Identity verification central to any fintech startup portfolio

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We approached one of our regular guest writers, Jonathan Jensen, to find out what role identity verification is playing in the fintech sector in Europe and what role it may play in Asia as deregulation of finance markets takes hold.

Jonathan is commercial director, identity verification at GBG Plc in London. GBG are global specialists in identity data intelligence offering a series of solutions that help organisations quickly validate and verify the identity and location of their customers. The products are built on an unparalleled breadth of data obtained from over 200 global partners. The innovative technology leads the world in location intelligence, detects fraud and enables the firm to verify the identity of 4.4 billion people globally. 

How has your company found working in the fintech sector in Europe?

The European fintech sector is an exciting and vibrant space to be working in. GBG’s identity solutions help our fintech customers meet their regulatory obligations, ensure they know who their customers are and protect both our customers and their customers from financial crime. 

How have you found working with more established financial institutions such as retail banks?

GBG’s customer portfolio stretches right across the financial spectrum. We have excellent relationships with retail banks who appreciate the wide range of data sources and solutions we provide access to. Retail banks typically have a more diverse financial product set and range of customers than fintechs, so GBG’s ability to customise identity checks to specific risk based approaches is appreciated by our customers.

Going forward, what are your goals and ambitions?

The goal is, as always, for GBG to continue listening to its 19,000 customers around the world, and continue helping our fintech and wider financial services customers build on their current market success. We will remain at the forefront of the identity market, play a key role in developments like digital identity and continue to help our customers combat the changing typologies in money laundering.

In terms of regulation, what do you anticipate could happen in the next five years?

Regulation will continue developing in order to protect customers and mitigate the scourge of money laundering and ‘dirty money’. The overhead of regulation will be balanced by increasing sophistication and effectiveness in the tools deployed to support it. One benefit of increased regulation will be a more collaborative approach across financial services to combat financial crime. This will manifest itself through increased data sharing and the emergence of digital identity schemes.

What do you make of the trend of fintech companies buying banks i.e. Raisin?

This is an exciting element of the competition in the fintech space. Fintechs have the skills and imagination to make a big impact on existing banks. We’ve already seen the impact of Monzo and Starling on the traditional banks in terms of their app functionality. The digital challengers have forced the traditional banks to up their game and start to improve their apps. Fintechs will need to manage the potential for a clash of cultures when combining their style with more traditional approaches. 

What are the greatest challenges facing the fintech sector?

The traditional players, like the banks, will fight back with their own enhancements which will put pressure on fintechs, however this will be mitigated by continuing innovation in the fintech sector. As the competition between fintechs increases, the pressure to differentiate from their peers will also increase. 

What kind of trends do you anticipate we could see occurring in the fintech sector during the next five years?

We will continue to see innovation and new ideas coming out of the fintech sector. I see more partnerships between fintechs and traditional players with established banks keen to learn from fintechs and leverage their talent. Ultimately, the pressure on traditional banks will intensify as challenger banks reach critical mass. So far traditional banks have reacted by closing branches and tweaking their apps, so it will be interesting to see what further steps they take to maintain their relevance.

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