In the last year, inflation has plagued nations around the globe. Unfortunately, African countries have not been immune to this, for example, the World Bank has projected Nigeria could have one of the highest inflation rates globally in 2022. With many fiat currencies being devalued at an increasing rate, people are turning to cryptocurrencies as an alternative. Across Africa, people are finding that converting their money into stable coins can guard their savings against volatility and even open up easier options for purchasing goods both domestically and abroad.
The Era of Hyper-Growth
With so many practical uses for crypto, it’s no wonder the industry grew by over 1,200% in 2021. In fact, Kenya is one of the top crypto adopters in the world. With 8.5% of Kenyans reporting they have an active crypto account, Kenya is adopting crypto even faster than the US. Even at Smile Identity, we have observed this growth. In 2021, we processed over 1.3M KYC checks for our Crypto partners, a 55% increase over the previous year.
As users are flocking to crypto, many crypto companies present in the African market are poised for hyper-growth. But, with fast growth comes the inevitable challenge of scaling not only quickly but also safely. With fraudsters targeting the space and regulators demanding transparency and controls, your KYC process is crucial for onboarding good users quickly and keeping their coins safe.
Scaling Fast Without Getting Rekt
To achieve this hyper-growth in the first place, crypto platforms must onboard users quickly. As users are looking to use crypto to replace traditional banking, waiting days to open an account won’t cut it. Users want to open accounts in real-time. Smile Identity has a track record of onboarding users in an average of 3 seconds.
Onboarding users does not only need to be fast but also needs to be reliable. The last thing you want is for good users to be rejected because your KYC solution mishandled them. Unfortunately, many global KYC providers don’t take into account local issues such as:
- Good African users being rejected due to bias from Euro-centric face recognition
- Highly variable selfie image quality from many types of phone cameras
- The need for local expert human reviewers to handle machine edge cases
At Smile Identity, we know these details are key to getting reliable customers onboarded and buying within minutes. Our technology is designed by Africans specifically for the African market. One example is our proprietary SmartSelfieTM technology, it has been proven to outperform leading face verification providers in recognizing African faces. Measured against leading facial recognition providers, Smile Identity can match African faces with up to 3% more accuracy. In practical terms, this means for every 100000 users you onboard you could be rejecting 3000 good ones incorrectly. Or worse, accidentally letting in fraudulent ones, jeopardizing the safety of your platform. Strong, de-biased facial recognition is crucial. Historically, 10% of the fraud that Smile Identity catches on crypto platforms can only be caught with biometric verification.
The FUD Around Regulations
As the crypto industry in Africa grows, it is increasingly attracting more regulatory scrutiny. Some countries like Morocco, have banned crypto entirely where others like Kenya are taking a more progressive approach. These rules are ever changing, leaving many crypto based businesses and exchange platforms in a difficult spot. Many of which are choosing to self-regulate by asking customers to provide KYC details and doing their own due diligence to prevent fraud. Validating users’ true identity is a crucial step for crypto platforms to alleviate serious regulator concerns around terrorism financing, money laundering, and general scams.
While the regulation process can be chaotic, regulators are justified in their fears as crypto scams across the continent are on the rise. In 2021, Smile Identity caught over 300000 fraudulent attempts to create accounts on crypto platforms, an increase of 113% from the previous year. And there are signs that fraudsters are getting smarter. More sophisticated biometric fraud attempts such as spoofs and deep fakes are on the rise, they have grown 19x since 2020. Luckily, Smile Identity’s SmartSelfieTM software automatically rejects 85% of fraud attempts via machine learning algorithms. The remaining attempts are flagged by machines and screened out by highly trained human reviewers.
As the leading provider of KYC services to the Crypto industry in Africa, not only does Smile Identity understand the challenges faced by crypto companies trying to onboard customers on the continent, we have adapted our products with their growth ambitions and fraud protection requirements in mind. Smile Identity is bullish about African crypto and we are here to help you go to the moon!!