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Trulioo’s Stephen Ufford: Regtech is the sexiest part of fintech

Today’s episode is a first for the podcast. We’re talking about regtech, the technology that enables a lot of the other types of fintech — lending, moving money, investing. Our guest today is serial entrepreneur Stephen Ufford. He’s started and exited multiple companies in the consumer credit and data space. His latest endeavor is Trulioo, a Canadian regulatory technology firm that was cofounded in 2010.

Trulioo verifies online identity of individuals, enabling trust and safety online as fraud and compliance systems worldwide use this information for all kinds of financial purposes. We talk about different approaches to regtech, how these technologies will impact the financial industry for years to come, and Steve’s vision for vastly more democratized financial services and products.

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Below are highlights, edited for clarity, from the episode.

What is regtech?

I actually think regtech is sexy. It’s the enabler of fintech. Fintech is about money movement and services like lending and banking. The purpose of regulation is to prevent bad things from happening and to enable people to do more things. Giving access to credit is real important to making life go smoothly.  Regtech isn’t new — the notion of a credit file is decades old. You only have to know how important regtech is when you’re the guy who needs the money.

We think about how we can help businesses trust individuals enough that they can lend to them. We’re covering 4.5 billion people right now. That means that there are people in emerging markets, through all these tools, who can borrow money to start a small business. Those small dollar loans have been proven to impact generations to come. To me, that’s sexy.

The wily internet

The way the internet started was anonymous and many think it should be. With the upside that comes with anonymity, in terms of international trade, anonymity isn’t always the best thing. In an online environment, the same is true. The key is giving the option to people to remain anonymous when they want to and to be known when they think it’s appropriate.

I know firsthand one of the things that inspired Trulioo when we started it was a story I saw on CNN of a woman who walked 45 minutes each way to pay her electricity bill. She was standing there with Anderson Cooper and began crying after she was presented with her first mobile phone and Facebook account. They asked her why she was crying and she replied that the Facebook profile was the first time she ever existed on record anywhere. Because she existed and could be trusted online, she was able to get back hours to her life.

Establishing identity

The world looks at identity in a variety of ways. When we know a person, trust is established. The internet is built upon trying to read signals with fraud detection tools — what’s their phone number? Is the phone number involved in other frauds? The other way to do it is based on identity as perimeter. When you sit in a room with people you know, their purses and wallets are pretty safe. We need a layer that when you’re online, when you come online, you have the opportunity to be known. Once you’re known, a lot of the other friction goes away. Once that happens the purses and wallets in the room are safe.

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Trulioo’s Stephen Ufford: “Missing element to provide financial services for the 2.5 billion unbanked lies in a digital footprint”

investing in fintech

Stephen Ufford is CEO & Founder of Trulioo

What is Truiloo? What was the inspiration/genesis story for why you founded the company?

Stephen Ufford, CEO, Trulioo
Stephen Ufford, CEO, Trulioo

Data has been around for decades, but the industry has drastically evolved in the last 10 years thanks to the Internet. I fell into the industry quickly after moving to the U.S. after high school. As a Canadian living in America, the experience of proving my identity and establishing credit was horrendous and inefficient. I have spent years building a good credit history for myself in Canada, but when I crossed the border and entered into the states, it felt like someone just hit the reset button and my identity was non-existent. I instantly knew this was a huge problem that could easily be fixed and launched iQuiri.com, one of the first companies that made consumer credit reports and scores available online. This was my first foray into the data economy.

Fast-forward 9 years and I’ve successfully launched and exited three data-driven companies with my co-founder, Tanis Jorge. We both decided our next company would have a more meaningful and significant impact on lives around the world. We wanted to go after something profound that would improve quality of life – not just for you and me – but for the man in Chile who doesn’t have access to financial services and wants to start his own business, or the woman in India who works 12-hour days and walks another 2 miles at the end of her day to pay for water. The missing element that could help provide access to financial services for the 2.5 billion unbanked citizens of this world lies in a digital footprint.

Why is identity verification important? What kind of opportunities does doing it at scale open up?

In today’s digital world, trust is the backbone to the success of this truly global phenomenon. What really greases the wheels of today’s fast-growing global economy is trust. As in most online interactions and transactions, anonymity becomes the biggest threat to trust, hence why identity verification is an important element for creating a framework of trust online.

The ability to instantly verify identities around the world will break down the walls that create barriers for cross-border commerce, payments, communication, and consumption. Verified identities helps build the first layer of trust between consumers, merchants, financial institutions – pretty much anyone doing business online.

Has the proliferation of social media made it easier/harder to identify people correctly?

Social media is a double-edge sword. While it offers an abundance of unique data about consumers, there are also ways to create fake accounts. When verifying identities online, it’s best practice to have a layered approach that leverages multiple data sources in combination with advanced machine learning algorithms and fraud prevention tools so that you can weed out the fake accounts before they engage in nefarious online activities.

What’s it like for a Canadian fintech/big data company to compete globally? Are there unique challenges/opportunities?

Globally, Canadian companies have the upper hand in big data thanks to the country’s revolutionary privacy laws and transparency. We have the legal framework, expertise, and know-how needed to be a global leader in the data-driven economy.

Canada is uniquely positioned to take advantage of the growth in the data economy, especially after the recent safe harbour rulings in the European Union.  U.S. companies are now scrambling to find a solution for their data storage needs leaving the door of opportunity wide open for Canadian companies.

Designed to protect both the consumers and the companies that are collecting personally identifiable information (PII), the Personal Information Protection and Electronic Documents Act (PIPEDA) was enacted in April of 2000. PIPEDA provides individuals with the right t know why any group collects or discloses their personal data. This level of transparency offers consumers peace of mind when they are looking to invest, buy products from, or associate with Canadian businesses. PIPEDA also ensures that the companies collecting an individual’s data only use the information for a specific purpose with consent from the individual.

Due to the increasing number of data breaches, how PII data is being handled by businesses and government is at top of mind of consumers, policymakers, and regulators. Exporting PII across countries and jurisdictions is a recipe for disaster, increasing risk for data breaches and regulatory compliance issues. Canadian companies are in the best position to enable the enterprise to leverage their global data assets with advanced technologies in a secure, highly regulated environment.

Where is your business headed in 2016? New products/services/geographies?

We are very excited to announce that our global identity verification API or platform, GlobalGateway, now verifies over 4 billion consumers around the world, the largest Know Your Customer (KYC) coverage in the market. Riding on the heels of China, we recently secured unique data sources in India, which will enable our clients to quickly expand into emerging Asian markets that are dominating our global economy with its unprecedented growth.

We are on a mission to provide verified identities for the entire global population, making Trulioo the largest marketplace for global data where businesses and organizations have instant access to consumer information to perform specific checks and activities granted by the user (consumer).

We will continue to disrupt traditional data aggregators around the world with our unique market place model while raising the bar for consumer consent and privacy protection. I believe that Trulioo will play an essential part of developing Canada’s global reputation as a safe haven for digital information into a robust new industry and major contributor to our economy.

Photo credit: charlesdyer / VisualHunt.com / CC BY