Fintech
Footprint Pitch Deck that helped the fintech raise $13 million
A startup looking to become Wall Street’s one-stop shop for onboarding new clients just raised $13 million.
Footprint, which appeared on Business Insider’s list of emerging fintechs last year, announced its Series A on Tuesday. The round was led by QED Investors and included investments from Index Ventures and Palm Tree Capital, among others.
The startup aims to streamline the identification process for businesses and consumers, which It’s a sore point felt across Wall Street thanks to regulations that require companies to know who they are providing services to, such as Know Your Customer (KYC). The problem is that every company does the same process differently, often relying on a variety of software vendors, according to Eli Wachs, CEO and co-founder of Footprint. Footprint wants to change that by creating a one-stop shop for banks and fintechs to combine KYC, authentication and fraud mitigation in one product.
“Historically, KYC was a back-end tool. It was a checkbox,” Wachs told BI. “We think it’s really difficult to detect fraud with a back-end API,” she added.
He compared the digital process to real-life identification. When a person presents their ID at the bank, Wachs said, the teller will check that the name and photo match the person standing in front of them. She added that the cashier can also notice if that person is twitching, if she came in with three briefcases or if six different people before them came in with the same ID.
But with many back-end KYC solutions, the parallel would see the cashier in another room other than the customer, with an intermediary who would pass on the identity.
“It seems silly,” Wachs said. “But that’s pretty much what happens online with these back-end KYC tools,” he added.
How Footprint wants to build ‘portable identities’
Footprint provides online security for financial firms to capture sensitive consumer information, such as Social Security numbers, while verifying identity and automating compliance workflows. It was founded by Wachs, a former investor on General Atlantic’s technology team, and Alex Grinman, a security and cryptography expert.
To authenticate consumer identities, Footprint uses behavioral biometrics, which tracks a user’s physical behavior online to distinguish between criminal and legitimate activity. This technology can determine whether someone copied and pasted an SSN or typed it easily. It also uses technology similar to that used by Spotify and Netflix to track the number of accounts and ensure that each user in its database has only one identity.
The goal is to create a “portable identity” for consumers owned by Footprint. The portable ID would be shared among companies that request it, similar to how single sign-on authentication allows users to log in to multiple apps and websites with a single set of credentials.
“Today, every company in a vacuum is looking for the needle in the haystack that is fraud. Footprint’s approach is to make hay: we will label the good actors and make it very easy for them to go around, and much more. we will narrow down the possible bad actors,” Wachs said.
Portable identity sharing it’s something VCs are optimistic about.
Wachs said he believes the technology is ready, but others say the success of such a solution will depend on the willingness of financial firms to adopt such a fundamental change. The portable identity database only works if there are sufficient entries.
According to Wachs, the number of companies that believe in the idea is growing, especially among fintechs dealing with automotive and real estate finance. By the end of the year, Footprint is expected to have more than 1.5 million portable identities, the company said. Some customers include Treasury Prime and Apiture, which facilitate digital banking for fintechs, banks and credit unions.
The Series A brings Footprint’s total funding to $20 million. Wachs declined to disclose Footprint’s valuation. Wachs said he will use the capital to grow Footprint’s fraud and risk teams in a bid to attract larger enterprise clients. The company will also use the capital to “manufacture” customer identities and automate compliance processes for financial institutions.