Fintech holding company Crossfin has invested in start-up truID through its ventures investment arm, Crossfin Ventures.
However, Crossfin did not reveal how much it invested in the start-up company.
Anton Gaylard, COO at Crossfin, says truID is driven by a team of highly accomplished fintech innovators with a daring vision for building an open banking culture in South Africa.
“The company’s simple and secure API [application programming interface] brings convenience to consumers while helping financial institutions retain customers through improved application processing,” Gaylard says.
“Their vision for enabling consumers to take control over their banking information creates immense opportunities for fintech innovation. There are also exciting synergies with some of our other portfolio companies which we hope to explore over the coming months.”
In a statement, Crossfin says truID’s Connect API provides financial institutions and fintech firms with secure access to consumer banking data.
Through a consent-driven process, in compliance with the Protection of Personal Information Act, consumers opt-in to truID, which can then securely share their bank statements, transaction history and other relevant information with third-party providers, which in turn can develop a range of value-adding services and products, it notes.
Dmitry Drabkin, who co-founded truID with Christian Schuit and Paris Valakelis, says open banking has immense potential for innovation in the banking, asset management, property, insurance and fintech sectors.
“By giving consumers control over their own banking data, we hope to spur a new wave of customer-centric innovation in the banking and financial services industry,” Drabkin says.
“Instead of providers developing products, we believe consumers are more interested in what third-party providers can develop using our API, resulting in products that meet their specific needs. We expect this to change banking in the same way that ‘app stores’ changed the mobile phone landscape, by creating a platform for wide-scale innovation that will transform banking.”
Crossfin notes that open banking is a set of standards that gives consumers control over their banking identity and data.
An example is the PSD2 standards that have been signed into legislation in the European Union, it explains.
“The idea is to give consumers the power to share their banking information with qualified third-parties of their own choice, who then develop products and services that add value and convenience to their lives,” says Drabkin.
“The model has already shown immense success in the European Union, where it has been officially instituted by local regulators. It is the next evolution of financial services.”
The investment firm says while open banking principles are not yet legislation in SA, the South African Reserve Bank has shown great interest.
“We believe consumers, credit providers and other financial institutions are ready to emulate some of our more developed peers. While regulators determine the best approach for South Africa, we wanted to start laying a practical foundation for an open banking culture in anticipation of what we see as the natural evolution of financial services.”
Drabkin adds that the benefits of truID’s service are three-fold. “Consumers gain access to a host of new products and services built to meet their personal needs; banks enhance their services by bringing in trusted third-party providers that use consumer data for product development and innovation; and there’s a knock-on benefit to the broader economy through the elimination of a number of forms of fraud, including bank statement fraud.”
truID works with South African financial services providers to digitise and optimise their internal processes.
“South Africa sees 3.2 million credit applications per month, each one requiring three months’ bank statements and account verification,” Drabkin says.
“Our first objective is to expand our services to a greater audience of these affected applicants who often lose valuable time and money sourcing the required paperwork.”
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