The ID Co passport to travel the internet: Fintech interview 23

Edinburgh based The ID Co set about solving one of the biggest challenges’ facing businesses that want to make buying financial, or for that matter any other product online, as convenient as dragging and dropping an app icon.

That was in 2011. Today the company has evolved into a provider of instantaneous onboarding for its business customers. It is for example possible, through its technology, to automate mortgage approval and complete it in a matter of seconds without a single form being filled in.

James Varga, CEO and founder at The ID Co was chief operating officer at personal finance management (PFM) tool provider Money Dashboard back in 2011. It was then that he realised PFM tools, which for example tell people that they can save money using different products, are limited. Once the advice was given that was it.  Consumers that wanted to change financial products to benefit from the advice had to do arrange everything.

“We realised very quickly that we had the same limitations as everyone else,” said Varga. “The next stage of the process of getting that financial product is really difficult. Most of the time this involves offline processes such as going in branches and sending pieces of paper.”

Most people don’t like managing their money, they would rather make a decision and be do something else

“People want convenience. They want to be able to drag and drop financial products,” said Varga. “But we could not do this products because the financial services firm  the consumer wants to deal with does not know if he or she is who they say they are and doesn’t know anything about them.”

He said this problem goes way beyond financial services. “There are a lot of things we want to do online but we can’t because of this lack of identity and trust.”

He said there are problems with traditional ways of providing ID such as name and address or photocopy of a driving license because the organisation asking for the information cannot be sure the details belong to the person applying.

Working for a PFM gave Varga and his team a potential answer. “We were connecting people to their bank, which is a great source of trust and data. The bank has already done the on-boarding and knows the person well. It can connect the physical you to the digital you through spending behavior for example.”

Varga and his team worked on developing the IT for the new concept within Money Dashboard but then realised the idea had to be developed as a separate company so he completed a buyout of the new technology being developed.

“A start up with two propositions doesn’t work. Success at a startup is all about being focused and finding that traction so we pulled the IT out and stood up on our own,” he said.

Originally the company was called Miicard (My internet identity card). “The idea was that as consumers we can take sources of trust and data, like bank data or social accounts, and put that into a digital passport for people travelling the internet,” explained Varga.

The company started with 11 people, mostly tech professionals. They built a digital passport system with the initial version completed in about 18 months

The online service offered businesses, such as banks, building societies or dating sites a link that customers could use to quickly sign up

“We had already verified the person’s identity so a bank for example doesn’t have to do the Know Your Customer (KYC) checks and the customer doesn’t have to fill out a form,” Varga said. What used to take a week or two was being done in five minutes.

Varga said the service could have almost been B2C2B because everything is done with the consumers permission. The business would be charged each time the service was used.

This business model was in use for about five years, with operations in about ten countries. “But a few years ago we realised we were too early for the market. The idea of consumers owning their identity and data was still foreign to a lot of businesses.”

Varga said it is only recently with the introduction of GDPR that who owns the identity has become clearer

We had the verification service via the bank and a digital passport on the consumer side. We figured the consumer side was too early for the market so we focused on the bank verification

The services was then made a clear B2B identity verifying service

Varga said because the company leverages bank data it was in open banking even when PSDII was just an idea. “It has taken longer than I hoped but now open banking is a global trend.”

Today the company is focused on helping businesses on-board customers. This is not just banks but any company that needs to onboard a customer that comes along and wants something from them. “We use bank data to solve the pain that can’t be solved through credit referencing agencies and other sources.”

“The problem today is that we live in a world where to get credit you have to have had credit, which I think is fundamentally wrong,” said Varga.

He said parents for example might have to get their kids a credit card just so they can rent a place, which he said is “pretending they are responsible.”

“It is much better if they are genuinely responsible person that can prove this to businesses through data and even get more personalised products,” he added.

He said the checks take 14 seconds. “It will be absolutely possible to get a mortgage in 14 seconds using this type of technology. We have customers that do same day mortgage approval and funding without any forms being filled in.”

“For all the questions people have to answer the data is already there.”

The company now has 28 members of staff and 35 business customers. In the UK The ID Co has Clydesdale and Yorkshire Bank as a customer. CYBG’s digital bank B uses its service.

Read the previous fintech interviews

Part 22 Currencycloud, Part 21 Tandem, Part 20 Tink, Part 19 Goldex,  Part 18 Azimo, Part 17 Yoyo, Part 16 Bud, Part 15 Previse, Part 14 Finastra, Part 13 InstaReM, Part 12 Eucaps, Part 11 AimBrain, Part 10 Meniga, Part 9 TrueLayer, Part 8 InvestCloud, Part 7 ClauseMatch, Part 6 Rebuilding Society, Part 5 Honcho, Part 4 Akoni, Part 3 Wrisk, Part 2 CreditLadder, Part 1 Taina Technology