investment by U.S. venture capital firm Frontier Capital has raised some serious interest in the Vancouver tech sphere. As reported by the Globe and Mail, Frontier recently paid $65 million for a majority stake in Vancouver software firm Agreement Express.
Agreement Express is an automation platform that allows financial services companies to efficiently “onboard” clients. Onboarding is the process of approving and validating new clients for financial products or services like car loans and credit card applications.
Though digitization has redefined how we access our accounts and make payments, the process for being approved for new accounts or financial products is still largely bound in a paper-driven approval system.
Agreement Express technology is aimed at expediting processes that can otherwise take anywhere from five to 10 days.
“We automate [onboarding] on behalf of firms in a lightweight, fast method, and we take that onboarding time down to hours,” said Agreement Express CEO Mike Gardner. “We are removing the business-velocity chokeholds that are a result of disparate processes.”
The company was founded in 2001 under a different name and was originally involved in learning-management systems. Gardner joined the company in 2005 and became interested in the digital signature realm, which was gaining steam at the time, with the best-known company in the space being San Francisco’s DocuSign Inc. (Nasdaq:DOCU).
Gardner came to realize that the digital signature space had its limits – “charging for that service, you can get the benefit of the convenience, but ultimately all that’s going to happen is the next group that’s going to come along is going to lower the price on the convenience until there is no value left,” he said – but he recognized that verification and approval technology was on the rise, and in 2007 the company took a new direction.
“We transformed into an area where our clients were,” he said. “The best place to go in a marketplace is to look at what your clients are doing. The clients that were deriving the most value from our platform were in an area that is now defined as client onboarding or just onboarding.”
But Agreement Express deals in a realm of onboarding that presents more complex challenges than just everyday banking.
“In financial services, the products have to worry about, and the firms that are administering those products have to worry about, not just basic risks like credit and ‘Who are you?’ but really advanced risks like anti-money laundering.”
In processing applications, red flags need to be raised, he said, “when there is reputational risk as well as legal and compliance risk. That’s the world we live in.”
As the banking world changes in ways previously unimagined, banks and other organizations are being challenged to come up with new ways to authenticate and speed up certain processes.
For loan applicants, “what’s going to happen eventually is that there is going to be a lot more automation,” said Mary Falconer, CFO of Westminster Savings Credit Union. “So maybe you can get all the way to the funding stage [of a loan] if you have certain credit capabilities without even really needing a human interaction.”
Falconer cited things like biometrics and peer-to-peer money payments as further motivation for change, and said that, soon, third-party financial management providers like Google (Nasdaq:GOOG) or Face-book (Nasdaq:FB) will emerge, changing the competitive field of traditional banks.
All coincides to suggest that the internet and digitization are inevitably becoming more permanent, more secure and, if possible, more complex than ever before.
Another technology that might be aligned in improved identity validation is blockchain. As one of the biggest emerging technologies associated with the security of online transactions, it could be used in tandem with onboarding to tighten security for digital finance.
“Currently, [onboarding] is being used through quite a few blockchain-related companies as a means of verifying users and making account changes,” said information technology consultant Reza Dehghani. “Through the crypto[currency] community, assistant bots on platforms such as Telegram and Discord are common.” •
