An interview with Inclusive’s founder and CEO, Paul Damalie, details the motivation behind the creation of Africa’s identity verification API.
It is no secret that there is a growing supply and demand of digital financial services and that the focus is on African fintech startups. This makes sense as Africans are one of the fastest growing adopters of digital connectivity technology. But when it comes to inclusive mobile banking, there is an obstacle that cannot be avoided for many: identity verification. Many remote Africans are left out of the financial services world due to the traditional model for banking which requires customers to verify their identity in person. On the surface it appears that anyone with a phone has access to digital financial services, but the truth is, without digital identity infrastructure, there is no widespread access.
The challenges associated with identity verification are not new to Paul Damalie, founder and CEO of Inclusive Financial Technologies, a company connecting unbanked Africans to the global economy through a single identity verification API. With years of experience in finance, banking, and insurance, Paul has come to recognize the importance of identity verification.
“Digital identity infrastructure is critical. It is the underlying framework for digital financial services to be provided,” he said.
Paul worked at Ecobank, one of Africa’s largest banks, where he saw one out of every three customers who applied for a bank account turned away due to lack of identification.
“At the time, there was very little you could do about it and at that point, I didn’t understand the problem in that sense. I just thought of it, well, it’s just the situation. It just happens.”
After leaving Ecobank and running Loystar, a mobile loyalty app company, the impacts of identity verification became much more pronounced to Paul. Customers wanted to redeem their reward from a loyalty program which required them to verify their identity, but without identity verification infrastructure in place, this proved challenging.
Paul started considering a solution to the lack of identity verification infrastructure in Africa by spending time with industry leaders to understand the technical challenges around identity verification. However, the event that inspired Paul and his co-founder, Jonathan Ayivor, to actually start developing a product to solve the problem was more personal.
The scene of inspiration takes place late one night outside a club in Ghana. Paul and Jonathan went out for a drink, both of age. The catch? Paul looks of age, Jonathan doesn’t. And there was no way to prove that he was of age - no trusted identity verification system. The lack of trust in Ghana’s national ID system and the in-person registration process for ID cards has compromised the success of this attempt at identity verification. In some situations, like outside the club, presenting an ID card means very little.
Paul commented, “I mean, you can show your card, but people don’t trust it. You need a system that people trust to prove you are who you say because right now, it’s left to the discretion of whoever is at the door.”
Paul and Jonathan have worked together on multiple projects before, having built the POS system for one of the biggest food retail chains in Ghana. They were confident that, together, they could lay the foundation for identity verification successfully. Paul’s background and his robust network in the financial services industry and Jonathan’s technology development experience and skill gave them the ambition to create a Pan-African product.
In December, 2016, they began developing what is now Inclusive, an identity verification API that works to onboard, verify, and monitor financial institution’s most remote customers through USSD, mobile and web channels.
USSD (Unstructured Supplementary Service Data) allows users to access their bank account from their mobile phone without internet connection. Users simply dial a number code from the mobile phone registered with their bank and they can manage fund transfers and other banking essentials.
It is the most common system because anyone with a phone has access to USSD, but when it requires customers to come into a physical branch to verify identity before getting an account, the access stops there. Imagine a farmer, miles away from the nearest branch and without transportation. They might have a phone that has access to USSD but when they get a message telling them they must stop into a physical bank to proceed, the access is gone. Inclusive aims to bridge that gap by building an identity verification system that allows any USSD based system or mobile banking product to be able to verify customers when onboarding them without having them come into the physical bank.
“Now more than ever is the time to focus on building the infrastructure so that many innovators can build all kinds of financial services on the top of that underlying digital infrastructure for Africa,” Paul said. And he and Jonathan are doing just that with Inclusive.
DFS Lab has recognized the potential for this fintech service and is excited to support Inclusive with expert advice, mentorship and funding as Paul and Jonathan further develop their product. Working together, Inclusive and DFS Lab are changing the way banking works in Africa.