As custodians of accountability, CFOs are under pressure to balance agility with watertight compliance, within an increasing number of regulations. Disruptive digital solutions can help businesses avoid fines and fine-tune compliance, while also improving service levels and the bottom line. They can do this by by onboarding customers more quickly and easily, as well as cheaper, than ever before, says David Thomas, co-founder and Head of Product at ThisIsme, the fast-growing Cape Town-based disruptive startup that helps businesses to reduce fraud, automate KYC, improve on-boarding and increase revenue while providing an on-demand, seamless customer experience.
The world is getting more complex, risks are increasing and criminals are getting smarter. Policymakers and regulators have responded to this by beefing up Know Your Customer (KYC) regulations and laws that protect people’s privacy. In South Africa, the Protection of Personal Information Act (PoPI) and this year’s amendment of the Financial Intelligence Centre Amendment (FICA) Act are on the minds of many executives.
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Some of the best CFOs have recognised that the convergence of the digital revolution with the ever-increasing compliance burden can be an opportunity for their businesses to gain a competitive advantage. Rather than seeing regulations as expensive stumbling blocks, they understand that the rules are there for a good reason. Digital compliance tools can assist in streamlining business processes and they can be catalysts for change for businesses looking to establish a more customer-centric culture.
“Implementation of digital solutions to deal with compliance challenges is often a lot more affordable than executives expect.”
ThisIsMe at Finance Indaba Africa
“Business shows often don’t live up to expectations,” says ThisIsMe Head of Marketing, Brennan Wright. “The Finance Indaba Africa is an exception, so we are happy to be a part of it again this year. We exhibited for the first time at the event in 2016. Our stand was constantly busy with the right people and there was a great atmosphere due to the open exhibition space. The most asked question for our team was: does it really work? Not only is the answer to that ‘yes’, but we can also prove it, in real-time, during the Finance Indaba.”
Freeing up finance
To date, the process of establishing and verifying the identities of clients has largely been paper-based, with clients having to arrive at a bank branch, for instance, for face-to-face identification. This tedious process of FICA on-boarding has increased costs for institutions to between R300 and R1,500 for each client. “By taking those mundane and cumbersome tasks away from your finance team, its members can focus on activities that add more value to the business. We can check millions of requests to verify an address within half a day,” says David, adding that the verification results will be accurate whether someone filled in ‘main road’ or ‘hoofstraat’ or made a spelling error.
ThisIsMe specialises in providing comprehensive KYC solutions to businesses. This involves customer identification and onboarding, along with customer due diligence solutions. Business has boomed on the back the Financial Intelligence Centre Amendment (FICA) Act 2017, which was signed into law in April. “The participation process in parliament was very soundly run,” says David. “The right questions were asked and industry organisations have contributed. All you can ask for is that politicians listen to the market and that has happened.”
The clarity that the law has created has provided a boost for businesses looking to revolutionise compliance.
“Negotiations with clients that used to take 12 months are now reduced to as little as six weeks before we start integrating our solutions. Gone are the days of people having to scrounge around for more copies of their IDs and proof of residence. Digital verification is significantly increasing the speed of doing business.”
Risk-based approach
One of the crucial differences with previous iterations of FICA, is a shift from a rules-based to a risk-based approach. This means accountable institutions must consider the potential risk involved in establishing a business relationship with a client. The intention of the new regulations is to combat financial crimes such as money laundering, terrorist funding and fraud.
“The changes in the Act have caused a major disruption in the market, but have also accelerated the adoption of digital solutions. For many, FICA had become a four-letter-word. That is a perception that we are changing,” says David. “It has added a lot of complexity, as each accountable institution has a different risk appreciation. For a service provider like ThisIsMe that means we cannot offer a one-size-fits-all solution to our clients. We have an amazing development team that approaches a client's unique challenges from every angle.”
Focus on individual
Of course, ThisIsMe is not the only player in the industry but the company’s approach to identity verification seems to have struck gold, with an impressive growth projected for 2017 and some mega-projects in banking and other industries in the pipeline. Individual customers can take full control over their identity data, explains David, when asked what makes the Cape Town-based business unique.
“One of issues that has plagued the industry is that anyone can submit documents, but it is important - especially with the PoPI Act in place - that individuals have the right to opt in or out of identity verification. We are focusing on the individual, without alienating the compliance departments of the corporates we work with.”
ThisIsMe has developed a custom method of verifying the identity of an individual, in which it places a micro-deposit into the individual's verified, pre-FICA'd bank account. This deposit carries a unique reference which is returned by the individual, in order to prove access to that account. The process is as simple as a one-time PIN, but infinitely more secure, owing to the fact that no password is held as securely by an individual as their banking password.
While the business is enjoying an incredible boom at the moment, the successful formula has been carefully crafted. “We launched in 2013 and spent the better part of two years building relationships with data providers. The trick it to get to the data’s golden source, as we call it,” says David, who says the company is eyeing African expansion and a foothold in countries like Australia and Singapore.
Security and encryption
Sources of data now include the databases of the National Credit Regulator (that includes information from retail store accounts), delivery companies and a host of others. ThisIsMe also collaborates with blockchain and scanning innovators in Europe, tapping into the latest and greatest technologies available.
“Security and encryption are foremost in our minds when protecting our customers' identities. When you deal with sensitive information, privacy and security need to be your core business.”
ThisIsMe recently announced that is has set an ‘African record’ in handling an entire FICA application within three minutes from scratch, including uploading proof of ID and proof of address. David says the company is actually being modest. “We can do a lot quicker than three minutes! That is verifiable. If you already have a ThisIsMe account, you can FICA almost instantly by approving a request to verify your identity with your mobile phone.”
