As Smile Identity acquires Appruve, CEO Mark Straub talks about where the startup is headed after 6 years and 60 million verifications 

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April 26, 2023
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5 min read
A picture of Smile Identity CEO, Mark Straub and Paul Damalie, CEO & Founder of Appruve, L-R: Paul Damalie and Mark Straub.

Before Mark Straub and William Bares founded Smile Identity — an ID verification and KYC compliance startup — in 2017, Straub had been an investor in Africa's fintech space for five years.

His experience as an investor, especially in the fintech space, helped him understand what the user verification process or know-your-customer (KYC) protocol was like for financial service-related businesses.

"A lot of that activity was happening at some little kiosk, or maybe you'd have to walk up to an agent where they would take a picture of you, your ID, or even ask for some paperwork," Straub recounted.

The manual process of verifying users made acquiring new ones a slow and expensive process for financial institutions. Easing this verification process is why  Straub and Bares launched Smile Identity.

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According to a 2022 World Bank Group report, one billion people globally are incapable of proving who they are. Interestingly, 81% of these people live in sub-Saharan Africa and South East Asia.

Per Punch, about 500 million Africans do not have any form of recognisable legal identity.

However, things have changed significantly in the past six years.

"Fintech platforms can now do remote onboarding where people are downloading a service or signing up to a service from their phone," Straub said.

According to him, this has been made possible by the rise of ID verification and KYC compliance startups.

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The public sector's role in ID verification 

While these startups are digitising the onboarding processes for different services, especially financial ones, ID systems created by African governments have played an instrumental role in helping startups like Smile Identity deliver on their promise to clients.

Straub commends governments' efforts to build modern verification systems but points to areas where improvements should be made.

"There are markets in Africa that still do not have any kind of central national ID database. They may have national IDs —physical documents people have been issued — but there isn't a queryable national ID system.

"And then you start getting to some markets like Kenya, Tanzania, and Uganda where there is a national ID of some kind and APIs that it can be integrated into, but there are various levels of technical challenges and compliance work — which isn't always clear — to getting things done."

However, in markets like Nigeria and South Africa with more robust APIs and biometric-enabled national IDs, which are also tied to SIM cards, addresses, and account numbers, consent layers are missing.

Straub explains these consent layers as a two-factor authentication system that confirms that "the person signing up for this service and using this credential, is in fact who they say they are."

He said the consent layers should also make it clear to the user what information they're sharing and who they're sharing it with.

The CEO said Smile Identity is collaborating with the public sector to get the consent layers working.

While the public sector plays an important role in making digitally viable ID verification systems, startups like Smile Identity make the job easier.

According to Straub, there isn't always the capacity to build the system, distribute it, and train people how to use it.

This is where ID verification startups come in. They act as middlemen connecting businesses that need KYC to the identification system the government has created.

However, their role requires complex technical and compliance integrations.

Straub said the process involves a lot of compliance work, security testing, certifications, and data processing audits, which help to prove their credibility.

Once they've proven their legitimacy, they will get access to APIs created by the government and write documentation for their clients to explain how to integrate the APIs across different platforms.

Competition in the ID verification space  

Smile Identity is one of the first ID verification startups on the continent, and the sheer number of metrics it has gathered over the years is a competitive advantage.

When answering the question about what sets Smile Identity apart from competitors, Straub said, a lot has been learnt in the startup's six years. With over 60 million verifications completed, Smile Identity has also learnt a lot about providing identity verification at scale.

"We've seen a fair number of failures, rejections, and different types of fraud. I think that puts us in a position to advise our clients on the best implementations for their needs and goals."

Straub added that the startup's obsession with partner success has also been key to staying ahead of the competition.

"So inside Smile, we have a dashboard to measure pretty much every aspect of success, failure, rejection, and fraud for a given transaction or set of transactions for each of our clients. And so we can not only share that data and those analytics with those clients, but we can also give them feedback on how to increase their pass rates."

However, staying ahead of the competition comes with challenges.

Straub pointed out that one of Smile Identity's biggest challenges is providing its service at scale.

He said the company has to handle complexities like policy changes, new integration methods, new countries, and, sometimes, even new languages.

"We have hundreds of partners who are onboarding millions of users, so this makes small changes, whether in uptime or integration methods, have big impacts. So for us, it is making sure that we have the right people and the right systems in place to catch things before they go wrong or to fix them quickly."

On acquiring Appruve 

Today, Smile Identity announces its acquisition of Appruve, a pan-African verifications platform founded by Ghanaian tech influencer, Paul Damalie in 2018.

Straub said the acquisition made sense because Appruve brings additional API endpoints that would be useful for Smile Identity's partners.

"They also brought an understanding of a set of markets that we had not spent time in. There are a couple of markets, especially in Francophone Africa, where the Appruve team has spent a fair bit of time so we are excited to bring some of our expertise and product offerings into the mix."

However, the more interesting side of the acquisition is what Straub described as the human standpoint.

"I first met Paul five years ago, and we spent a little bit of time in Accra white-boarding how the identity industry could unfold. About a year ago, Paul and I reconnected, and it just made financial sense for us and for them to connect and combine efforts."

While Straub couldn't share Appruve's acquisition cost, he revealed that the transaction was a mixture of cash and stock.

With this acquisition, Smile Identity could see an increase in its yearly verifications. Already, the company has done 60 million verifications. Straub highlighted some key metrics, such as the number of women signing up for fintech services increased to 30% and 350% user growth outside Nigeria.

He added that Smile Identity has experienced significant growth in the past six years, and while its technology didn't have what some users needed in the early days, it has expanded substantially and will get even better with the acquisition of Appruve.


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He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.
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He's a geek, a sucker for Blockchain and an all-round tech lover. Find me on Twitter @BoluAbiodun1.

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