Identity theft – a global, billion-dollar worth problem
Identity theft poses challenges for consumers and businesses and is a billion-dollar problem worldwide. Every two seconds there is a new victim of identity fraud, and in the US alone, there were 1.4 million reports of identity thefts in 2020. Social media users have a 46% higher chance to fall into the hands of cybercriminals because criminals are actively seeking their targets on these platforms.
According to Accenture there are three main drivers behind cybersecurity threats:
- Evolving targets: data is no longer the only target of cyber frauds. Companies worldwide are seeing their controls systems and infrastructure being hacked.
- Evolving impact: Cyberattacks are changing approach from simply stealing data to destroying or altering it to create distrust.
- Evolving techniques:Criminals are targeting the weakest link – people – through malicious insiders.
This, unfortunately, generates compliance and regulatory rules that are obstacles for companies in the process of scaling up their business while they want to make sure to maintain security and User Experience.
Idwall – offering cutting edge solutions to tackle the problem
Idwall is a startup company that developed a software to help small and medium-sized businesses in the customer credentialing process. The solution involves machine learning and other cutting-edge solutions to tackle the problem in the most efficient way. Idwall provides businesses with document validation, background check, and identity verification solutions and services. Moreover, the solution offers an alert system that enables users to verify their data in signups and purchases.
Idwall was founded in 2016 and is headquartered in Sao Paulo. In Brazil, actually, it is estimated that identity fraud-related crimes cost the country about $15 billion a year. The country is ranked second in the world regarding online fraud and identity theft. This also affects the country’s economic relationships with other countries.
Lincoln Ando and Raphael Melo founded idwall to address this urgent issue. The company started as a solution providing an automated background check, but by today it has grown into a successful business serving customers with a variety of data and identity validation products. The rise of fintech, marketplaces, and gig-economy startups made the solution offering automated background checks essential.
What’s behind the solution?
Idwall relies on machine learning algorithms and artificial intelligence to help companies “build a seamless digital onboarding process” and mitigate external risks using face match, background check, and automated optical character recognition (OCR). The APIs search for and verify personal documents and information in both public and private databases. The first step in the verification process is verifying that the ID of the user is authentic. Then the process entails a full background check based on the data of the owner. The whole verification and background check process takes less than three minutes. The solution ensures compliance such as Know Your Customer (KYC) and Anti-money laundering (AML).
The history of idwall
The founders realized the problem of cyber fraud early on having worked to create a digital bank. Lincoln Ando, while trying to solve the problem, concluded that large companies are too slow to innovate, so he went to the USA to continue his training in security. Then, Ando worked at a marketplace to rent construction equipment and soon enough realized that it is extremely difficult to establish a relationship based on trust in case the two parties do not know each other. People would create fake companies, then rent their non-existing equipment just in order to steal the money.
A year after the start of idwall, in 2017, the company has attracted funding from two Brazilian venture capital funds in the Seed Round: Canary and Monashees with a total amount of R$2 million. Then, in 2018, in Series A, a round led by Monashees followed by Canary and other companies, such as Mercado Livre and Fundacio Estudar, the startup received an investment of R$9 million. In Series B, the company attracted R$40 million and became the first Latin American company receiving investments from Qualcomm Ventures’ AI fund. This round also featured ONEVC and Globo groups, as well as, among others, the previously mentioned Monashee and Canary. By 2020, the company already grew to have more than 100 companies as their customers and 80 people working for them on offering a solution against identity theft.
A growing number of customers
The company has successfully implemented the solution in collaboration with several players in the Brazilian market. Its customers include Zazcar, a car-sharing company; Loggi, a logistics company; Movida, a car rental business; the ride-hailing app, 99; and iFood, the food delivery platform. These companies combined have an estimated $4 billion in value.
Qualcomm’s participation in the technology
Once Qualcomm learned about idwall, the company’s venture arm was eager to work together with the startup, so they could leverage Qualcomm mobile platforms, AI processing technologies in order to achieve higher efficiency. Qualcomm is an American multinational corporation headquartered in San Diego, California. It produces semiconductors, software, and services related to wireless technology. It also owns patents critical to the 5G, 4G, CDMA2000, TD-SCDMA and WCDMA mobile communications standards. This collaboration was an extremely important validation for idwall.
ONVEC as another important investor
Alongside Qualcomm Ventures and others, ONVEC also invested in idwall predicting that the company is positioned to earn a significant share of the markets due to the need to solve fraud events that caused Brazilian companies to lose approximately $18 billion in 2017 only. Investors, such as ONVEC, also saw the opportunity regarding the changes in regulations, since the Brazilian Central General Fintech Regulation created a new wave of fintechs that needed the service of idwall. Furthermore, the adoption of the solution supports existing laws, such as the Anti-Money Laundering and Anti-Terrorism Laws.
Why investors saw the considerable potential
MeuID is the digital identity solution that centralizes the personal data of the clients of businesses. Idwall is the first organization, including the public and private sectors, too, that creates a centralized identity for citizens, connecting biometrics with the personal data of users. This also proves to be promoting the future in different ways, strengthening Brazil’s new regulations on LGPD and Europe’s regulations on GDPR, which are both emerging and gaining momentum. If trust is firmly established regarding idwall, it may become the number one application businesses and customers will opt for when it comes to protecting identities.
Data Network Effect
A company’s product or service may become more valuable as its usage increases, and additional usage of that product yields data that then establishes the foundations for the Data Network Effect. This, in real life, would mean that the listed car-related service providers, for example, might attract several companies with a similar profile, and each new company with the same vertical would add more value to the network making the product more attractive.
Good business relies on good data governance
Privacy protection design, transparency, informed user consent, and codes of conduct will be vital for any businesses in their customer interactions. The process of this transformation has really been accelerating, and we found ourselves in a new era of innovation and technologies. With the help of artificial intelligence, biometrics, and privacy protections we will create a foundation for a more digital future without compromising our security standards.