IDnow wants to put a new face on identity verification

German firm seeks to ditch the need for in-person identity checks

Securing and keeping private our digital activities is one of the critical issues of modern life and identity management is its centrepiece. The ability to prove who we are is at the heart of our interactions with the binary universe and the companies that have succeeded in providing the keys and locks - IBM, Oracle, CA, Sailpoint, Okta and OneLogin, for example - have become very important aspects of IT infrastructure. To these we might add another contender, IDnow.

The market that list of firms plays in is wide and saturated so Munich, Germany-headquartered IDnow has had to differentiate itself. The chief role of the company is to act as the middle man in those environments where physical presence has traditionally been an aspect of the identity management environment. Or, IDnow performs "the on-ramping of your offline identity into an online identity", as Rupert Spiegelberg, the firm's CEO, puts it. In other words, "You need to prove who you are and, historically, that meant going to a Post Office or bank and that would traditionally take a day or couple of days."

The company was founded in 2014 to move that verification process into the online sphere and it came after a change of German regulations for opening a bank account or borrowing money. Previously, in a step to prevent money laundering or other nefarious and fraudulent activities, that process had to involve humans. The advantages are pretty clear: a faster, more efficient process that can scale to handle larger volumes and meet the demands of regulations such as Know Your Customer, GDPR and AML. But IDnow and Spiegelberg see more markets and areas of activity opening up and McKinsey describes this process, sometimes dubbed ID verification as a service, as the next $20bn digital market. 

In some ways, verification is a relic of the old world. Or, as McKinsey puts it:

"Consumers are moving more and more of their transactions online, including sensitive transactions like opening new accounts and purchasing big-ticket items. They increasingly expect a seamless purchase experience, and one of the last points of friction is the identity check. Validating one's identity, while easy to do in person, can be cumbersome online."

IDNow wants to rid the world of that friction, and its alternative to showing up in person -- with all the disruption and hassle that involves -- is to combine a video chat session using facial recognition with an agent to identify the applicant and then document scanning and automation in a SaaS model. It calls this the industry's first combined automated and video identification platform. Competitors include Jumio of Silicon Valley and the UK's Onfido but they don't currently have both capabilities. It's the sort of market where you might expect to interest those big software stack vendors but for now IDnow and a swarm of other startups are operating in an interesting RegTech niche.

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A particular challenge today is that, even when operating within a single trading bloc such as the EU, countries tend go their own sweet ways for on-boarding and identification, some with video, some with e-signing, and so on. IDnow's approach is in some ways an attempt to cover all the bases of in-person document presenting and the brave new world of automating everything. Its solution detects passport, ID card and driver licences, including hologram checks. IDnow also complies with qualified electronic signatures (QES) rules via a partnership with the 800-pound gorilla of that space, DocuSign. That partnership should also help with compliance for eIDAS, the EU rules that harmonise contract rules on the internet.

Isn't the approach, I ask, rather similar to me, a UK national, returning to Heathrow airport and having my digital passport scanned and verified by a camera to speed things along? Not quite, he says, adding that IDnow's technology is "lighting-agnostic" unlike airports, making it a candidate for a broader gamut of purposes such as hotel check-ins.

The IDnow technology covers identity documents in 193 countries (effectively the whole developed world) including all passports and about 60 other documents that meet the required security requirements. IDnow believes this covers more than 7 billion people globally, or all but about 500,000 of the world's population. A legal spat with rival WebID over patents cast a shadow for a while but this was effectively resolved in 2018 and, with 300 staff in place, IDnow could be set fair for international growth.

IDnow isn't talking about revenues yet but it has raised over €12m and Spiegelberg says his company is strong in Germany and building elsewhere; a French office opened recently. Early successes in the roster of about 250 customers stem from a range of verticals including financial services, telecoms, the Internet of Things, automotive and in HR candidate recruitment. 

With the flood of regulations showing no signs of stopping (dating app verification being just another example), being Germany-based may also be an aid as the country has become the gold standard for data privacy and related compliance rules. "In a funny way I see regulation as our friend," says Spiegelberg, "because the regulatory environment in Germany is so much higher than everywhere else".