THE INVESTORS: IMPACT FUNDING ‘Build back better’ is one of the buzz phrases of the moment – the idea that the turmoil created by COVID-19 gives the world a fresh start to tackle inequality. And, though this year will be dominated by the gargantuan task of vaccinating billions of people, interest in fintech as an equality solution is gaining traction. When the pandemic hit and populations were locked down, digital banking systems proved their worth by allowing contactless transactions. This wasn’t just in countries with advanced banking systems, either. Figures cited by the International Monetary Fund (IMF) show that in Rwanda, for instance, the number of people sending money digitally rose from 600,000 the week before the country’s spring lockdown, to 1.2 million one week after, and hit 1.8 million by the final week of April. Furthermore, in countries where digital banking is established and well-integrated, governments have been able to use it to deploy financial support to those in need. Groups of all sizes have the potential to build on this trend – from fintech startups to major banks and other global organisations. Citi Ventures, the venture capital arm of the US banking giant, is one such, and is focussed on building back better with its mission of ‘helping people, businesses and communities thrive in a world of technological, behavioural and societal change’. Its $200million Impact Fund was launched just as the threat of coronavirus became apparent in January 2020. One
of its five focus areas is financial capability, which starts with financial inclusion. And the first hurdle to achieving that is often customer identification. Citi Ventures had already invested in three fintechs in this field – Socure, BioCatch and Trulioo – before the Impact Fund was set up. “In order to participate in marketplaces, to be digitally enabled and to interact, people need an identity that can be verified,” says Citi Ventures’ managing director Matt Carbonara. “The pandemic, all of a sudden, put a much greater focus on the digital channel and non-physical transactions, starting with the ability to be onboarded in a non-physical way.” Of the three identity and verification tech companies Citi Ventures backed, New York’s Socure provides tools for onboarding customers, and harnesses artificial intelligence alongside analysis of data from email, phones, addresses, IP addresses, devices and the broader internet, to verify identities in real-time. BioCatch, based in Tel Aviv, works to weed out fraud both at the onboarding stage and when an account is running, to identify criminality or evidence of hacking. Then there is Trulioo – a Canadian firm that can verify the identities of people in 80 countries through its GlobalGateway platform, which examines the identification data used in each territory. Citi Ventures’ investment in Trulioo was made in September 2019, as part of a CAD$70million funding round, alongside Goldman Sachs, Santander, American Express, Blumberg Capital and BDC Capital
Trulioo’s mission is to reach the world’s unbanked and underbanked – which, it argues, is more than just a ‘goodwill effort’, since financial inclusion has the potential to boost the wealth of the individual and the companies serving them, and strengthen the societal and economic fabric of entire countries. Carbonara liked the Trulioo mission, but said the fintech was also selected because of its global reach and its potential to operationally improve Citi’s own services. “Digital customer onboarding was already a trend, but the current environment has accelerated it, and Trulioo is well-positioned to take advantage of that,” he says. “We liked the fact that the Trulioo team were very much thought leaders for their market, and they allow their customers to take advantage of all their data. They’re a network of networks, if you will. “They plug into 400 different data sources around the world, and allow their customers to apply whatever policy they want to those different data sources. That flexibility, that ability to customise all those data sources through one API, is really the strength of the Trulioo system. So that’s what really got us excited.”
GATEWAY TO CHANGE The task of improving financial inclusion is huge – the IMF estimates that 1.7 billion people globally have no access to a bank account, while billions more are classed as ‘underbanked’, able to use only the most basic services.
Inclusivethinking Launched at the start of 2020, Citi Ventures’ Impact Fund is already influencing the future shape of financial services, as it invests in companies that help people thrive in a world impacted by change on an unprecedented scale. Here, Citi Ventures MD Matt Carbonara explains how digital identity solutions are a crucial part of its mission 58
TheFintechMagazine | Issue 19
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