Transcriptions:
Kate Fitzgerald: (
Okay, we are going to get started. Welcome to day two of payments forum, starting off today with a great presentation on one of the biggest problems, plaguing all of payments, which is fraud and how to cope with that through technology. I would like to introduce you to Patrick Kelly. He is head of the Americas at Shufti Pro which is headquartered in the UK, thanks.
Patrick Kelly: (
Thank you, Kate. Hello everyone, so you are probably looking at the screen and just, Shufti Pro what the heck is that, Right? So, it is a weird name, quirky name for sure, but essentially we were in the identity verification business. So think KYC, KYB, AML those kinds of things, right? So, if you know that space, I am guessing pretty much everybody in this room has heard it a thousand times, but we were a little bit unique and we are going to, I want to talk about that today. The objective of today really is not to talk about our company, although I do have a few slides at the end, it's more about just the market in general. A lot of this might be repetitive for you guys, so I am hoping you get some info out of this for sure it's a very short presentation.
Patrick Kelly: (
I will walk through it and then take questions and then we can move forward. So first, my background I come from the biometrics industry, so I worked for a large company for about eight, nine years. We manufactured the US driver's licenses, did a lot with passports. One of the programs that I was responsible for was TSA, precheck. I am sure many of the people in this room probably have it. We were the first vendor to actually win that contract a very very big contract. So believe it or not, I am going to digress little but I actually had to. Wen we started the whole thing, I had to go to airports and I had to actually ask people for space so we could open enrollment center's. So if you have ever dealt with airports before, it's kind of a really, it's not easy.
Patrick Kelly: (
That space is valuable, especially when you are asking for it for free. So this kind of just my background, so biometrics led to identity verification and so long story short, I recently joined shifty pro the company itself was founded in 2017 and it was founded by two young guys over in Europe. So our headquarters is out of the UK. These two gentlemen worked in the banking and payments industry and both could not find a technology that would meet their expectations, right? So, that was an issue and they got together and they said, you know what? They are either too slow the coverage. Isn't very good, whatever the issue was, we have documents that are being rejected etc. I think we can do something better. So they, both of them felt like the future of the business was based on machine learning and AI, because it is just when you have human intervention you can make mistakes.
Patrick Kelly: (
And there is probably a few folks in this room. In fact, they came by our booth last day or two here. And I have had a conversation with a couple people who are still doing sort of manual reviews of that stuff. And it's doesn't scale. So I see you are smiling. So I am guessing that maybe you have seen that happen before. Anyways, it's not a really exciting topic today. I know I probably should not say that, but onboarding in this sort of in 2021, 2022 based on everything that's happened with COVID. It's definitely a challenge these days, and I am gonna talk a little bit about this as we move along in the presentation. Really what I want to talk about is, given sort of the rise in fraud across the globe, not just in the US, and that is what I will talk about that as well, being a global company, you need to know the person on the other end, that's interacting with your digital platform is who they say they are.
Patrick Kelly: (
And I don't care if it's KYC, KYI, KYB, how about KY anything, right? Which is, that's what it seems like where we are going right now. So, there is a lot of players in this space again because of where most of you come from, I am sure you are familiar with them. It's a crowded space. Look ID me, so cure and Lexus nexus. You name it, there is 50 or a hundred of these companies out there. Many of them are overhyped, they have got crazy valuations. So, you are paying an awful lot upfront just to get up and running with some of these vendors, but there are reasons for it, right. So, and I understand that and I am certainly not here to criticize anybody at all, some of the vendors are excellent.
Patrick Kelly: (
There is a the value has to meet the price at some point what they are charging for. A lot of are very US centric, because just having a conversation with someone that we in the US, sometimes I was gonna say, tend to think, but sometimes I think everything starts on the east coast and ends on the west coast and there really is a big world out there. So you really need to be thinking globally about this kind of stuff. And the more people I talk to, Latin America is a market. I get more interest right now from the Latin American market than I do in the US market for KYC, it's crazy. We get calls all the time from Latin America, so, we can support every country down there.
Patrick Kelly: (
We have a access to the documents and a lot of our competitors are still trying to get up to speed there. So point is a global solution is very important. When we do our KYC, for those of you who are involved in this side of the business typically when we say real time, it's 20 seconds to validate a document facial recognition etc, for those of you who are not to the biometrics and what not. So we like to think that is real time compared to our some of the other vendors in the market 20 seconds. And a lot of you in this room have come by already. So this is old news to most of you probably. And we have shown the demo a number of times now and it's pretty consistent with that number.
Patrick Kelly: (
So here is the two big things here. Do you know how much revenue you are losing to people who come into your digital platform and get frustrated and decide, what, I am going on to something else because of friction obviously, you guys is a big word in this industry, right. But not being able to provide a seamless experience is that an issue for anybody in this room? I don't, I am assuming it is, maybe you are not tied to it, we see that as a big issue. When 80% of our sort of deals that we do are replacements because people are losing revenue, they are losing customers. It's not like we are walking in the door, everybody has something, right. So, and you have to be able to play in the sandbox. But at the end of the day, as I said, when I started this kind of a boring topic onboarding, but it matters because you don't know how many customers in general, you are losing that go to your website and so that is revenue that's the bottom line.
Patrick Kelly: (
Okay. So, we have got our Gartner reports as well, right? There are four areas that they focus on in the ID proofing space, all of these are critically important, whether it is an internal customer, external customer workforce is the same way people logging into your systems. They need to be secure. Everybody in this room knows more about compliance than I do for sure. So there are a lot of fines that can be had by not adhering to the certain rules and regulations in your industry. But so I look at something like this and I think the most important thing see, this is just the user experience, whether it is an employee or whether it is somebody out there customer, and I am sort of giving you the same, you start me resonating with the whole CX UX thing over and over again, because what we found is that's why most of these companies competitors are losing customers.
Patrick Kelly: (
So companies are under pressure to move more high risk interactions online. Again I am talking about the user experience, but how do you differentiate between vendors here in this space? It's kind of interesting. I use the analogy, if you are a head of sales or whatever right. I have never seen a resume that says you are less than a hundred percent of quota, right? I mean, everybody in this industry, we are number one at everything. Nobody is number one at everything. It's just not the way it works. So, you will see that when you go to these different websites, IDV vendors, everybody is number one, no one is saying we are the penultimate, we are the number two.
Patrick Kelly: (
So just some trends. I just like this is just sort of, wanted you guys to take a look at the way we sort of look at things. So biometric fraud and document fraud. And what is interesting here is especially on this slide, obviously Africa has a tremendous amount of fraud right now. It looks like things in the US are getting better. We will see what happens with that biometric fraud is growing document fraud seems to be slowing down a little bit in our area globally, though. Both are increasing and expectations are 2022 and 2023, It is gonna go through the roof.
Patrick Kelly: (
So what I found kind of interesting about this information in general, this slide by document type because I have worked with as I mentioned in my past with all three of these documents on the right, I was a little surprised that passport was the biggest one. May be it is because we are here in the US and I am thinking like I was talking about earlier just, and I was thinking driver's licenses, the company that I worked for, as I mentioned, we manufactured driver's licenses each state. And it makes sense when you think through it, but each state has their own security features built into their licenses. Most of you probably know that the only people that know that what specifically goes into those licenses, that's those security features are the state themselves and the people who are manufacturing those licenses. And there are three or four companies that do that in the us today. So they are fairly secure. They get real ID, now there is all kinds of things going on, but I was a little bit surprised that passports was at the top of this list.
Patrick Kelly: (
As I mentioned still global problem, it looks like things are starting to drop a little bit for us here in the US. Other parts of the world are still struggling in a much bigger way than we are, although it's still a massive problem. So you can see, how things have sort of progressed with both biometric fraud and identity, document fraud over the last four years. So, it's funny that I am not really sure on some of these data when I see it, okay, how has COVID affected all of this, right? You get everybody's working remote now. That's not gonna stop. I don't think most companies, but the bad guys are starting to catch onto this stuff, right? So they are gonna start to target these people in remote, the remote working world as well. So we need to work as fast as they do to try and keep up with them. This is really just a breakdown post pandemic, as I said, global problem is much bigger than just what we have here in the US, but actually this is broken down by the holiday seasons. And you can see November to December what it used to look like, and you can see sort of where it is today from 2019 through 2021 in those two focus areas.
Patrick Kelly: (
So when we look at the trends in identity fraud, document originality of course is number one, right? You can see it's massive it's almost half what I found. I don't know why I found this a really interesting name on the address document does not match. Like that's kind of weird. I feel like you are really gonna try and get away with that. That's just doesn't make sense to me. So, but everything else face unmatched image manipulation, these are the kinds of things you see when you are talking about fraud.
Patrick Kelly: (
So key takeaways from 2021 still a major problem across the globe. But I think the takeaways from this right here is what to expect in 2022. And there is gonna be a rise in deep fakes, right? We know that increase in synthetic identity, fraud, crypto and NFTs regulation. I do not have that up there, but I know for a fact that is gonna be a big issue is regulation. So those companies are coming to us, smaller companies, a lot of them saying, Hey, what do you guys have that can help us out.
Patrick Kelly: (
So as we move forward here look, how many people in the US? 330 million, 276 million mobile internet users in the United States. That is a huge number, I guess it's not a surprise, but as I said earlier, Covid has accelerated the digital transformation. But I am not sure how that is gonna affect us going for the next sort of three to five years. But because so many people have so many choices, they get to your website, they get onto your digital platform and things. Don't, it's not a seamless experience. They are gone, as I mentioned earlier non-compliance means big fines. Again, these are all things that probably all of you are familiar with in this room. But if anybody has sort of kids or teens, or what have you, how sophisticated these kids are now, like, I know my kids, they are crazy when it comes to this kind of stuff.
Patrick Kelly: (
If they have to wait more than five seconds, they are gone. I mean, they text me in my own house. It is the weirdest thing anyways. So this, regulatory compliance, you guys know more about this business, this part of the business than I do. Okay, but I found this sort of fascinating, so we pull from a whole bunch of different sort of sources for this information and 5.4 billion in fraud and 2021 on versus 10.6 billion in 2020. So you look at that and you go, wow that, we are moving in the right direction. We must be doing something, right. So when I started to dig into this and putting this together, it turned out that second bullet point there underneath pandemic impacted investigations because nobody could go anywhere to actually do these investigations. They didn't see a lot.
Patrick Kelly: (
So I think it is a little tricky there when you look at the numbers breaches 176 in 2021, 760 in 2020, is that really what the numbers indicate? Because of COVID right, when you dig beneath the covers, bottom line is as an awful lot of money, that is going out the door here with these breaches and fines and what not. So having a solid KYC KYI, KYB, AML solution, continuous AML solution, not just the one timer, especially what is going on today in other parts of the world, oligarchs etc., who are trying to get access to their funds and things like that. It is important to be able to track that on an ongoing basis.
Patrick Kelly: (
So look, anybody who takes on a digital onboarding solution, right? I am not gonna say that they are not gonna get, there is not gonna be any fraud because if anybody is worked with the federal government in the US, they have tried a number of different products. In fact, many of are going through trials now. And if you knew how much the social security fraud was in this country on an annual basis, you would be shocked. Or maybe you would not, but it's pretty big. So bottom line is for anybody in this room, the people that actually have these KYC solutions are doing a hell of a lot better than the folks who are kind of winging it.
Patrick Kelly: (
So here is where it gets interesting for me. Okay, so I talked about the two founders of our company, and they talked about AI. They talked about machine learning and the mistakes that were being made by humans, right. When they were doing sort of looking at this information as it was coming in. And so they knew the future of it was, AI, they knew that there had to be a solution that would cover the entire globe, as I mentioned earlier, but it had to be configurable and it had to sort of be, look, everybody has something, somebody bought those products, right? So you are paying annual maintenance or what have you. So just going in and trying to do a rip and replace is not easy it is possible, but you need to be able to play nice in the sandbox. So here is some of the things I would look for right before we get to signup kind of shifty pro, in what we do, all of these are very important. I mentioned we support 230 countries. I do not think there is another vendor in the market in KYC that supports 230 countries. I could be mistaken. The third bullet, 150 plus languages. That is not easy to do. So, we support 150 plus languages. I mentioned configurability and then obviously you have to have an audit trail.
Patrick Kelly: (
So this is where I get into sort of the shifty pro thing. And again, I am not up here to give you a sales pitch. I am really not. If you guys come by, you have seen our stuff. So that is great. This is more about sort of how we have performed since we have gotten to the US. And globally, our customers are happy. Customer satisfaction is really important when we sell somebody, something we include 24*7 support 365. And because we have people all over the world, we can support you essentially, the turnaround time is like 15 minutes. If you have a problem and you are using our technology. So that is pretty impressive and I have a use case that I will show you guys and you will find it actually pretty interesting, but on average, we have got 600 customers globally. We have got, I don't wanna say the name, but probably the largest payment provider in the world who just moved to our platform in the last six months which has helped us tremendously. Obviously we have one of the biggest gaming companies in north America now that just signed on with us. So, somebody is seeing, they're seeing value in what we have to offer.
Patrick Kelly: (
So, I am not sure if anybody, a lot of folks in the room know banks, so sticking with my theme of global here. So first Algerian digital bank, part of an attack, not Texas, a very simple sort of use case here. If you take a look at that problem, 75% onboarding failure rate, I am just gonna give you money. Here you go. Like, it's ridiculous. So they came to US, put out an RFP, 30 vendors responded. We had a smaller foot print, we did it in real time. And when I say real time, as I mentioned, it's 20 seconds. They wanted an on-prem solution. We have both, we could do something on site. We could do something where you come to us or your customers come to us. And the bottom line was their onboarding rate increase in their fraud, went down. And, now we have a happy customer. So sounds like a simple story, but, again, it was revenue going out the door, because their customers were not going through the process.
Patrick Kelly: (
And so, this is sort of the head over at the bank. There had some nice things to say about us and I think that is it. That is my presentation for today. Any questions?
Audience Member 1: (
I can just shout it out. You mentioned all the competitions is not that undermining the movement toward any sort of standard or consolidations that might solve and bridge some of the gaps
Patrick Kelly: (
That what's gonna happen. This is my view of the world here. There is gonna be a lot of consolidation. And a lot of it has to do with, I said earlier, these crazy valuations of these companies who are not making any money. So what they are looking for now, what I think is gonna happen is you are gonna see consolidation. Some of these companies are not gonna be in business. And I also feel like you will see a lot of orchestration platforms, right? Look at like a ping identity, right? Ping identity picked up a company last six months called singular key where you can kind of plug and play into their orchestration platform and use ping on the backend, whatever you want on the front end. whatever technology you use, but something like that. So to answer your question, Kate, that is how I think it is gonna go. Anybody else or pretty straightforward. All of you are probably very familiar with this market and it doesn't look like anybody has any questions. So, thank you very much. I really appreciate.