KYC and AML requirements typically require financial institutions to rely on numerous third-party data providers for both onboarding and ongoing monitoring. PassFort streamlines this process into a single robust dashboard that integrates 25+ different data providers, mitigating the chance of fraud and security vulnerabilities. Digitally-focused financial institutions (neo-banks, fintech startups, global banks, and platform banks) can now deliver real-time, risk-based decisioning combined with fast, customer-friendly experiences. PassFort consolidates and streamlines both the onboarding process and ongoing customer management to meet ever-changing regulatory requirements, leaving institutions protected with detailed audit trails.
London TechWatch caught up with PassFort CEO and Founder Donald Gillies to learn more about the genesis of the business, strategic plans, latest round of funding, which bring the total equity funding raised to £13.05M, and much, much more…
Who were your investors and how much did you raise?
Series A, $16.2 million (USD) a mix of equity and debt. Our investors are Level Equity, Shard Credit Partners, OpenOcean, Episode 1, and Entrepreneur First.
Tell us about your product or service.
PassFort enables regulated financial services companies to rapidly onboard customers then manage risk and compliance standards throughout the customer lifecycle.
Our integration model enables us to ingest datasets from any data provider and interoperate with different back-office systems. We help customers build a data ecosystem, with pre-built connectors to more than 25 data providers and growing.
PassFort’s automation of customer due diligence, enhanced due diligence, KYC, KYB, and AML workflows through our unique smart policy builder puts the weight of compliance activity on our risk engine, not on an applicant.
We layer automation to speed up manual processes and remedial tasks that can’t be automated, bringing in compliance teams where they add the most value for analysis, judgment, and decision-making. More efficiency and greater customer experiences with no compromise.
Born in the cloud, PassFort’s SaaS solutions are designed for the digital economy. They are hardware-free, affordable, flexible to configure, and easy to use, with constant feature innovation and a choice of deployment options. Our low to no-code solution thrives on AML/KYC complexity, such as multiple customer types, multiple product lines, and multi-jurisdictions, solving challenges at scale without being costly to implement and evolve.
What inspired the start of PassFort?
Henry Irish (Cofounder and CTO, and I met through the Entrepreneur First cohort of 2015. We saw an opportunity to become the SaaS software that compliance professionals use every day.
Our key insight was that compliance professionals couldn’t configure, manage and evolve their customer onboarding and risk-monitoring processes as easily as say a sales and marketing professional might. There was no software for that. No one was building Salesforce for compliance.
Henry and I knew this was a problem that extended across the financial services industry, from startups to global banks. RegTech hadn’t caught the Enterprise Software revolution the way other business technologies had, so PassFort was born.
6 years later, PassFort is being used by compliance professionals to transform the way they support customers and work across the digital economy.
How is it different?
PassFort was ‘born in the cloud’ and designed for the digital economy. We are helping to build a trust infrastructure online i.e. whereby institutions are able to build trust in customers and customers can own their digital IDs and use that to access financial services.
We are also on a mission to digitally transform the working lives of compliance professionals because we don’t believe there should be a compromise between compliance efficiency and customer experience in the fight against financial crime.
In terms of our product, our smart policy builder is unique to PassFort – it uses a workflow approach (that looks like a flowchart) to manage compliance processes. Customers build in the KYC steps they want or need to execute, and they include decision points along the way. This means they can take a risk-based approach to compliance and avoid unconscious bias.
For example, the KYC steps might be to verify the individual’s ID with two data sources. That’s done but the applicant has a passport from a country considered to be high-risk according to the firm’s policy. That’s flagged in the workflow so, the process then automatically seeks further information and finds they have a passport from a high-risk country, but they have a UK address, so the applicant’s risk profile changes, and the compliance team can make their onboarding decision with a full and accurate picture of all the data available. Applicants aren’t excluded from financial products just because a rules-based KYC system has said no – that’s why PassFort’s risk-based approach, using our smart policy builder, is unique.
Our RegTech solution is a blend of great data sources, the best automation possible, and bringing people into the compliance process when key decisions and human judgement are needed.
What market are you targeting and how big is it?
We are targeting financial institutions and regulated businesses operating in the UK and EMEA initially, but with plans for global expansion. We specifically work with digital payments, online banking, crypto, and forex providers and we help them onboard customers across 197 countries and 211 jurisdictions.
What’s your business model?
We are a SaaS company, born and bred. We offer different deployment options for our customers, but primarily we are a SaaS solution – great for remote working and hybrid working, which is being adopted so widely in financial services following COVID.
How has COVID-19 impacted your business?
The digital economy was taking off anyway, but COVID hit the accelerator. There has been a boom in digital payments, cryptocurrencies have taken off, foreign exchange has been huge for us. All this means FinTechs and regulated businesses need efficient, flexible ways to carry out digital onboarding and ongoing risk-monitoring at scale, which is exactly what we offer.
PassFort was born in the cloud, built for a digital economy. It can be used in any jurisdiction for any product or customer. And compliance teams can use it in the office, at home, or when hybrid working.
- Digital transformation and remote working have accelerated, particularly since COVID
- Criminals have exploited disruption leading to an increase in volume, complexity, and sophistication of financial crime. It’s estimated from those tracking regulatory changes that by August 2020, more than 1,330 COVID-19 related regulatory announcements had been made globally by regulators.”
- Technology was designed to satisfy regulators rather than digitally transform the compliance profession
- Customers have high expectations of fast, digital, and exceptional customer experiences
PassFort is a solution to these problems.
What was the funding process like?
Fast! We are extremely pleased to have secured the funding so quickly working with Level Equity, who were efficient and supportive. Shard Credit Partners, who provided PassFort the debt facility were also great to work with, Will Chappel in particular was hands-on and partnered with us through the raise.
Charles Chen of LE is now on our board and we are delighted to have knowledge and experience on our side through the next phase of growth.
What are the biggest challenges that you faced while raising capital?
Possibly the speed of turnaround, the team had to pull together to gather the information needed for LE’s due diligence process. Otherwise, we were delighted with how the process went.
What factors about your business led your investors to write the check?
“Over the last few years, financial institutions and organisations have experienced exponential growth in business volumes and data, which has only increased the complexity in staying compliant with ever-evolving regulatory laws. In parallel, we’ve experienced an unprecedented rise in sophisticated financial crime activity as channels into financial systems have been digitised. This has underscored the importance of compliance matters such as AML/KYC, yet companies often have to weigh the trade-offs between speed, compliance, and automation. PassFort has solved this challenge by providing a next-generation RegTech software solution that enables customers to offer a seamless customer onboarding experience, maintain best-in-class monitoring capabilities, and balance automation vs. human touch via its intelligent orchestration engine,” Charles Chen, Partner at Level Equity, who will join PassFort’s board of directors.
What are the milestones you plan to achieve in the next six months?
We plan to accelerate expansion of our Growth team. Following the recruitment of our c-suite with Ray Ryan, formerly of ComplyAdvantage, as CRO, and Dr. Christine Bailey, formerly Valitor, as CMO, we are now in a position to grow sales and marketing activity and secure PassFort’s place as the category leader for SaaS RegTech.
There are currently 54 customers and 1,289 users of PassFort – the plan is to continue growing that number.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
You need to see and understand a problem that businesses or consumers face every day. Figure out what would make them happier or make their lives easier and then believe in the solution you design. Focus on creating a great solution – engineered from the customer backwards – and don’t be afraid to test and evolve that constantly. Our customers request around 8 changes to their configuration of PassFort each quarter and that’s no problem. We are flexible and responsive and want to deliver the Compliance solution that works for each customer.
You need to see and understand a problem that businesses or consumers face every day. Figure out what would make them happier or make their lives easier and then believe in the solution you design. Focus on creating a great solution – engineered from the customer backwards – and don’t be afraid to test and evolve that constantly. Our customers request around 8 changes to their configuration of PassFort each quarter and that’s no problem. We are flexible and responsive and want to deliver the Compliance solution that works for each customer.
You also need talented people – we are extremely thankful for all the smart, skilled people that work across the team.
If you design a good solution, it’s easier to attract talent, to talk about it to customers, and to sell it. Then the capital investment should follow.
Practically speaking, spend what you have. There is a temptation (especially with investors) to spend quickly and hope for growth. My advice would be to gate your levels of spending based on your levels of growth so you don’t run out of money or are too dependent on any single investor. Be honest, if you are spending too much and cut back.
Where do you see the company going now over the near term?
The company only started commercialising its product in 2018. PassFort operates with gross margins at 90+% with all its software designed in-house and cost of sales limited primarily to cloud computing resources.
We are not currently cash generative, but Covid last year set us on a “Path to Profitability” plan, which was achieved prior to raising this round of funding (and subsequently increasing investment into our business).
So, we see profitability, growth, and a recognition of PassFort as a leader in the SaaS RegTech space.
What is your favourite restaurant in London?
Good question – there are lots to choose from and my passion is food and cooking. My partner and I love Italian in particular, so we would probably say La Famiglia or Daphne’s in Chelsea.
