Veriff has hit a sweet spot
Earlier this week, the Tallinn-based globally operating startup offering AI-powered identity verification solutions raised an additional $100M and — now valued at $1.5 billion — rightfully joined the ranks of Estonian tech unicorns.
Several years ago when I was visiting our partner’s offices in Greece, I was shown the inner workings of their online proctoring solution. I was impressed. Something that used to require central shipping of printed examination papers and sometimes also ‘shipping in’ an invigilator, was now done securely and fully online with the help of webcam video and when most convenient for the delegate, rather than necessarily at the end of the three-day classroom course. When we still had classroom courses, that is.
Real-time video and image processing technology have advanced significantly since then and Estonia’s Veriff with their multifaceted identity verification solutions is at the forefront of practical innovation in this space — globally. Which, for an Estonian who’s somewhat partial to secure digital identity management, is a source of admiration, hope and pride.
New approaches to identity verification are increasingly important as both customer-focused and back-office processes are moving online and the historical processes and procedures don’t work anymore or are just not considered secure enough. Not that all of those were necessarily secure in the first place anyway. Ahem.
Both startups and blue chips operating in the digital space — and who isn’t, nowadays — have already figured out that digital identity verification can be an important enabler for improved business processes and their company’s growth. An increasingly international customer base and partner network, as well as remote working, have made it unfeasible to rely on physical identify verification alone.
Starship (another startup from Estonia) is using Veriff’s technology for online orders of e.g. age-restricted items delivered by autonomous delivery robots. Bolt (yet another tech unicorn from Estonia — we have quite a few) is using it to verify their users. Monese (a fintech startup founded by an Estonian) uses it for user onboarding, meeting Know Your Customer requirements, and addressing potential online fraud. Veriff is also participating in the Visa Fintech Partner Connect program to help their partners globally.
In addition to celebrating Veriff’s commercial success, I’m hopeful the increasingly widespread use of their solutions helps to decrease FUD and move forward the discussions about national digital IDs.
In many countries, the two important prerequisites for even starting those discussions in any meaningful way are increased trust and increased transparency through demonstrable success. Between people, between states and their citizens, and between individuals and enterprises. Considering this, anything that makes a core part of digital identity solutions, e.g. identity verification more — or in Veriff’s case, a lot more secure through digital means, is to be applauded.
The demand increases, the benefits become more clear, and risk mitigation can be made more efficient and transparent. Digital replicas of paper-based processes and security-through-obscurity procedures can be replaced with digital-first solutions that are built for people rather than for automatons.
We are just getting started, though. While many nations and enterprises are talking about secure digital identities, most of them are only at the beginning of the journey. Even in the EU where cross-border business and public sector collaboration is the norm, a cross-border digital identity framework is yet to be developed. There are some services (e.g. digital prescriptions) that leverage parts of the existing digital infrastructure and there are regulations in place for cross-border use of electronic services, but national-level capabilities (and needs, and fundamental readiness) differ significantly.
Just to be clear, identity verification through digital means as an organisational and business capability does not require parts of or a full-scale (national) digital identity framework to exist. Digital identity verification for online services can be developed and implemented using the existing infrastructure, with minimal friction for users and those managing the processes. A national digital identity framework does require some sort of digital identity verification but is governed by different standards (e.g. eIDAS).
While digital identity verification can help mitigate many familiar ‘analogue’ risks, e.g. identity fraud, it is not without challenges, of course.
Some of the challenges are almost purely digital by nature and can mostly be solved through digital means. If there’s friction in the process — make sure the aspect of UX is not an afterthought in product development. If the process is too slow — increase computing power, simplify workflows, and re-architect the code. If the process is unreliable — introduce mid-process checks and assisted workflows, improve biometric forgery detection capabilities, employ ML with more varied data, and improve your algorithms.
For most companies, figuring out how to make it all work and ensure it then works with thousands of different types of ID documents is … difficult. Considering the rapidly increasing global demand, I think that Veriff has hit a sweet spot. Their service is secure, reliable, fast enough, frictionless enough, and works well for companies with an international customer base. So far, they have managed to satisfy the demand and stay ahead of the curve. They have the trust of their customers, and quite obviously they have the trust of their investors.
Some other challenges are made more tangible in the digital era and cannot be ‘outsourced’. For example, how much personal information — if any — should you share online with a service provider you don’t know through a verification process you haven’t used before? How safe is it to share your passport or ID card details together with your photo and perhaps a screenshot of a document containing your home address? Bringing a bunch of documents to a bank branch to be checked by hand is a process many of us are familiar with, but doing it online, interacting only with a machine, … yeah, scary stuff. And I’m not being ironical here — online fraud is a massive problem and consumer awareness campaigns encouraging to refrain from sharing personal information online can be seen daily, as well as reports of successful scams.
And some challenges stem from the core of identity verification. For example, not everyone in the world has an official ID to prove who they are and often those in marginalised groups are at the highest risk of getting left behind (again). If we are building services without thinking about who might not have access to these by no fault of their own, we’re not building a just society; we’re perpetuating inequality.
These kinds of challenges are not for any one company to solve — it requires close collaboration between governments and businesses. The more we have good examples of trusted services and decent service providers, the easier it becomes.
Header photo by Denis Shlenduhhov on Unsplash
