Daon established itself years ago as a leading pioneer of the mobile biometrics revolution. The company was one of the first biometrics specialists to realize the potential of using the sensors on mobile devices—specifically cameras and microphones—to enable multimodal biometric authentication through sophisticated software that could run on virtually any smartphone.
As mobile biometrics have become ubiquitous, Daon has quietly continued to refine and promote its IdentityX platform, to the point where it not only supports powerful face-based authentication capabilities, but compelling voice-based security as well, resulting in some notable recent partnerships focused on call center security. In this new interview with FindBiometrics, Daon CEO Tom Grissen delves into his company’s advances in voice technology, and also talks about excitement in FinTech, the growth of Daon’s VeriFly solution, and his company’s impactful work as one of the identity industry’s ‘well-kept secrets.’
Read the full FindBiometrics interview with Tom Grissen, CEO, Daon:
Peter Counter, Editor in Chief, FindBiometrics: When Daon IdentityX was first launched, it supported a number of biometric modalities, including voice recognition. Over time, how has this technology evolved? And what innovations have been added?
Tom Grissen, CEO, Daon: One of Daon’s proven strengths is our worldwide customer base, and delivering authentication and identity verification solutions in a regulatory compliant way at scale across this space. Our global customers place a lot of importance on our strong native intellectual property. And that would span verification, authentication, and our contact center solutions. That also includes a very wide range of on-device and on-server biometric modalities.
In recent years we’ve seen the advancement in machine learning algorithms and that allowed us to dramatically improve facial biometric technology. So face verification, face identification, and face liveness algorithms are significantly beyond what a human observer could perform. We take all these modalities that are appropriate and have them independently tested by NIST and iBeta, including iBeta Level 2, which has a very high standard of presenting attack detection. They are very skilled hackers trying to defeat the system. We passed their test with no break-ins. So the bar is extremely high for the technologies that we put into production.
Also, voice – as you asked about – has improved significantly in security, flexibility, and convenience. It’s an important modality. We originally launched IdentityX to support text-dependent voice authentication, and then we expanded the platform into the contact center, which is an important channel for telephone users. Then we created text-independent and text-dependent voice authentication algorithms, and we further secured that channel with a voice replay algorithm. That is important because it allows our customers to move beyond frustrating, time-consuming, and insecure knowledge-based authentication methods that tie up contact center operators, and obviously customers who have to spend 45 seconds or so trying to say who they are. Voice biometrics is a much more natural approach.
We also have our team of top researchers and biometric scientists developing cutting edge improvements to the technology in order to protect against new threats—as the bar is always being raised. We also are very open-minded and we evaluate hundreds of third-party technology products from around the world that plug into IdentityX and our VeriFLY platform. But in all cases, our customers count on us to test the performance claims of these third party products in the wild before they put it into production. And only the best ever make it into production. So we see a constant advancement in the quality of the modalities, and also just how they’re used. In the beginning it was more on authentication, and obviously now it’s bridged into verification and the contact center. It’s multichannel, and we are taking the best and highest-performing modalities.
Peter Counter, Editor in Chief, FindBiometrics: I’m really excited to hear you talk about the importance of replay defense in voice recognition. It’s not something we hear a lot about, but given how much voice data is out there, I imagine that replay attacks are a growing part of the security arms race you alluded to.
Tom Grissen, CEO, Daon: Absolutely. It is a big threat factor for the CISOs of our customers. As you can appreciate, customers don’t want to spend 45 seconds going through authentication and knowledge-based security. Many datasets have been compromised through breaches. The success of voice in the prevention of replay attacks is very promising. We’re excited about it, for sure.
Peter Counter, Editor in Chief, FindBiometrics: As a consumer myself, especially after the pandemic, I don’t know how many times I’ve had to deal with an IVR system or a call center. I sleep easier knowing that folks like Daon are protecting that experience.
I’ve been personally reporting on your company for about 10 years now, so I take your presence as an innovator for granted. But Daon still seems to be a well-kept secret in the identity industry. Can you elaborate on some of your recent worldwide successes and deployments?
Tom Grissen, CEO, Daon: Daon certainly is a worldwide business, and a fact that I don’t think has ever been publicly shared is that if you gathered our top 20 customers measured by annual revenue to Daon, their corporate headquarters would be in 10 different countries. This gives us a full appreciation of operating around the world. And I’ll share some of the other implications of that as I answer your question, but many of our customers are iconic brands. Many of them are very large, and due to the nature of our work as a core part of their digital security strategy, they are often very private on these matters.
The most important measure to us historically, and today, has been when our work positively affects our customer’s brand. Our customers are all very proud of their brand name, and for us, it’s all about helping their brand name be synonymous with innovation, convenience, and trust.
As I reflect on that in your question, it is probably due to our early heritage in protecting nations, borders, and critical infrastructure. We did that often behind the scenes and there was a very big dedication to the mission of our customers. We didn’t do much at the time to promote that activity because there was a word-of-mouth between countries that Daon technology served them well. I think the things that more recently stand out to me are more outcome measures, because I don’t really see our customer base shifting and speaking extensively about their core components or digital security strategy. But I can share some recent examples to illustrate the work we provide and how we help them.
One of our large customers in the European continent successfully processed a billion customer biometric authentications over the past year, and the way they did it with us reduced their fraud by a third, which is a significant outcome measure for a financial institution. But it’s not just about fraud. One customer I can speak about is SMFG in Japan, and they’re on track to process 11 million eKYC verifications this year, which is hugely important to driving new account origination and customer revenue. And an interesting metric that we get from around the world is that our customers tell us 30 to 40 percent of their Net Promoter Score (NPS) is based on how easy they make it for the customer to do business with them, whether it be new account origination, authentication, or the contact center. Those are big parts of the customer experience. We celebrate with our customers when their NPS rises above 60. It’s a great outcome measure that provides us some unique insights.
And then we have the VeriFLY platform, which is newer to Daon. Our corporate airline and cruise customer base—and this would include the world’s largest airline and the world’s largest cruise line— have been more vocal. And I think they’ve spoken up to help outreach to the travelers. To say, “Come fly with us,” or, “Come take the cruise with us. You’re going to have a good experience.” And also because of the immense pressure they are under. But as recently as the 10th of August, the head of guest marketing technology for Carnival Cruise Lines stated in a press release that VeriFLY saved their guests a significant amount of time at the port, helping board the ships faster.
Pause and think about boarding a cruise ship, with 4,000 other people that are eager to get aboard and begin their vacation—if you can do that in half the time, that’s a big operational improvement. So when I look at Daon, I always felt that operating worldwide made us a stronger company. It’s not always easy, but it’s very valuable. And while IdentityX and VeriFLY have both been adopted globally, each region of the world has unique preferences. And they also have data privacy and regulatory requirements that are special. Those requirements force us as a company to design a more orchestrated flexibility into our technology. And the other benefit is just that the diversity and cultural difference of our customers reflects on our employees. This translates to unusually high retention rates, more innovation, and a richer culture.
And the last thing is, there’s no region in the world that has control over the market as it relates to innovation. We see innovation happening all around the world. One of our financial services customers in APAC is live with our account origination technology, IdentityX. And they’re able to bring new customers on board in 90 seconds with zero fraud to date. That’s segment-leading outcomes, and it’s helpful for other regions of the world to realize that it can be achieved that way, as opposed to a very friction-filled experience.
And there are also very subtle, less tangible things that make up Daon’s culture. I mentioned, one of our top enterprise customers is SMFG in Japan, and our employees and Daon play an important role in supporting SMFG. To their great credit, on their own, they decided to retain a tutor to host weekly sessions, teaching them to speak Japanese. This is done out of respect for our customer, and respect is a big part of the Japanese culture. It wasn’t an idea that came from the office of the CEO. It just simply was an initiative that Daon staff wanted to take. And I think it’s really cool to see that. There’s hundreds of individual things like this that happen across the company. I do believe that that greater appreciation of culture, understanding the challenges different regions of the world face, and knowing how we as a company can reflect their culture in the service we provide—these are all really important to our success.
Peter Counter, Editor in Chief, FindBiometrics: First of all, congratulations, that’s all really amazing. It’s really great to hear about these human elements that go along with your business. We talk a lot about this technology in our industry, but really, at the center of identity, it’s all about humans interfacing with other humans in digital and physical spaces. It’s nice to see that your global scope has really brought a high degree of humanity to what Daon is doing.
Tom Grissen, CEO, Daon: Thanks, Peter. I think it’s a really good observation. You have to. It’s vitally important. The center of every transaction is someone trying to get something done.
Peter Counter, Editor in Chief, FindBiometrics: We spoke a little on this already, but Daon is a big pioneer of mobile biometrics in the financial services market, which remains the frontline of biometrics adoption. Are you starting to see that traction for biometrics in the financial space extend into the world of crypto and other verticals?
Tom Grissen, CEO, Daon: Our customers turn to Daon because they need an identity solution that provides continuity through authentication and verification, across all channels, whether they be mobile, web, contact centers, or in person. I think Gartner estimates the total addressable market for this to be around $8 billion in 2025. So it’s a significant market, and financial services customers are front and center in that, and operate in regulated industries.
But it’s not just them. Crypto is another good example. We have customers in insurance, telecommunications, healthcare, public sector, hospitality, casinos, and the sharing economies. And they are all going to require high performing solutions that address similar needs to those required by financial services. They have to do it in a regulatorily compliant way. Every market that I just mentioned has regulatory requirements. Some not as rigorous as financial services, but nonetheless all have regulatory components that place demands on them. With these challenges comes an opportunity for us to make sure that the end user transaction is reliable and secure. And I’d say, with the emergence and pace of crypto—even though there’s a current uncertainty about what happens next in that market—I think it’s inevitable. It’s going to become a significant part of the economy. And it’s only heightened with the recent concerns about fraud and the peace-of-mind on transactions. So yes, we see crypto as an important space. It’s going to be a market that will be regulated. Nations are going to step into it and set standards. And we also see those other markets I mentioned as very important to the future of Daon.
Peter Counter, Editor in Chief, FindBiometrics: I love that hopeful outlook. We’ve already spoken a little bit about VeriFLY, but I’d like to loop back to that. You mentioned that VeriFLY is new for Daon, but that just makes the stat hat I’m about to mention all the more impressive. You announced earlier this year that VeriFLY has reached the milestone of 200,000 users. Where does the user base stand now, and what is your vision for VeriFLY in the future?
Tom Grissen, CEO, Daon: It’s a really fascinating stat. I almost have to chuckle a little bit, but when we get our technology right, we have very steep adoption curves. In terms of your question—200,000 users, as a milestone—we currently have, less than six months later, over 10 million users. And it’s growing at about a quarter million users per week. And VeriFLY has been both a brand success globally, and a market and financial success for us. In the iOS App Store VeriFLY ranges between the 16th and the 23rd highest ranked app. We haven’t invested any money in marketing—again, back to our heritage of trying to build the right technology, but perhaps not promoting it as much. It’s current App Store rating is 4.6, and that comes from over 350,000 users.
If you look at those types of measures, it’s a wonderful success. Coming back to where the credit is deserved for VeriFLY: first off, it’s a pure SaaS offering. We started with a pilot with American Airlines from one route—Miami to Jamaica—and it was to take pressure off their staff and provide a simpler, more streamlined and confidence-boosting tool for travelers to use. And American Airlines was incredible and insightful in helping us as we worked with them so we could fully appreciate the challenges that the traveler had. We sent a team down to Miami and they just lived there for two days, watching American Airlines’ professionals at a check-in counter, trying to help travelers, and also watching travelers try to confidently and successfully bring together the travel-related identity credentials necessary for the destinations they wanted to fly to.
One of the striking things we saw while we were there in Miami was a bride who was just married. She still had her tiara on, she was heading off on her honeymoon, and she had thought she had created all the right travel documents to get to her destination. Inadvertently she had made a mistake and she was denied entry. She just couldn’t go on her honeymoon. So you have these huge, complicated set of travel-related documents that don’t come together in a nice place. And one of the things that VeriFLY did was bring all that together.
To your point earlier about having the individual user at the center of what our identity technology does: it’s natural for all of us in this field, because we’re security experts, to think of these solutions as a bunch of algorithms or cryptography or liveness detection. But when you get back to the consumer, security is an emotion. It’s one filled with frustration at times, and anxiety, and then this great relief when it’s done right. And I think if we start with that, we design better technologies. That’s certainly one of the things we did with IdentityX and VeriFLY. And so the 10 million users hasn’t come through tons of advertising, it’s come through a technology that really has a great product market fit. It was actually never designed to help with COVID. That’s kind of funny to say because it’s the world’s most popular app for managing digital health credentials, but we created VeriFLY for a much broader problem, and that was to help travelers acquire credentials of any type in a digital world, and then present them in a physical world, to remove that burden of physical travel documents.
You probably experience this yourself, but passengers have this suffering—the slow pace and inconvenience, the different travel documents they have to bring together and ensure are up-to-date, and which ones are necessary to get to where they want to go. All of that leads to longer transaction times, higher handling costs, increased frustration, and flight delays. VeriFLY was designed to help remove those challenges. I personally think of it this way: I’m a runner and I feel so much better when I’m on the move and more confident. In a simple way, VeriFLY is somewhat the same. Travelers want to be on the move. They want to feel confident that they have the documents necessary to get to where they want to go, and they’re not going to have disruptions. So, behind VeriFLY we’re investing more in our artificial intelligence and machine learning, and while those may be buzzwords from a consumer standpoint, they’re really important.
Think about how it’s affected travel. Our customers that use VeriFLY know, before they leave the comfort of their home, that they have every single travel-related document necessary to board a plane or cruise ship, and they don’t have to worry about having their plans disrupted. Our strategy and our vision behind that is to really break down these silos. Passengers can share data in a privacy-enhancing way across their travel journey with who they want, when they want, how they want. We’re working extensively with other leaders in the travel sector who share this vision and arranging partnerships. I’d say VeriFLY is at an exciting point and has a really exciting future for Daon.
Peter Counter, Editor in Chief, FindBiometrics: I love that phrase you used, “Security is an emotion.” With everybody traveling all over the place now that pandemic restrictions are lifting, and everything is going ahead at full speed, any delay can feel catastrophic. The amount of relief of having that VeriFLY assurance—that I have everything I need, and that it’s secure, and it will get me where I’m going—that’s a priceless feeling right now.
Tom Grissen, CEO, Daon: For travelers everything is emotional. I was a road warrior for a long time, and I even feel emotional when I’m traveling. I want to make sure I got it right, I want to be confident. And so I think what was really well done with VeriFLY—and again I want to give credit to American Airlines, because they were very insightful in terms of what the product needed to do, and listening to that voice of the customer helped us a lot—is that it addresses that emotional need, and it does it in the way tech companies would want to build a product. It’s exciting.
Peter Counter, Editor in Chief, FindBiometrics: Moving away from the human element for a moment, you’ve mentioned VerliFLY’s use of sophisticated AI, especially as it continues to expand. How does the use of AI make you more competitive?
Tom Grissen, CEO, Daon: Great question. I can focus on the customer, but behind that, I have to have cutting-edge technology deliver on that brand promise. If you think of our AI—and I’ll just take the travel sector alone—there’s a lot of identity-related travel documents that need to be verified and processed such as visas, COVID certs, health attestation forms, and passports, just to name a few. VeriFLY, can validate all these identity-related travel documents digitally, in a trusted manner, in advance of travel. So it certainly leads to better efficiencies and a better customer experience. And when I get into the tech side of it, our AI engine, which we branded ‘Veri,’ has been trained through the review of over 50,000 unique credentials, from over 74 countries around the world. And the remarkable thing is it has yet to make a mistake that led to an inadmission due to travel documents.
And it’s a hugely important measure of quality. Mistakes in traditional methods are made daily and weekly. And they’re costly. Whether you’re an airline or cruise line, you can imagine if you fly somebody to a destination and immigration denies their entry, they have to be boarded back on the first plane. There is typically a significant fine, and these fines roll up into the millions of dollars a year. That brings us back to the regulatory issues, not to mention the disruption to the traveler. The success of the AI technology is seen in how we’ve been able to train it to the diversity of travel-related documents around the world, and not having made a mistake yet that led to an inadmission. It is an outstanding performance by our team. I’m really proud of that.
Peter Counter, Editor in Chief, FindBiometrics: I think you ought to be. When you have something like that, where the performance speaks for itself, I think that proves that you struck a balance in a high-stakes scenario between the technology and the customer experience. And that’s a razor-thin line to walk sometimes. So, congratulations.
Tom Grissen, CEO, Daon: Not for the faint of heart, right?
Peter Counter, Editor in Chief, FindBiometrics: No way—you need to have perseverance in this industry.
Tom Grissen, CEO, Daon: It’s interesting. It was very demanding, but people loved it. There’s just an element of great pride that was very professionally rewarding for the tech teams that work so hard and for our customers who were part of it.
Peter Counter, Editor in Chief, FindBiometrics: What can we expect from Daon in the second half of 2022?
Tom Grissen, CEO, Daon: Just like 2021, we’re going to come forward with a lot of innovation in the second half of the year, all designed to meet customer needs. Our identity verification product, IdentityX, is in production around the world and has been vital to meeting the regulatory requirements that are strategic to our customer base. We are adding assisted digital onboarding, which really translates to a live agent, in multiple languages, and certain regions of the world require it, particularly certain regions in Europe and some in APAC.
Our customer base is increasingly moving to the cloud, so we’re doing a lot tied with new simplified integration models. Document forgery is always top priority, so we’re releasing a number of new identity document forgery detection capabilities, and they leverage our AI and ML capabilities that are key to delivering remote identity verification.
And as I previously mentioned, we’re expanding VeriFLY into new markets, and new usage, such as visa integration and tokenized identity. We see it all as part of a central strategy for consumers to streamline access to real world services that are delivered in person. We’re also working on really exciting partnerships for our solutions. So I think you’ll see some significant partnerships announced. Right now, as we speak, we’re going live with some very significant gaming, entertainment, and telecommunication customers, all of which are new to Daon, in different regions of the world. We expect those customers to issue press releases in 2022. As we talked about earlier, those are regulated industries that are faced with everything from SIM swapping to identity-related issues. This is an exciting time for us.