use cases like age verification for delivery services. In a contactless world, delivery is increasingly important. And that could be for verifying the identities of deliverers for takeaway for companies like Delivaroo, or it can be both the deliverers and the recipients, for age-restricted products like cannabis or alcohol delivery.
We’re seeing content creation where companies like FundOf need to verify the identities of their authors so they can prevent theft by impersonation, or disinformation, or even money laundering. For example, one report found that out of 130 social media influencers, 112 reported an increase in scammers buying or succeeding in stealing their identity to trick followers into sending them money. So, if you’re a content publisher, being able to have a clear strong visual identity, and identity verification, is increasingly important in this new world.
Peter O’Neill: I also think that you’ll see a lot of additional new cases with remote everything. It’s just going to explode. And this year again, we saw some exciting news about your work in the worlds of AI bias. How have you been improving your technology to address this significant challenge?
Mike Tuchen: Well, this is a big deal. And frankly, the industry is behind in solving AI bias. Over the course of 2020, there’ve been fundamental shifts in the conversation around anti-racism, ethics and proactively tackling bias. And we’ve taken them seriously and made a big commitment to [AI bias]. Our mission as a company is to provide open access to the digital world for all our customers. And that means we have a responsibility to make sure that everyone has access to the services they need.
This means that our product needs to work consistently across all demographics. What we’re finding right now is that most algorithms have an inherent bias based on ethnicity, or skin color, or other demographic traits. And to provide an equal opportunity, and equal access, it’s critical that we remove those algorithmic biases. So, we made enormous strides here with our internal measures showing that we improved our accuracy, or false acceptance rate, by a factor of 10, and by a factor of 60 across different racial backgrounds and skin tones. So now there’s almost no difference across those different demographics using our new algorithms. But as I said, this is an area of continued investment for us because it’s critical to provide an open environment for everyone.
Peter O’Neill: We’ve been writing a lot about AI bias for the past couple of years. So, congratulations on those tremendous results in that area, it’s critical for our industry. In 2020, you reported massive year over to year growth. What spurred such growth?
Mike Tuchen: Well, as we talked about with the pandemic, which was a challenge for a lot of companies in our business, when the physical world came to a standstill, the digital world had to accelerate to take up the gap. And so that was a big tailwind and a catalyst for our business. As our customers needed to suddenly increase their contactless services and provide digital ways of providing financial services, healthcare, retail, and so on, that was enormously helpful to us.
That led to an 82 percent year-over-year growth in recurring revenue for 2020, 320 new customers, many of which brought forward their digital transformation plans because of the pandemic, and more than double the number of enterprise customers year-over-year, as we continue to bring on strong complementary enterprise partners. And that led us to bigger deals with more enterprise customers. Another factor that led to our strong growth was our partnership program, which nearly tripled its sales, and that was working with partners like Salesforce, Okta, and Forgerock. In the US in particular, our business more than doubled as well. So we’re seeing very, very strong growth overall, especially in enterprise, and especially in the US.
Peter O’Neill: As you mentioned, the latest version of your remote onboarding technology was integrated into Salesforce app exchange. What are some of the unique characteristics of this version of your technology?
Mike Tuchen: Well, our Salesforce integration enables identity verification to be used not only as an onboarding tool, but also as a recurrent touchpoint along the customer journey. You can, for example, use it to help upsell additional financial products, authenticate a user to authorize a large value transaction, or enable account recovery as part of a unified flow. And that empowers Salesforce customers in financial services, insurance, and trusted marketplaces to easily integrate remote identity verification and authentication into their existing workflows. So, for example, we worked with a large UK credit union to solve their onboarding problem. We also worked with a large UK home developer that used ID verifications that’s built to weed out the serious buyers from the window shoppers, as some builds take 12 months or more.
Peter O’Neill: I’d like to take a bit of a broader view of the industry. Again, we’re in the midst of unpacking the 2020 version of our Year in Review. From your perspective, what is the biggest challenge facing our industry, especially as we head into a difficult 2021? And what opportunities might come out of that?
Mike Tuchen: The biggest challenge that we’re seeing from our customers is that digital fraud and identity fraud has increased by 40 percent year-over-year. And that’s from our latest fraud report. That means that we’re seeing new and more sophisticated attack vectors.
It’s no longer a nine-to-five role, seven days a week—it’s 24 hours a day. And that means that we, and the rest of the industry, need to be able to scale as quickly as the fraudsters to be one step ahead of these new, more sophisticated fraud vectors.
What we’re doing is investing in new technology to fight these new fraud vectors at scale so we can be faster, more scalable, and more agile. So our new next-gen fraud engine will help us scale faster and adjust to new fraud vectors more quickly. We have advances coming in AI that will make our biometrics operate faster and more accurately when verifying and authenticating people, and we’ll have more advanced customer analytics and greater integrations with complimentary products.
Peter O’Neill: Thank you very much Mike for taking the time to fill us in on all the really exciting things going on at your company, Onfido. It was a pleasure to speak with you today.
Mike Tuchen: Thank you Peter, and I look forward to working with you.
(Originally posted on FindBiometrics)