Identity verification startup Incode raises $220M
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New challenges have emerged in identity verification as business moves increasingly online during the pandemic. Companies, facing an influx of new customers to onboard, have in some cases loosened security controls while trying to contend with dispersed anti-fraud teams. A recent study commissioned by One Identity reveals that 95% of organizations are facing challenges in digital identity management. Another study published by IDology found a 53% increase in fraud attempts across nearly every channel in 2020 — with identity verification reported as the biggest challenge to combating fraud.
Demand for solutions is expected to drive the identity verification market to $21.9 billion in value by 2026. One of the beneficiaries is Incode, a five-year-old, San Francisco, California-based startup offering an “omnichannel” biometric identity platform for banks, financial institutions, governments, and retailers. Incode today announced that it raised $220 million in a series B funding round, led by General Atlantic and SoftBank with additional investment from J.P. Morgan and Capital One, that values the company at $1.25 billion post-money. CEO Ricardo Amper says that the proceeds will be be put toward product development, customer support, and marketing efforts.
“As is the case with the digital world in general, the pandemic has fostered remote and touchless interaction worldwide,” Amper told VentureBeat via email. “Incode’s technology did not originate in the pandemic, but when it hit, we were ready and equipped to help people get access to their medical records, banking information, and ecommerce services from their homes in a safe, friendly, and timely fashion. Since the start of the pandemic, the interest in Incode’s technology has exploded and the company has grown exponentially in the last two years.”
Incode initially launched an app that automatically recognized and shared photos with everyone in them. This contributed to a dataset of tagged people from around the world, which the company repurposed to train the AI models powering a product suite called Omni.
“Soon after the release of the consumer product, I was was approached by several large financial institutions and governments to see if Incode’s technology could be used to identify customers when they opted in to a service,” Amper continued. “Incode soon shifted its resources to develop a single platform.”
Omni comprises a set of software development kits and APIs compatible with cloud-based and on-premises environments, web browsers, and operating systems. The kits offer liveness check technology that leverages machine learning, light modeling, and computer vision in addition to fraud and tamper checks designed to detect potential threats.
Omni provides a number of prebuilt solutions intended to integrate with existing systems. For example, companies can use it to onboard users from the web or mobile, or verify purchases using facial recognition from kiosks that cross-reference government-issued IDs. Incode also pitches its technology as a way to “gain marketing insights and comply with age validation requirements” as well as “greet and recognize customers” as they walk into a hotel or brick-and-mortar store.
Above: Incode’s health-checking platform for businesses.
Last year, joining the throngs of startups clamoring to deliver biometric-based “back-to-work” solutions for enterprise, Incode introduced HealthID, which uses facial recognition, testing certification, temperature checking, and mask and hand sanitization to screen employee health. At the time, Incode said the system was compliant with both HIPAA and the European Union’s GDPR.
Unless deletion is requested, Incode retains personal data “as long as [a customer has] an open account … or as otherwise necessary to provide [a customer] with its services.” For residents of the State of Illinois, which has stricter privacy regulations governing biometric data, Incode retains personal data for a maximum of three years.
Even as face-based payment and verification systems become more common, particularly overseas, consumers remain wary of the technology. According to a 2020 Myplanet survey, 70% of shoppers would hesitate to use in-store facial recognition, and 65% said that they’re uncomfortable with the idea of biometric-targeted ads.
In March, Incode — whose total capital raised stands at more than $253 million — said that it had quadrupled revenue and its customer base in the past 12 months and planned to triple the size of its workforce in Europe and North America. In a previous interview, Amper said the ultimate goal is to “set global standards of digital identity.”
“The [new] funds will be used to accelerate Incode’s growth in Europe, the U.K., Middle East, United States, North America, and Latin America, and to aid in expanding its market-leading technology and engineering teams,” Amper said. “We have over 100 enterprise customers, including global banks, hotels, global fintechs, governments, and marketplaces.”
Investors continue to pour hundreds of millions of dollars into identity verification companies. Earlier this year, SentiLink, a startup developing a platform to detect identity fraud, raised $70 million. Identiq has landed tens of millions to build its product that verifies identities using a cryptographic network. In March, Jumio secured $150 million to grow its image verification-based onboarding solution. And Socure landed a $450 million tranche in November.
Driven both by the pandemic and the increasingly digital nature of transactions, identity fraud losses reached $56 billion in the U.S. in 2020. Unemployment fraud alone totaled $400 billion. Dovetailing with this, the demand for identity verification solutions has steeply increased as more organizations build an online presence and look for growth opportunities. In a recent survey, 79% of businesses said that they’d even rather have digital transaction security than new customers.
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