Pioneering Identity Verification: Shile Owoka's Trailblazing Path with Smile ID in Nigeria

I had the chance to sit down with Shile Owoka, Smile ID's General Manager for Transaction Authentication and former Country Manager (Nigeria), to discuss how identity verification has evolved in Nigeria. Smile ID operates in multiple African countries, with our initial entry into Nigeria, which is now our largest market. 

However, achieving this milestone wasn't easy. Five years ago, identity verification in financial institutions was very different—opening bank accounts required hours in the bank with extensive paperwork. Fintechs and Neobanks weren't popular, and the adoption of Nigeria's Bank Verification Number (BVN) and Nigerian Identification Number (NIN) was still in its early stages 

Shile Owoka joined Smile ID two years after our 2016 launch. While refining our MVP for banks and financial institutions, starting a first-of-its-kind business like Smile ID was challenging. Yet, Shile excelled. He collaborated with the team, cultivated strong relationships with ID authorities, shifted our focus to emerging Neobanks and Tech Startups, and played a key role in the brand's substantial progress.

This article will delve deeper into this incredible journey by asking Shile specific questions.

Keep reading to uncover more about this remarkable story.

The urgent need for identity verification in Nigeria

When you joined Smile ID in 2018, how was the landscape of digital identity verification and compliance solutions in Africa?

Back then, there wasn't any established infrastructure for proving your identity online using biometrics. We did have some infrastructure in terms of accessing data. For instance, there was the BVN issued by NIBBS and NIN issued by NIMC. These two ID types were available but not easily accessible online.

They were accessible only to those I call ‘gatekeepers’. To be a gatekeeper, you had to be licensed by an authority like the central bank or certified as a verification agent by NIMC. Alternatively, you needed to have significant financial backing. This setup was the reality of digital identity verification at that time.

Now, when it comes to other forms of identity like voter IDs, driver's licenses, or passports, there wasn't an online database or service to check or retrieve data from these ID sources. Financial institutions primarily verify information manually, relying mostly on paper-based methods. The challenge with these manual processes was the inherent friction during onboarding and the growth limitations it imposed on businesses.

However, Nigeria had BVN, which financial institutions could access for verification and KYC purposes, but in most African markets, this was not the same.  In some cases, we were in discussions with governments to create APIs, allowing third-party entities like us to access their ID systems. And while this has materialised in some markets, we still have a long way to go. That was essentially the landscape at the time.

What made you want to join Smile as a leader in Nigeria?

According to UN statistics, approximately one billion individuals lack fundamental proof of identity, with half residing in Sub-Saharan Africa. Accessing essential public services like healthcare and pensions becomes impossible without this basic identification. Also, it hinders individuals from leveraging the prospects the digital economy offers. As our founder, Mark Straub puts it, a modern digital lifestyle remains out of reach without basic proof of ID. It's a colossal problem that remains largely unaddressed.

From my standpoint as a leader in Nigeria, this meant embracing an entrepreneurial pursuit. I was entrusted with the responsibility to drive entrepreneurship by establishing fundamental ID verification systems and biometric tools. These innovations aim to unlock digital opportunities for Nigerians. It sounded very exciting and equally challenging, that’s why I took on this role.

Smile ID’s approach to tackling regulatory and technological shifts

How has Smile ID navigated regulatory changes and compliance requirements over the years?

The people we work with in different markets are vital. They help us engage with regulations and regulators and ensure everyone's goals align. This includes local board members, country managers, and legal advisors.

In other instances, we proactively engage with leaders of ID authorities and government agencies. In these engagements, we liaise with these regulators and communicate any changes in regulations to our clients. 

One tangible example of the latter is our engagement with the National Identity Management Commission (NIMC) in Nigeria (which issues the NIN). They expressed concerns regarding companies creating replicas of their databases, raising data privacy and access visibility issues. In response, NIMC introduced a tokenisation service for verification, emphasising data privacy compliance and limited access to personally identifiable information, along with clear audit trails. 

In this scenario, we engaged proactively, providing guidance and insight on building technology to support fintechs and startups, aligning with the changes initiated by NIMC.

These instances summarise our deep engagement with authorities and regulators, working closely with them to adapt to the evolving regulatory scene and foster mutually beneficial solutions.

Rising above the challenges: Smile ID's trailblazing moments in Nigeria

Can you describe the milestones that marked the transformation of Smile ID and the industry during your 5-year tenure?

Initially, gaining access to the ID authority was a huge challenge. Back then, forming alliances with local entities in Nigeria that possessed the required licenses to access this database was a game-changer for us. These local allies became our sponsors, allowing us to offer this data to our customers. Once we gained access and linked it with biometric capabilities, the value of our service offerings became much clearer.

Our primary technology use case back then was digital KYC or eKYC. A regulatory framework existed that mandated financial institutions to verify regulatory ID documents like passports and BVNs. Offering a solution for verification that aligned with regulatory expectations was a critical milestone for us.

Transitioning from SDKs to APIs made our offerings easier for partners to consume, significantly impacting our approach.

The emergence of ‘challenger banks’ leveraging technology post-2018, particularly in Nigeria, was another pivotal phase. These banks embraced new technology, aligning with our approach and providing significant opportunities for collaboration.

COVID-19 was a significant milestone for us as well. It helped us streamline sales cycles from years to months. Also, we were able to assist governments with their COVID relief programs, aiding in the distribution of relief to millions of Nigerians.

A recent milestone was Nigeria's demonetisation program, which led to cash scarcity and increased transactions at agent touchpoints. Our partners in agency banking operations experienced substantial growth. In early 2023, our verifications skyrocketed, surpassing the total verifications we'd done since our inception up to 2022.

How have the solutions provided by Smile ID impacted the businesses and industries it serves over the years? 

When you want to scale swiftly, integrating the Smile ID digital verification platform sets the stage for accelerated growth. Let's delve into some of these growth metrics.

In 2022, Nigerian fintechs secured over $1.2 billion in financing, the largest in any African market. These metrics underline the pivotal role of infrastructure like ours, enabling rapid user acquisition and subsequent monetisation.

One of my favourite customer stories is that of Kuda Bank. At the beginning of 2023, Kuda celebrated an impressive milestone of acquiring 6 million customers. To put this into perspective, Access Bank, a top-tier commercial bank in Nigeria, achieved the same number of customers between 2002 and 2012—taking a decade. Kuda, on the other hand, accomplished this feat in less than four years since its late 2019 launch - as their onboarding partners, it is a clear indication that digital KYC was directly correlated with their business expansion. 

Another remarkable story involves our collaboration with GT Bank. They aimed to migrate over 2 million active users from their existing Internet banking platform to a new channel without necessitating branch visits. Our challenge was to achieve this remote migration as swiftly as possible. And within three months, we successfully migrated over a million of these customers.  These impacts and achievements are close to my heart and reinstate the value of why Smile ID exists and its transformative power on the continent. 

Envisioning Smile ID’s future impact in Nigeria

In another 5 years, how do you see Smile ID’s story transforming? Where would Nigeria be in particular?

Our bullish outlook on growth companies and enterprise customers remains consistent for us. Across the board, one common necessity among these customers is verifying their users' identities to combat fraud. Our trajectory aligns with building powerful biometric tools over the next five years to empower these entities in their fight against fraud.

Our goal is to position Smile as the leading biometric solutions provider in Nigeria, equipping the country to tackle emerging threats like deep fakes and systemic frauds such as duplicate fraud. We aim to empower Nigeria to counter these challenges effectively using our biometric solutions.

Considering the challenges we faced when starting five years ago. It often seems insurmountable, but I am determined to face these challenges head-on. Hopefully, in another five years, we can revisit this conversation and see our progress.

The journey continues: Smile ID’s growing legacy in Nigeria

Even with our recent accomplishments—such as completing 100 million identity checks and expanding after our Series B raise—it's evident that Smile ID is just getting started. Nigeria is currently going through an unprecedented time, at Q2 2023, the fraud rate in Nigeria increased by 277% and keeps rising. There is work to be done. 

As Shile rightly pointed out, I eagerly anticipate what the next 5 years hold for Smile ID and how it will shape the identity verification landscape in Nigeria and across Africa.