Fresh on the heels of a $100 million fundraise and U.S. expansion with the acquisition of Aviata, Onfido just may have received the news they need for their next major breakout project.

Onfido, Deloitte and Evernym just announced the positive momentum from their Financial Conduct Authority (FCA) regulatory sandbox pilot. The results show clear successful viability in their pilot of a reusable, user-controlled, digital identity solution. 

It’s a huge win for the identity solution. Cutting edge government and private sector partnerships are rare, but perfect timing in the wake of GDPR and the global push toward privacy make this pilot fundamentally unique. 

CEO and Founder, Husayn Kassai, started Onfido with a vision to revolutionize the world’s broken identity infrastructure. What started as Husayn and two friends, Ruhul Amin and Eamon Jubbawy from an Oxford entrepreneurship club, has ballooned into a major startup unicorn. Adding nearly a dozen employees each month, Onfido is shaping up to revolutionize the world’s identity infrastructure.

In this exclusive interview with Identity Review, we sat down with Husayn to hear more about his vision for a reusable identity and how Onfido is charging full speed ahead to solve some of the most complicated problems in identity. 

A Fragmented Planet: 200+ Countries, Thousands of IDs

Standardizing a user-controlled identity is no easy feat. 

“There’s over 200 countries and each country has at least 3 types of ID and every couple of years there’s a new version, so you end up with over 5,000 ID types continuously evolving…there’s a lot of work that you have to do,” Kassai highlighted.

Powering over 1,500 businesses in the financial services sector, Onfido is turning an eye toward the challenge of standardizing how everyone in the world proves their legal identity, connecting their physical self to the digital world. The recent partnership began when Onfido presented a vision for the future of KYC to the FinTech Delivery Panel (FDP), a consortium of 24 industry participants, and received the organization’s endorsement to prove how Onfido’s solution could work within the FCA regulatory sandbox. Deloitte and Evernym were also partners in this proposal. 

Testing for this solution started in February 2019 shortly after these companies were accepted into UK’s FCA Regulatory Sandbox (Cohort 5) to evaluate how reusable or ‘portable’ identity can improve customer onboarding journeys and reduce compliance costs for financial institutions.

“The [FCA] bought into our vision that the next biggest company is going to be an identity company,” said Kassai. “Our goal is to standardize how everyone in the world proves their legal identity or real identity.”

Onfido’s goals to provide digital access are built on four building blocks:

1. Make it easier for consumers to gain access to digital services
2. Stop bad actors with fraud feedback loops
3. Create the best possible user experience
4. Uphold users’ privacy

The Benefits of Reusable Identity

Given the proliferation of data breaches in recent years, a lot of the world’s data is now on the dark web. Credit bureaus, which have historically acted as a shared identity trust system, are vulnerable because the data is accessible to bad actors. However, security features like facial biometrics are designed to make this data more secure and also convenient to access.

Portable identity allows people to safely and securely reuse their verified identity across financial services and other organizations. This portability streamlines operations and reduces costs as they can be reused and do not need to be re-verified every time to access new services. With this system in place, businesses can balance security and customer experiences, reduce compliance cost and respond to regulations.

Creating the Reusable Digital Identity Ecosystem

By creating an ecosystem for digital identity, the solution provides a way for individuals to hold and control a proof of identity that they can show to anyone, anywhere. This is different from physical proofs of identity like a traditional passport, which is accepted at every airport. The digital world allows individuals to have a unique credential (like a username and password) for every online service they access to prove that they are who they say they are. This often becomes unmanageable and insecure; the average person manages over 191 pairs of usernames and passwords.

How the model works:

1. Credential providers are able to verify any relevant information about an individual or organization and issue verifiable credentials to that person.
2. People hold multiple digital credentials on their phone and accept or reject requests to share information with institutions (referred to as relying parties).
3. Relying parties request information from the consumer and receive digital credentials.

Through this trial, the companies have demonstrated that consumers may prefer owning and controlling their own legal identity and provisioning access to different businesses and organizations. In addition, businesses are liking this because it is standardizing this technology and is lowering the integration costs as well as the costs of carrying out the checks. This helps to give businesses more access to individuals in an easier way. 

“This pilot was instrumental in proving that portable identity significantly improves both consumer experience and protection, while accelerating customer onboarding and reducing KYC and compliance-related costs for financial institutions,” said Kassai. “Now that we’ve proven the model in one of the toughest regulated markets in the world, we’re rapidly proceeding to apply it to other geographies and services as well such as renting a car, self-checking into a hotel and one day, even voting.”

Onfido CEO Husayn Kassai also believes that the pilot’s success can be attributed to using Onfido’s AI-powered identity verification, Evernym’s blockchain-based technology and Deloitte’s devised governance framework. These are part of the early wave of solutions to be tested in regulatory sandboxes.

Using the Cloud to Create Secure and Controllable Data

Onfido’s goal is to have an identity solution that allows users to have control over their identity and a high degree of security and privacy. However, instead of storing the data device-side like the majority of blockchain approaches, Onfido stores identity data on a private cloud server for a specific individual so no one else can access it. To save consumers from understanding the intricacies of private key management, they offer an interface that aims to make this process more simple for users. When users enroll and give consent to create this cloud database, Onfido creates for them a private server to store their credentials and personal data, such as a copy of their ID and biometric profile. Then, Onfido can no longer access it once it’s established. This model allows users to give provisioned-access to relevant parties, giving or denying permission after they use their facial biometric to unlock access.

The Results and Future Steps

The pilot looked to validate market appetite from users and service providers in order to prove the practical application and business relevance of digital identity. Overall, the testers were able to successfully open financial products using their digital credentials. According to results from the trial, more than half went on to reuse their digital credentials to sign up for multiple live services. In addition, of those that participated in focus panels, the majority stated they would recommend the solution to a friend.

“Our work alongside Evernym, Onfido and other industry participants has demonstrated the practical applications and business relevance of portable digital identity within the FCA regulatory sandbox,” said Derek Ryan, Deloitte Partner. “We believe that the emergence of a portable digital identity provides a unique opportunity to build an open and scalable ecosystem which can help improve customer experience and protection, solve an institution’s onboarding challenges, and also create new and scalable business models.”

Updates to the UK’s Money Laundering Regulations that came into force on January 10, 2020 should allow the use of electronic identification of customers. This will help pave the way for the next phase of the portable identity pilot and prepare it for the UK market.

“The pilot has been a shining demonstration of how portable digital identity can transform markets and solve real business problems in a way never before possible,” said Steve Havas, CEO of Evernym. “When you put the individual in charge of her digital identity, everyone wins. It gives consumers the freedom to securely move about the digital world, and businesses the ability to finally know and trust who they are interacting with.”