PassFort - Lucky coffees and notes on napkins

5 years ago, a conversation about anonymity in blockchain over a cup of coffee turned into a discussion about the commercial applications for this kind of technology in the compliance space. And PassFort was born.

Posted by: 
Henry Irish
  |  
Nov 3, 2020

Compliance is a slightly odd tech space to build a career in but my Co-Founder Donald (PassFort’s CEO) and I started working together because of a fortuitous coffee we went for about five and a half years ago. It's a cliché but we ended up doodling ideas on napkins and taking our business forward from there.

PassFort is a meld of our two skill sets. We were discussing our respective areas of experience on Entrepreneur First (EF), Europe’s leading pre-seed technology investor, and quickly focussed in on the opportunity to reimagine how financial crime, compliance and onboarding professionals use software.

There was a massive opportunity to become the software these professionals use in their day to day lives and we believed in it based on our backgrounds – me, as a software engineer recently returned from a successful stint in Silicon Valley, Donald as a private equity professional turned entrepreneur, who while on a New Entrepreneur Foundation (NEF) secondment helped launch a FinTech.

Our key insight was that you couldn’t configure, manage and evolve customer onboarding and compliance processes as easily as you could, say, a sales and marketing process. There was no software for that. Who was building the Salesforce for compliance?

We dabbled by looking at compliance issues faced by our friends in the FinTech community, but quickly realised that while they were the cool new kids on the block, actually the same problems extended across the entire industry, including the global banks. Compliance software hadn’t caught the Enterprise Software revolution in the same way other business technologies had.

This set the scene for us trying to solve this RegTech problem together.

PassFort in the first instance

In the first instance, we approached creation of the PassFort platform as two people who would learn about compliance from our customers - rather than assume we knew what customers needed on day one.

So, we focussed on the lowest hanging fruit – what was the most valuable problem we could solve with a fairly simple technical solution? Stripe as a company was taking off at the time and we loved the simplicity of their model. A single API to access the world of payments. We thought, what if there was a single API to access the world of compliance checks?

This didn’t (yet) have any appreciation for the nuance in regulation though, the importance of a risk-based approach and making sure processes are appropriate to customer typologies, product and jurisdictions - understanding the many different ways that can fall apart!

The first solution we put together was pretty simple. Basically, it was a way for customer’s to access the data they needed to verify their customer. If you do this check, this check and this check then you get a result.

Everything since then has been learning why that simplistic model doesn't work in all cases, understanding all the places it will fall over and then developing software to handle them.

In terms of the value we were trying to sell at the beginning, that hasn't changed substantially. We wanted to create a digital compliance solution for regulated businesses starting out or those digitising their global financial crime, compliance and onboarding functions.

We were and still are applying technology to compliance processes to digitally transform them; making them scalable, flexible and more efficient for regulated firms.

In terms of the difference between our solution now and then, it's been about finding out all the different ways compliance is a difficult problem to solve with technology. That's why we've got a sophisticated and much more powerful solution now.

Building from the customer up

Everything we have learnt and are learning comes from our customers. From the very beginning, any time we thought we had delivered a solution to a problem, we'd take it to clients and discover a bunch of minor or major issues with that. And that's the agile process we work to. It’s tight iteration cycles that help build the right product for those customers.

We might sit down as a team and try to engineer what we thought was the right solution to the problem as we understood it, but it's only when something is presented to a client you understand what problem you're really trying to solve and the amount of variability there is in how people approach things.

Variability comes from all over the place with compliance. It comes from a client’s business requirements, from their industry, the people that work in the business, it comes from risk appetite and jurisdictions. The only way you can really get a feel for that and understand it properly and then understand the right solution is by talking to clients.

Evolving RegTech for evolving businesses

RegTech is becoming competitive, but it's still a relatively nascent market. What sets PassFort apart is how the product scales with a client’s business.

PassFort has been deployed into very small start-ups; people who sell one product in one jurisdiction to a small number of customers. And it's good for that purpose.

But one of the best things about the solution we've architected is we also capture the other end of the market - the hyper-complex, well established businesses operating globally who have complex product lines with complex customers, and hundreds of thousands of those customers.

PassFort can help businesses go through their maturation process. It can start simple and then iterate to become the solution it needs to be, then it’s always right for that customer's’ compliance processes.

Getting compliance “right” isn’t something that happens once; it needs to happen many times over many year, and we enable customers to do that.

And what of the next 5 years?

PassFort is now a complete customer lifecycle management solution, no longer solely a point solution for data checks. It’s a loss for us every time a compliance analyst has to go out of PassFort to do their job. We have built KYC and KYB as first-class citizens in the platform. Onboarding a company or onboarding an individual are very similar and we have tried to keep them as consistent as possible and that feeds through to the features we're building right now and will continue to focus on.

It’s been exciting to have worked on more complex, global compliance deployments already and the solution scales very effectively. The next area of focus for us will be one of completeness around the onboarding process.

We've focused so far on compliance and AML, but there are lots of parallel elements to onboarding that the compliance function needs to complete and these would be well served in the product. Everything from US FATCA compliance to fraud detection to credit risk. Bringing all parts of the onboarding decision into PassFort is where we are are headed next with customer lifecycle management.

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