This previous month has seen a number of African fintechs comparable 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 have to be held accountable to whereas working throughout the continent and globally.
For the various startups whose providers assist hold the operations of economic establishments comparable to banks and fintechs in test, this era highlights their relevance greater than ever. Within the newest improvement, Youverify, a Lagos and San Francisco–primarily based id verification firm serving to African banks and startups automate KYC and different compliance procedures, is saying that it has secured a $1 million seed spherical extension. The startup raised a $1.5 million spherical in 2020, bringing its whole seed elevate to $2.5 million.
Africa-focused VCs Orange Digital Ventures (ODV) and LoftyInc Capital, the 2 traders who co-led its preliminary seed spherical, additionally led the extension. Extra funding got here from Octerra Capital, Plug & Play Enterprise, Syntax Ventures, HTTP Traders, Afer Group and Fronesyz Capital.
The proliferation of economic providers in Africa is starting to draw extra scrutiny from regulators. In accordance with studies, transactions price $116 billion might be made by means of digital cost channels this 12 months, requiring stringent measures to stop id theft and fraud. Subsequently, the rise in deal with sustaining transparency in monetary laws and enhancing methods for KYC and AML by implementing regulatory applied sciences has develop into a big progress issue for the market. And as regtech demand globally will increase, so will Africa’s, with studies saying it’ll 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 supplied API for handle and id verification to a number of monetary establishments. Now it has added extra KYC merchandise and expanded into new markets comparable to Ghana, Côte d’Ivoire, South Africa, Kenya and Uganda.
“The way in which our clients see us is that we assist them automate their KYC and compliance points,” mentioned 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 comparable to transaction monitoring. He additional defined that these choices cater to points some fintech platforms have confronted not too long ago: 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 might put in place the correct transaction monitoring and fraud detection methods that may establish transactions taking place from their clients,” the CEO mentioned of the chargeback scenario Union54 has handled over the previous couple of months. “A system like ours will have the ability to establish earlier and new patterns in such a approach that we’d’ve been in a position to assist such the corporate.”
It wasn’t till final 12 months that Youverify began coping with fintechs. Initially, most of its clients had been governmental our bodies, huge companies like Bolt and banks. Practically two-thirds of Nigeria’s business banks, comparable to Commonplace Chartered, Commonplace Financial institution and Constancy Financial institution, use the platform’s id verification and KYC merchandise, Youverify mentioned.
Nonetheless, in a bid to serve extra shoppers, the corporate launched its proprietary know-how, the Youverify OS (YVOS), which gives a single platform for automating due diligence and combines threat and compliance administration with its core id verification platform to ship these fintechs an enterprise-grade compliance resolution. With its different product, vFORM, a low and no-code software, companies can create a customized course of for onboarding new clients utilizing a drag-and-drop builder.
On account of diversifying its clientele and demand for its KYC merchandise, Odegbami mentioned Youverify’s buyer base elevated by 300% to serve greater than 400 banks and high-growth startups. Within the final 24 months, Youverify’s utility processes have grown by greater than 1,000% to greater than 5 million purposes which have helped its shoppers rent expertise, promote monetary merchandise, and remotely onboard ride-hailing drivers. The corporate’s YouID digital id platform added greater than 500,000 customers, with 600 service suppliers on its market waitlist throughout the continent. Odegbami mentioned the Lagos-based id verification firm crossed an ARR of over $1 million final 12 months.
Youverify isn’t the one id verification firm in Africa. Comparable suppliers embody Smile Identification and YC-backed corporations IdentityPass and Dojah. With out mincing phrases, Odegbami mentioned his firm is a “market chief” as a result of it got here into the market a lot earlier and possesses extra expertise, and gives extra information units than the others.
Over the subsequent 18 months, Youverify plans to develop its footprint to cowl 30 international locations, particularly within the southern, jap and francophone elements of Africa, the place Odegbami says the corporate might 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.