We sat down with our CEO, James Varga, to get an insight into the company, products, and industry he has had so much involvement with over the past 10 years. Why did he create The ID Co? What is the company here to do? and where are we going? Here's the result:
IDCO: What is The ID Co.?
JAMES: I set up the The ID Co. In 2011. I’d worked in other big FInTech’s including household names in the UK, and felt that there was change in the air. There had been talk of bank data in the UK even before that time, and I knew that were I able to get in early, that it would take off as there was just so much untapped benefit for consumers. Of course, we weren’t to now at that point that it wouldn’t be until January of this year before bank data, what we now call Open Banking, finally became a reality in the UK! We were way ahead of our time, and in many respects, are still leading the curve. We now offer solutions in over thirty countries, with our products based around bank data.
IDCO: What does The ID Co. do?
JAMES: Your bank holds all kind of information about you. It knows you better than anyone else. Using that bank data can be a secure and knowledgeable way to operate online. The goal of The ID Co. Is to break down barriers in finance, remove friction and offer speed and convenience for consumers. Whether this is by offering customised services in seconds, verifying your identity online, or seeing multiple bank accounts with one login, there is so much across banking and finance that innovation can improve.
IDCO: Where are you HQ’d?
JAMES: We have always been based in Edinburgh. Earlier this year and after growing in headcount to almost thirty we knew it was time for us to find some premises that could accommodate our significant groth in size. We were very deliberate in choosing a location where there was both room for us to grow, and where the team could locate to simply and easily. We were very fortunate in finding Norloch House in the city centre. It is seconds away from Princes Street, and our windows look out to the Castle.
More than that though, we were determined always have an Edinburgh base. Aside from having a team who are based here, I knew from early on that Edinburgh would always be our home regardless of how many countries we operate in. Edinburgh and Scotland is a great location for a FinTech company. The support we have from external agencies, the proximity of other technology firms, as well as the big financial institutions – who are almost across the road from us – make it a great spot.
IDCO: What prompted you to create The ID Co.?
JAMES: First principles. All of the products and services that we have created are based around real-world pain points. There is a huge volume of products or services that we could task our developers with creating, but ultimately, if they don’t solve a problem or make a process better, they won’t have any real-world value. That’s why we have been very selective in the work we have done. We have already had considerable success with our B2B platform DIrectID, integrating with financial institutions to bring the benefits of Open Banking to their customers. We have just launched our consumer facing app, NoMo. The fear that many people have around addressing their finances must be tackled, and we feel that NoMo – through a clean interface and just a sprinkling of personality – will help people to actually keep tabs on the money in their current accounts.
IDCO: Tell us about DirectID?
JAMES: DirectID is the primary service provided by The ID Co. Through DirectID individuals are empowered to utilise the trusted data from their bank and other secure accounts. This gives companies the ability to make more informed affordability assessments, increase operational efficiency and reduce fraud through real-time financial data reporting and analytics.
Companies use DirectID to verify the identity of their customers or applicants, carry out regulatory and compliance checks such as Anti Money Laundering (AML) or Know Your Customer (KYC) and to assess affordability and spending patterns.
IDCO: And what is NoMo Money?
James: NoMo (for no money, mo money) is a simple financial cashflow tracking app, built for personal consumers. The app offers users an honest appraisal of income and outgoings, simply, and with a human touch. Ultimately, regardless of where we are in the month, or how long it is until pay-day, we all want to know the simple answer to the question “Do I have enough money to go out tonight? Or order pizza? Or anything else?”
NoMo was designed to make individuals feel more confident about their money. We know that many young people, in particular, do not check their current account balances because of fear of what they’ll find. NoMo aims to give people that confidence. We know that it takes confidence to engage with your finances, and we hope NoMo will offer that.
IDCO: We’re frequently asked if users data is safe. Is it?
JAMES: Yes absolutely. DirectID shares your information only with your explicit consent with the company that requested you to verify. The use of DirectID is users consenting for their information to be shared with a company to access their products or services.
The important thing to note though, is that when logging into DirectID, neither The ID Co., nor the business requesting verification will ever see, store, or have access to individual’s credentials. Moreover, our security model is bank level, layered and protected by tokenised OAuth authentication and strong encryption. All transaction data is encrypted and access to customers’ bank information is read only.
IDCO: What’s next?
JAMES: We’ve already had a very successful 2018. In the early part of the year we moved into our new offices in Edinburgh city centre as I’ve described. Since then we have made significant investment in developing the teams with The ID Co. Marketing, product, operations and our development team have all been expanded to prepare us for future growth. We have become regulated by the FCA and launched with a leading UK retail bank, Clydesdale, and live within the B mobile banking app. We’re seeing considerable traction in the UK and the US, so we’re preparing for that by having a full-time presence in the United States. With the regulations now in place, and new versions of the Open Banking standards being refreshed at speed, we’re well prepared for growth.
IDCO: There has been much talk around Open Banking. What will be the main impacts and who will be the beneficiaries?
JAMES: As to the beneficiaries, that’s easy. The whole point behind the introduction of Open Banking is to benefit the consumer. Customer’s will have more options in every aspect of their financial lives' courtesy of Open Banking, from current accounts, credit cards and loans, to mortgages and car loans. The example I often give is if I am at a car dealership with the intention of buying a new car, should I phone my bank with the intention of taking out a £5,000 loan at a flat rate of interest, or be offered a loan tailored to my exact needs, taking into consideration the cost of the car, and how much is in my current account at that time, in mere seconds. Ultimately, Open Banking will save consumers time and money as applications can be processed in seconds, tailored so they won’t pay any more than necessary.
Another benefit to the consumers will be the for the first time, they will have real choices in who they use for their banking requirements. If we look at a typical consumer who may have a couple of bank accounts, a credit card, a loan and a mortgage, with two or three providers, do they know what the best deal is that they could get is? Sure they can shop around on a price comparison site, but even then, the figures stated are just typical APR rates, they don’t reflect either the requirements of that person, or take into consideration such as their ability to repay credit. Open Banking will see power move squarely into the lap of consumers.
The big banks have accepted that Open Banking is happening and have for the most part, been helpful. It will be interesting to see their full response in due course, and how they will seek to gain a competitive advantage through Open Banking. Historically, they have managed to hold a monopoly on customers for two reasons. 1. the need for customers to be able to visit a branch; and 2. they held all our data. Now that customers are have stopped frequenting branches with anything like the same regularity as they did in the past and Open Banking has relinquished data back to the consumer, banks’ response is being viewed very closely.
IDCO: What’s the future for Open Banking globally?
JAMES: I think it’s very positive. It’s fair to say at this time that the UK and EU are leading the way with the second Payments Services Directive, but countries across the globe are watching to see how things progress in the UK. That's certainly part of the reason why I’m so passionate about making a success of it. Even in the last few weeks, there have been significant announcements come out of Singapore, New Zealand, Australia and Canada. There has also been recent news from several of South American states such as Columbia and Mexico. While progress in the United States has been slower than we perhaps anticipated, there’s no doubt that there is a groundswell of support coming together in the US. Overall then, we’re pretty confident that beyond the confines of the UK and EU, where Open Banking is now a defined phenomenon, there is enough progress to be sure that Open Banking will become a global success story.
IDCO: And you’ve started your own meetup group on the subject?
JAMES: Yes, myself, and Ross Laurie had the idea of getting all the interested parties together on an informal platform to meet and debate the various strands of Open Banking. It’s been a great success and now in both Edinburgh and London every month. We’ve held four or five Open Banking Excellence meetup groups, and the take-up has been fantastic. Currently we’re holding them in the event space at The ID Co. which is the perfect venue, as it provides us with the space we need as well as a bar, so we can serve some complimentary beer and wine to those who give up their Monday nights to join us.
Beyond that, we’re very informal. We pull together a group of speakers who talk for no more than half an hour then offer up the floor to everyone who’s attended so they can discuss and debate, and illustrate use-cases for Open Banking. We’ve had 50-70 to each group, made up of technologists, Fintech’s, regulators and representatives from financial institutions. This way everyone in the ecosystem has an opportunity to share their views and how we might work better together to provide value for all.
With the success we had in Edinburgh, last month we launched in London. Again, we were delighted with the take up with about another 60 attending. OBE: London will certainly become another regular event in our calendar and I’m delighted to have the presence there. Beyond that, we have had expressions of interest from across the globe of companies and individuals who wish to create their own OBE. I’m sure by early next year we’ll have more than one “international chapter”. This again, illustrates the global appeal of Open Banking and its spread across the globe.