The Munich-based Fintech IDnow provides video-based identification and eSigning solutions for digital, legally compliant contract conclusion. The company was founded in 2014 by Dennis von Ferenczy, Sebastian Bärhold, Armin Bauer, and Felix Haas. The four are no strangers to the startup scene—they sold their ticketing company amiando, founded in 2006, to Xing in 2011 for more than €10 million.
IDnow is also on a successful path. The company was recently honored with the Euro Finance Tech Award as "Most Successful Fintech." With its EU-patented video identification solution, the startup enables legally compliant, secure identification via video chat. Previously, users had to provide personal identification when concluding contracts requiring ID, such as opening an account or signing a loan agreement at a bank or post office.
AI-supported identification process
Sebastian Bärhold, founder and CFO, says:
"In an onboarding process supported by IDnow, the same process is completely digital and paperless and takes just a few minutes. What's more, our artificial intelligence-supported identification process is more secure than the traditional Post-Ident process."
With the video identification process, the whole process can be handled much more easily using a valid ID and a smartphone or a computer with a webcam.
The startup focuses its offerings on companies that need to conduct legitimacy checks when acquiring customers online: banks, leasing companies, credit card companies, cryptocurrency issuers, robo-advisors, and many others. This means that IDnow is now on a growth path in many European markets.
But how did the former amiando founders come up with the idea? As is so often the case, it's based on personal experience. Bärhold explains:
"One of our founders wanted to open a bank account on a Saturday. However, he only got as far as filling out the online form because he would have had to go to the bank or post office to verify his identity. Both were already closed at that time. This gave rise to the idea of an online identification solution that could be used regardless of time and place."
A tough test of patience…
The founders' patience was severely tested when the approval of the video identification process by the Federal Financial Supervisory Authority (BaFin) dragged on. But when approval was finally granted in spring 2014, there was great joy. This marked the launch of video-based identification in Germany.
Sebastian Bärhold says:
"This meant that nothing stood in the way of our rollout on the German market. It was encouraging that we were already able to generate significant sales by the end of the year."
Another milestone: the addition of the qualified electronic signature (QES) in April 2016. This solution is enjoying great popularity throughout Europe thanks to the EU regulation on "electronic IDentification, Authentication and Trust Services," or eIDAS for short. In May 2016, the EU patent for the video identification process followed—which the founders had already filed in 2013.
How IDnow approaches internationalization
As soon as one challenge has been overcome, the next issues arise. The most challenging issue at IDnow is probably the company's internationalization. More and more countries in Europe want to switch to video-based identity verification and are adapting their legislation accordingly.
Founder Bärhold explains:
"To be present in these markets from the outset, we need to engage with their regulators and potential customers, and we need to do this in many directions in parallel. Fortunately, we have already done good development work in many foreign markets."
The Munich-based startup is already on the market in Spain, Italy, and Switzerland, among others, with its video identification and, to some extent, its eSigning solution. The next target country is France, where the introduction of video identification is imminent.
To further expand internationally, the Munich-based company has even brought a new CEO on board: Rupert Spiegelberg. He has 17 years of experience building technology companies in Europe, the UK, and the US, with a focus on B2B fintech and regtech companies.
Bärhold explains:
"We need a management structure that reflects our development into an internationally growing technology company active in various industries. We have already laid an important foundation here with the appointment of our new CEO, Rupert Spiegelberg."
As CEO of his former employer, the New York-based international software company Investis, Spiegelberg achieved the fastest growth of any US company in this industry. So, we can look forward to further developments at IDnow.
Sustainable corporate development
We wanted to know from IDnow founder Bärhold what he believes are other important factors for successful company development, in addition to the appropriate management structure:
“We need to continue discussions with European regulators to support them in implementing the video identification process.”
He adds:
“We also need to grow our staff in order to be successful in new markets and different industries.”
Learnings — what paves the way
Successful presence, good image: For this reason alone, things like app and service reviews are also an important topic for a company like IDnow with a B2B2C model. We therefore wanted to know from company founder Bärhold how the company deals with negative reviews. He explains:
"Every review is helpful because it can provide clues to optimization potential. We examine very carefully what the source of the problem is, whether it's the technology or the interaction between user and video moderator."
If a startup listens carefully to what its customers say, it can learn a lot from it. At least as much as from its own experiences—or mistakes—while founding the company. Accordingly, it's advantageous to have already founded a company before and, like Bärhold, to have been involved in building several startups. So we asked him for his ultimate tips for founders:
- "Don't get stuck on your very first idea right away. As a founder, you have to continually discard ideas and seek new inspiration to develop a truly compelling product.
2. Focus 100% on your cause! A successful company requires the full commitment of its founders.
3. Market orientation is crucial. Founders should offer a solution that delivers crystal-clear customer benefits.
4. Be at the forefront! Without quick and perfect implementation, even the best idea is worthless.
