Blockchain Startup Fractal Signs Deal With ConsenSys-Backed Gnosis To Drive Global Financial Inclusion
Fractal, a Berlin and Singapore-based identification management upstart, has signed a partnership with Gnosis Limited (Gnosis), which has developed a conditional token standard allowing users to predict the outcome of multiple events and gain insight into their relationship. The partnership will benefit future users of Sight, an innovative market prediction platform by Gnosis. Fractal’s identification solution will bring bank-grade compliant ‘Know Your Customer’ (KYC) and ‘Anti-Money Laundering (AML) capabilities to Sight’s operations.
Per McKinsey’s Digital Identification 2018 report, there are an estimated 4.4 billion people around the world who either do not have a legally recognised form of identification (ID) or do not have a digital trail. Having good digital ID is highly beneficial, not only providing civic and social empowerment but also creating opportunities for financial inclusion.
Julian Leitloff, CEO and founder of Fractal, came up with the idea for the business after witnessing the 2008 collapse of Lehman Brothers and Deutsche Bank first-hand. He saw the lack of AML/KYC control as a major barrier preventing healthier financial ecosystems and decided to work with like-minded individuals to start Fractal. In promoting a more open financial ecosystem through Fractal’s non-bank financial institution (NBFI) partners, Fractal’s vision is to promote financial inclusion at a global level.
“For global investors to have access to global intelligence and market insights, they will need requisite digital identity and verification. Fractal’s solution helps Gnosis and Sight users to access smart investment intelligence to make better trades and investments,” explains Julian. “Increasing the compliance of blockchain-based projects worldwide, will in turn increase the standing of the new ecosystem with regulators. We want to offer a solution to not only giving an impulse to set a new regulatory standard, but also help blockchain companies overcome the cost of compliance, hence making it much easier for new players to find their place within the ecosystem,” added Julian.
Gnosis builds decentralized infrastructure on Ethereum, including prediction market protocols and standards. Gnosis is also the first project founded within and spun out of blockchain venture studio ConsenSys, a well-known global blockchain technology company building the infrastructure, applications, and practices that enable a decentralized world. In 2017, Gnosis set a new record by raising 250,000 Ethereum then valued at US$12.5 million in a token offering via a Dutch auction, the first successful token generation event of its kind.
Dr. Friederike Ernst, Chief Operating Officer of Gnosis said, “Using Fractal has saved us time getting information from investors to do smart trades. It is great that we can focus on what we love to do – building applications on top of Ethereum.”
In order to help break down barriers to services for people with no access to the necessary infrastructure, Fractal will be making their KYC/AML solution available to all. Through this initiative, Fractal hopes to assist companies by removing this roadblock and transition to a more open and inclusive financial ecosystem.
KYC and AML processes are critical components of financial institutions and other regulated entities that are required to verify identities, provide due diligence, and comply with legal requirements.
Digital ID has also been estimated to lower opportunity costs by eliminating frictions within customer onboarding. World Bank’s Private Sector Economic Impacts from Identification Systems 2018 report shared that in the UK, one out of four financial services applications were abandoned due to difficulties encountered in the KYC process.
Fractal provides the industry’s first free tier for KYC/AML solutions. Fractal ID was conceived as a global solution to enable trusted relationships between people and organisations across borders and languages based on reliable and verifiable information. Fractal’s self-serve software-as-a-service (SaaS) product will provide an opportunity for financial inclusion while maintaining compliance. The automated verification journey is composed of four components: ID document verification, liveness detection, facial comparison, and Politically Exposed Persons/Sanction List filtering – including human intervention if one part of the automated process fails.
Fractal was one of the few scale-up ready startups supported by German Accelerator Southeast Asia (GASEA), a partnership between Enterprise Singapore and the German government to facilitate German start-ups’ set up in Singapore in 2018. The startups were selected based on the region’s industry needs.
Since 2017, Fractal has received US$3 million in venture funding with participation from Coparion, a VC fund backed by the German government. They have also partnered with Hong Kong’s Ocean Protocol, a data-sharing platform, Germany’s Bitwala, a virtual bank, and Singapore’s Piexgo, a digital currency exchange and ALLDEX, a derivatives exchange to achieve their goal in delivering fast and accurate global verifications.
Fractal ID is a user-centric KYM/AML platform specifically built for Finance 3.0 services including blockchain fintechs – internationally compliant, easy to integrate and with a conversion rate of 40 per cent above market average. Fractal was founded in 2017 in Berlin and holds additional offices in Porto and Singapore, where it has completed the German Accelerator Southeast Asia programme. The company received US$3 million in venture funding with participation from Coparion, a VC fund backed by the Germany government. Visit https://www.trustfractal.com/ for more information.
The Gnosis Group builds new market mechanisms to make this future possible. Through blockchain-based, decentralized infrastructure and trading protocols, they enable the redistribution of resources—from assets to incentives, and information to ideas. Gnosis will be launching its latest prediction market project, Sight, in Winter 2019/2020. Visit https://gnosis.io/ for more information.