The news: The Estonia-based digital ID regtech Veriff raised a $100 million Series C at a $1.5 billion valuation after a stellar year of growth.
More on Veriff: The regtech’s AI-powered video solutions tap into surging interest from financial institutions (FIs) for financial crime protection, resulting in strong customer growth in 2021, particularly in the US.
- US digital account opening spiked by 32.3% in 2021 as the pandemic forced customers online.
- And financial crime spiked as nefarious actors seized on the opportunity: Identity fraud increased by 109% during the end of 2020 and start of 2021, per TransUnion.
- FIs are confronting the challenge: Almost 80% of North American FIs said they upped their investments in combating financial crime in 2021, per Compliance Week.
- This has been a boon for digital ID regtechs like Veriff, which reported staggering customer growth of 150% in 2021.
- Veriff said its video-based identity verification solution is more accurate against fraud than picture-based solutions utilized by its competitors, like Onfido.
The digital ID space: Elevated funding levels are not slowing down, testifying to the magnitude of the security threat—but players could find it more challenging to stand out in the future.
- Several digital ID regtechs have scored mega-rounds over the past year, including Socure and Trulioo. We don’t expect investor interest to wane, as financial crime will remain a thorn in FIs' side for the foreseeable future.
- This demand has sustained several players that have achieved global scale through similar offerings. But it could become more difficult for regtechs to distinguish their offerings.
- Digital ID regtechs will need to hone in on new pockets of growth to sustain their growth figures.
- Veriff’s focus on becoming an identity verification specialist in the metaverse could present one way of standing out as consumer interest in the 3D virtual world soars.
- This could bring in new business from FIs operating in the nascent space, particularly crypto firms that facilitate payments.