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Canadian entrepreneur James Varga, founder and chief executive of online identity firm miiCard, is a veteran of financial technology start-ups. Living in Edinburgh, Varga set up Money Dashboard, a personal finance aggregator enabling users to consolidate all their bank accounts, credit cards and financial data in one place and then search for savings.
“Personal finance management and other consumer finance tools are a great ideas, but what consumers really want to do online is actually transact online,” Varga says. “If the way to save £200 on mortgage services is to refinance, that quickly encounters the great challenge for financial services relating to know-your-customer, anti-money laundering, fraud and all the rest about verifying a user’s identity. It’s a big obstacle when trying to deliver the convenience and frictionless user-experience consumers demand.”
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My bank has already done all the KYC and AML checks on me. We simply saw a way to take your bank-verified identity and then use that in other ways James Varga, miiCard |
For high-value and risk transactions such as mortgages and consumer loans, providers and consumers still face cumbersome identity verification processes. These may, for example, require borrowers to scan and email copies of passports or driving licences that lenders must then manually verify.
miiCard believes it has found the best way to establish a reliable online passport by piggybacking off the credential checks that consumers use to access their online bank accounts. “Not only has my bank already done all the KYC and AML checks on me, it also has a lot of information that relates directly to me as a physical individual. We simply saw a way to take your bank-verified identity and then use that in other ways,” says Varga.
“We do that partly through partnering with Yodlee, the leading bank account aggregation with over 65 million users, with whom we have some global exclusivity. It’s important to note that we don’t ask consumers for their bank account numbers or sort codes, which you share every time you make a payment, write a cheque and so on, but something only they know: their bank credentials, that can be used to prove their real identity.”
He continues: “miiCard is a much better and more reliable way of establishing identity online to a very high level of trust than the typical request for name, address and date of birth. I’m afraid that fraudsters do not find it difficult to source those details on almost any individual. As a result, lack of trust around identity remains one of the biggest obstacles to high-value business really taking off online. It’s easy to buy books and CDs online, nowhere near as easy to get a mortgage or a car loan.”
The company so far offers two products: miiCard is a digital passport for consumers; DirectID is a business-to-business verification service that allows businesses such as banks or consumer lenders to embed the miiCard identification engine when signing customers up. “We can even go so far as allowing consumers to select which parts of their financial data – for example bank statements showing monthly payments from employers – they want to show to third parties.”
The uses are many. “Say you want to buy a car and you find the dream model. You’re sitting at the dealer who’s offering 0% finance for the first year but then 30% a year after that. Wouldn’t it be great to go online first, search for the best financing deal, verify yourself online, get the money paid into your account, and then go to the car dealer and buy the car with your bank card?”
The service is free to consumers, while miiCard charges a small amount to vendors on each transaction. miiCard works in 10 countries, DirectID in 30. It’s a potentially vast market. “Half a billion people could do this tomorrow,” says Varga, who says he is not aware of any direct competitor providing a consumer-centric online identity service.
Though the company is based in Edinburgh where Varga lives, he is enthusiastic about fintech industry body Innovate Finance. “I was introduced to Innovate Finance by DueDil. We’re not in the same business as them but saw some potential synergies and overlap, which we discussed. I’m from a bootstrap background. The value for me in fintech clusters like Innovate Finance is simply that they bring together people who want to get stuff done. There’s obvious ways we can help each other. We’re working with a peer-to-peer mortgage lender and with other fintech start-ups. I could see ways in which, as our users grow, they might make a great potential customer list for other new companies disrupting the traditional lenders.”
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Is he thinking of an exit yet? “We have a lot of capital and strategic support to grow this company. Sure, we’re a funded company, and if someone came and offered us crazy money we’d take it. But the only way that will happen is if we build value, and we’re now in the early growth stage of doing that. In the fintech world you have the incubators, which really provide proof of concept, then accelerators where companies actually launch. Then there’s real market testing. And it’s only when you’ve been up and running for two or three years that you find people coming back to you and saying: ‘So, you’re still here. Now we can have a proper conversation.’”
