Helping firms manage risks and detect frauds
When an insurance firm received a claim on a term insurance of ~4 million from a supposed nominee, it decided to run a check and outsourced the job to a start-up, which subjects such claims to 80-odd process checks. The start-up found a selfie of the insured three days after his supposed death and alerted the firm.
‘‘ We detect fraud in people transactions. While on-boarding people — getting a job or taking an insurance or a loan — there is a chance of a fraud. We try to catch that as fast as possible,” says Ashok Hariharan, founder of IDfy — a risk and fraud mitigation platform that raised ~220 million from Japanese fund Dream Incubator, NB Ventures and NEA last week. It had raised $3 million in 2015 from NEA, Blume Ventures and Beenos.
IDfy processes nearly 100,000 transactions a month. Among IDfy customers are the companies that conduct background checks on prospective employees, sharing economy where a cab or logistics firm needs information about antecedents of its drivers, and lenders to check loan fraudsters, identity thefts or special frauds.
As digital transactions rise, companies are looking for better and faster ways to manage risk and fraud on a real-time basis. The market is estimated at $1 billion. ‘‘We are like a road; infrastructure on which you can build any transaction,'' says Hariharan. IDfy customers include 11 insurance firms, 40 lenders and 150 companies who use its services for hiring.
The company has four platforms that are used by fintech companies to identify — verify the document, extract the inputs, and eliminate data entry — authenticate, detect frauds and determine eligibility. In fintech, its services are used by seven sub-segments: insurance, loans, credit cards, KYC verification, demat, credit bureau, NBFCs.
IDfy offers ID verification on a real-time basis, court verification for HR and sharing economy and address verification, which it outsources. They do physical verification, but the process is controlled by the firm. For finance firms, it offers database-based verification for fraud detection.
The company follows a utility-based pricing, similar to software as a service (SAAS) firms, but charges on per person, per verification basis. For fintech customers, it charges a set-up fee and AMC (annual maintenance charges), which comes with some credits, after which users have to pay per person. The AMC could be ~20,000 to ~500,000.
The charges depend on the case and the type of verification, but usually range between ~200 per profile in fintech to ~500 for driver verification and up to ~2,500 for HR background verification.
IDfy hopes to break-even at Ebitda (earnings before interest, taxes, depreciation, and amortisation) level in 9-12 months by when it hopes to double its monthly transactions to 200,000. It has to keep building technology and products that can help it find new ways of detecting fraud and catch different types of fraud. It will keep focusing on insurance and loans, and to grow three-four times in 15-18 months in India.