Esigie Aguele on digital identity in Nigeria
Last year, we had a sit-down with Esigie, Aguele, Co-founder and CEO of VerifyMe Nigeria. He gave us quite an interesting take on digital identity in Nigeria.
Give a brief take on the state of play in the digital identity space post COVID-19.
We have seen an explosion in the demand for consuming digital identity data post-COVID. I think that the pandemic exposed a big gap in industries so much so that it became necessary for companies to provide remote services and also evolve a viable alternative, as against having customers walk through the doors to access services, while still maintaining the ability to scale. It was clear that companies needed to plug into a strong infrastructure that could enable them leverage digital identity for their operations. That was largely VerifyMe’s experience as we saw a spike in customers’ demand for ID verification infrastructure to boost their operations. So, in summary, we can say that COVID-19 accelerated customers who required using digital identities for scale in their business.
How can digital identity drive economic recovery?
Digital identity doesn’t just drive economic recovery, it’s the foundation of any kind of economic growth because in order to recover, you need to grow.
In VerifyMe, we visualise the criticality of digital identity to the economy from a four-stack perspective using a technical, operational and regulation lens. If you look at the history of payments in Nigeria, you will see that it aligns with our view. For example, the Bank Verification Number (BVN) became really important over 10 years ago because banks needed to grow by enabling people to make payments via transfers. To do that, there had to be a digital identity infrastructure in place.
So, in the first layer, what is needed is the ability to exchange payments leveraging digital identity so that people can buy goods and services. This transaction can also happen physically but in order to facilitate payments in a way that will enable scale and ensure that it’s secure, safe, and can be done anywhere and anytime, you would need a trusted digital identity which is also regulated, not just any digital identity. That’s where the National Identification Number (NIN) as well as the BVN come in.
The second layer is securing payment which digital identity enables. You would see that we now have all types of payments because there’s so much innovation in that sector. VerifyMe also plays in that sector by using digital identity tools like biometrics and others to secure payments as well.
Now that unlocks the third stack for us which is the data as a service layer. By that we mean the ability to use the attributes of these payments — payment types, frequency of payment, payment amount and all the different metadata associated with it — to create valuable information and insights into the customer and provide affordability and credible worthiness information on customers.
The fourth layer is what we refer to as the Open Finance Maturation, where the data as a service maturity can be used to evaluate customers in order to unlock opportunities in areas like mortgages, for instance, which is currently grappling with more than 16 million home mortgage shortfalls in Nigeria. It can also help in unlocking other opportunities like in the auto loans and insurance space which are both massively under-scaled at 0.3 to 0.5 penetration on maturity and have the potential to grow into $800-$1billion industries. Imagine getting to a point where we can leverage digital identity to achieve all these maturities. In Nigeria today, we have only about 60 to 70 million people properly documented. Imagine having that number rise to 150 million and then having those folks financially included. Now, imagine being able to get data as a service and credit information on all those 150 million people. Imagine what impact that would have on the economy and our economic growth. This is the line of sight that digital identity has on economic growth. We believe it is the foundation and there is no economic growth without it.
When one thinks of digital identity, customer on-boarding and KYC for fintechs and the financial systems readily come to mind. What opportunities exist in other sectors, if any?
This is one of the areas where VerifyMe is unmatched. We are really across all sectors and industries for anyone that is looking to consume customers’ data or even specialised customers’ data. For example, in the insurance space, we provide key and licensed information such as the driver’s license information, so we can onboard identities using even your specialised identity for the kind of sector you are in.
Insurance companies also use NIN for different types of products depending on their needs. VerifyMe is also across the board in betting companies, and for pretty much anyone who is looking to consume customers’ data at scale. We are really an infrastructure for compliant checks, be it for utility companies or others. In the future, people should be able to access a wide range of services for whatever utility they are looking at just by picking up their phone and giving their NIN. In the telco space as well, we are working towards a future where one can purchase products and have the line and phone delivered postpaid. These are all the areas that digital ID will unlock. And one key reason why we are across board is that we really have access to all the necessary trusted identities. We are the go-to ecosystem for that, and we match that with a logistics engine that can also provide any type of tiered account opening for on-boarding customers whether it’s Tier I, Tier II or Tier III. So, we play across board in all spaces for anyone who is looking to consume customers’ data at scale.
As one of the private sector partners licensed by NIMC to provide NIN enrollment services, can you share your experience on the project so far, challenges and milestones?
It’s been challenging, to say the least. However, I think whether you are looking at it from the government side or from private collaborators like VerifyMe’s side, we have all been trying to walk through the technicalities. What I would look at is the result and I think it’s quite impressive that we have gone from 30 million to 70 million people documented in eleven (11) months. That’s 40 million extra people. A lot of work has been done there. It’s a growing pain and I think there are still a lot of hurdles to overcome so that we can do more in the ecosystem. I believe some of those steps are being taken and we will see even more results in the coming months.
Address verification seems to be the rave in the eKYC space at the moment considering the wave of new entrants into the segment. What is driving the surge, and based on your first-mover status, what trends are you seeing?
I think companies are coming in to see how they can solve the problem of addressing which is really a good development for the industry. Though, I would say unfortunately for them,
VerifyMe is already here and kind of large in this space and we are a first mover. We built the first digital addressing infrastructure about three years ago and we started with two banks, one of which was Diamond Bank (a customer of ours at that time). Now, one of the things we had to address was the Central Bank of Nigeria’s directive which requires that all addresses used for Tier III account openings must be physically verified by designated personnel in order to ensure that they are Anti Money Laundering (AML) compliant. I think one of the issues with addressing is how do companies who want to open 1,000 or 10,000 accounts a day do it at scale? This is one of the reasons we actually evolved our agent network where we now have almost 30,000 agents conducting address verifications across the country for our banks. Sometimes, they do more than tens of thousands of address verifications every month. What is essentially driving the surge is the need for banks and fintechs to open more Tier II and Tier III accounts.
However, two things are happening. One is the rate of account opening which can be as high as 50,000 to 100,000 accounts a day. The question now becomes, do all these accounts need a Tier III level address verification type account opening? This was why we launched our second product last year which we called VeriFind. What we have done is to build a selfsolution and now an SDK (software development kit) that allows our customers easily obtain insights into their own customers’ location, giving them information about the environment that the customer is in and using 4D information over time to tell them whether that customer really lives in that location. We’ve built all this technology to take the headache away from our customers and provide a cheaper solution to Tier III where it’s not really needed. What’s so great about VerifyMe is that our whole API hub is a combination of real-time services for full compliance, secure, safe KYC, where you can do authentication and we bring in the logistics hybrid model when needed. Take our addressing service for example, our customers at any given time in their workflow can choose whether they want to call the Tier III level addressing service or the 4D addressing service, so they don’t waste funds always trying to do a Tier III address verification on their customers where it’s not needed. So, these are some of the services we offer, and therefore folks are realising now that this is a big space. At the end of the day, there is a national security aspect to this especially when foreign organisations are dealing in the addressing space and get to where they have information on ‘probably’ where generals live in Nigeria or where national security officials live, where civil servants are located and how they move. These are regulations that I think the government in the future should look at so that we can also have national security in mind when we build for our country.
So, some of the trends we are seeing is innovation in addressing where we are providing cheaper, faster, real-time products. Another interesting innovation — and this is unique to VerifyMe — is that we are delivering AML compliant Tier III address verification real-time from other sources. So, for example, if somebody has gone to do his or her driver’s license, FRSC has collected their information in a Tier III manner and we would be able to give that information during identity verification. This is also how I think addressing is going to evolve. If you look at Nigeria’s landscape and ecosystem, there will be authoritative sources of addressing repository. Eventually, I think government agencies, states and even telcos would be the ones providing the addressing information that we will pull from as the current Tier III model is definitely not sustainable over the next three to five years.
What are your predictions for the digital identity and eKYC sector in Africa in the next 10 years?
My predictions on the digital identity and eKYC sector in Africa in the next ten years will be that it would have produced a couple of unicorns. We are not there yet but that is our ultimate goal. I also believe it will have evolved. I will say for Africa, it’s not necessarily going to be what KYC onboarding is in the West, but I think if you look at the models in Africa, it’s more about infrastructures that will survive. My prediction is that there will be unicorns over the next ten years and hopefully, VerifyMe is one of them.
Recent communications from VerifyMe says you are currently witnessing 100% growth month on month. What does this mean for the future of the company?
Yes, some months we see 100% which is very good, some months we see 40%. The minimum we’ve done month to month is 40% but some months we see about 200% as well. I think earlier this year between April to May we were about 200%. It’s been a fantastic year for us. What it means is that the future is very, very bright. We are building our teams and bringing in the best and brightest to continue to grow our infrastructure.
For VerifyMe, it also means that we are well on our way to achieving our goals and our mission and building for our country. We decided to focus on Nigeria because we knew we needed to go deep and wide. A few years ago, folks thought that was a mistake but looking back in hindsight, we are the fastest growing in the digital identity and KYC segment of the country and that’s because our Nigerian companies called us, and we answered the call. Today, we have over 400 companies that are using our APIs and we are really growing at a significant rate. The future is bright. We are very excited about it. There are going to be many announcements in the short term and the long term about very exciting things for our company. We look forward to it.