Onfido raises $50 million and adds former Salesforce executive to board
Onfido has raised $50 million dollars in a Series X funding round led by SBI Investment and Salesforce Ventures, and will also add former Vice Chairman of Salesforce Frank van Veenendaal to its Board of Directors to help scale revenues from its biometric technology.
M12 Capital (formerly Microsoft Ventures), FinVC and other new and previous investors also participated in the funding round, the proceeds of which Onfido Co-founder and CEO Husayn Kassai told Biometric Update in an interview the company will use to continue product and technology development, and to scale its sales and marketing efforts. The company plans to consolidate its core market in the U.S., and accelerate its expansion into Europe and South-East Asia.
Onfido has been trumpeting some significant accomplishments over the past year, and its customer base has shifted somewhat from sharing economy businesses and online communities, to fintechs and now banks. Soon the technology could extend to hotel check-in processes and remote prescription drug ordering. This is in part, Kassai says, because of advances in facial recognition specifically with photo ID, and its small images and frequent challenges like stamps occluding the image.
“When we experimented with it 5 or 6 years ago, it was a question of facial recognition technologies out there do a good job of faces in the wild, and recognizing your Facebook friends on social media, but they didn’t do a good job on small photographic ID. It’s small, sometimes there’s a stamp on it and so on,” Kassai explains. “Our facial recognition and machine learning is dedicated to that. Our models outperform others if its photo ID facial recognition, because we’ve done tens of millions of checks and that’s what its based on.”
The trend in onboarding and online ID verification is towards authentication with facial biometrics and liveness detection like Onfido’s, Kassai says, and the global standard of facial images on ID documents makes it the natural modality for the use case. The company’s greatest competitive advantage among facial recognition onboarding providers, according to Kassai, is in the way it uses human fraud detection experts to augment its artificial intelligence technology by verifying the edge cases the automated system cannot handle, and annotating those cases to further improve the algorithm’s performance.
“It’s really when you have feedback loops with your internal fraud experts and clients over a number of years that everything comes together.”
The company offers an all-automated option, but when customers compare it to the hybrid approach, they usually chose the latter due to higher pass rates. That also helps with continuous improvement in fraud detection.
“Everyone likes the sound of automation, but we know that machine learning is all about data, it’s all about annotations, it’s all about quality,” Kassai notes.
The funding round, which would be Series D according to Crunchbase, brings the company’s total funding to over $100 million.
“4.5 billion records were breached in the first half of 2018, and McKinsey has predicted the identity verification-as-a-service market to hit $20 Billion by 2022. So Onfido is very well placed to solidify its position as the global leader in identity verification,” said SBI Investment Executive Officer Tomoyuki Nii in the announcement. “We chose to invest in Onfido because they have proven their expertise at using artificial intelligence to effectively fight fraud, giving businesses a safe and secure way to scale their businesses online.”
In his time with Salesforce, van Veenendaal played key roles including Chief Sales Officer and Vice Chairman as the company scaled into the global giant it is today, and Kassai says he brings the sales and growth focus Onfido, which has so far been more product-focused, is ready for. Customer referrals have been the company’s main source of new clients, so far.
“There has never been a more important time for companies to build trust with their customers by showing they are one step ahead of fraudsters,” said Frank van Veenendaal. “I believe Onfido has the unique opportunity to transform the digital identity market and deliver robust and scalable authentication-as-a-service, similar to how Salesforce transformed customer relationship management.”
Onfido says its technology can perform automated checks of more than 4,500 documents from 195 countries and onboards customers in as little as 15 seconds with KYC and AML compliance. Kassai stresses that this is only part of its function.
“We may be seen as a verification proofing tool, what we are finding is that we are very much an authentication and a fraud prevention tool as well,” he says.
This is because identifying fraud through anomaly detection is the other side of the same coin as easily and quickly onboarding everyone else. The company says its risk engine can reduce customer’s fraud exposure rates to as little as 0.0195 percent.
“We are fundamentally about fraud detection,” Kassia explains. “We happen to also help businesses be compliant, but that’s not our main function. Credit bureaus help you be complaint. It’s estimated almost $2 trillion every year is laundered money, that’s between 2 and 5 percent of global GDP. It’s used for human trafficking, drug trafficking, and terrorist financing, and the one common denominator is identity theft.”