This previous month has seen a number of African fintechs akin to Flutterwave and Union54 make headlines for compliance checks and fraud points. Each unlinked occasions re-emphasize the significance of know your buyer (KYC) and anti-money laundering (AML) checks and why regulators implement strict insurance policies that monetary establishments must be held accountable to whereas working throughout the continent and globally.
For the numerous startups whose providers assist hold the operations of monetary establishments akin to banks and fintechs in test, this era highlights their relevance greater than ever. Within the newest growth, Youverify, a Lagos and San Francisco–based mostly identification verification firm serving to African banks and startups automate KYC and different compliance procedures, is asserting that it has secured a $1 million seed spherical extension. The startup raised a $1.5 million spherical in 2020, bringing its complete seed elevate to $2.5 million.
Africa-focused VCs Orange Ventures and LoftyInc Capital, the 2 buyers who co-led its preliminary seed spherical, additionally led the extension. Further funding got here from Octerra Capital, Plug & Play Enterprise, Syntax Ventures, HTTP Traders, Afer Group and Fronesyz Capital.
The proliferation of monetary providers in Africa is starting to draw extra scrutiny from regulators. In response to experiences, transactions value $116 billion will probably be made via digital cost channels this yr, requiring stringent measures to stop identification theft and fraud. Due to this fact, the rise in concentrate on sustaining transparency in monetary rules and enhancing methods for KYC and AML by implementing regulatory applied sciences has turn out to be a major development issue for the market. And as regtech demand globally will increase, so will Africa’s, with experiences saying it is going to attain about $1.2 billion within the subsequent 5 years.
Youverify got here into Africa’s regtech scene when founder and CEO Gbenga Odegbami based the corporate in 2018. Launched within the Nigerian market, Youverify first offered API for handle and identification verification to a number of monetary establishments. Now it has added extra KYC merchandise and expanded into new markets akin to Ghana, Côte d’Ivoire, South Africa, Kenya and Uganda.
“The way in which our prospects see us is that we assist them automate their KYC and compliance points,” stated Odegbami on a name with TechCrunch.
Along with verifying identities past Nigeria’s financial institution verification quantity (BVN) and addresses, Odegbami says Youverify layers KYC and compliance merchandise akin to transaction monitoring. He additional defined that these choices cater to points some fintech platforms have confronted just lately: alleged AML points within the case of Flutterwave in Kenya and Ping Specific within the U.S. and fraud within the case of Union54’s chargebacks. Within the latter, Youverify claims it may’ve prevented large-scale chargeback fraud by figuring out the sample of transactions to flag fraud, blocking the digital playing cards and tying them again to fraudsters committing the a number of pretend chargebacks.
“They [Union54] grew sooner than they may put in place the right transaction monitoring and fraud detection techniques that may determine transactions taking place from their prospects,” the CEO stated of the chargeback scenario Union54 has handled over the previous couple of months. “A system like ours will be capable of determine earlier and new patterns in such a manner that we might’ve been capable of assist such the corporate.”
It wasn’t till final yr that Youverify began coping with fintechs. Initially, most of its prospects had been governmental our bodies, huge companies like Bolt and banks. Almost two-thirds of Nigeria’s business banks, akin to Customary Chartered, Customary Financial institution and Constancy Financial institution, use the platform’s identification verification and KYC merchandise, Youverify stated.
Nevertheless, in a bid to serve extra purchasers, the corporate launched its proprietary expertise, the Youverify OS (YVOS), which supplies a single platform for automating due diligence and combines danger and compliance administration with its core identification verification platform to ship these fintechs an enterprise-grade compliance resolution. With its different product, vFORM, a low and no-code instrument, companies can create a customized course of for onboarding new prospects utilizing a drag-and-drop builder.
On account of diversifying its clientele and demand for its KYC merchandise, Odegbami stated Youverify’s buyer base elevated by 300% to serve greater than 400 banks and high-growth startups. Within the final 24 months, Youverify’s software processes have grown by greater than 1,000% to greater than 5 million purposes which have helped its purchasers rent expertise, promote monetary merchandise, and remotely onboard ride-hailing drivers. The corporate’s YouID digital identification platform added greater than 500,000 customers, with 600 service suppliers on its market waitlist throughout the continent. Odegbami stated the Lagos-based identification verification firm crossed an ARR of over $1 million final yr.
Youverify isn’t the one identification verification firm in Africa. Related suppliers embrace Smile Identification and YC-backed corporations IdentityPass and Dojah. With out mincing phrases, Odegbami stated his firm is a “market chief” as a result of it got here into the market a lot earlier and possesses extra expertise, and supplies extra information units than the others.
Over the following 18 months, Youverify plans to develop its footprint to cowl 30 international locations, particularly within the southern, japanese and francophone components of Africa, the place Odegbami says the corporate will probably be recruiting aggressively. It additionally intends to extend the variety of IDs it will possibly confirm, from 400 million to 2 billion, and develop new automated compliance merchandise for the gaming, journey, healthcare and telecommunications industries.