The London Stock Exchange Group (LSEG) has acquired digital identity verification start-up Global Data Consortium (GDC), to enhance the group’s know your customer (KYC) and identity capabilities.
GDC is based in North Carolina’s Research Triangle; founded in 2012, it sources identity information from more than 300 sources across 70 countries. Neither LSEG or GDC disclosed the value of the deal, but North Carolina media speculated it could be in the range of hundreds of millions of dollars.
Refinitiv, previously acquired by LSEG -- which has been acquisitive recently -- holds an 11% stake in GDC, through a $3.5 milllion investment in 2020. Through this LSEG’s global head of digital identity and fraud solutions, James Mirfin, previously of Refinitiv, has had a seat on the board of GDC.
LSEG buys GDC for its 'unique approach'
“GDC was a vendor to us previously, and obviously, we had an investment so we've had a close working and commercial relationship,” Mirfin told The Stack, following the deal's announcement.
“Bringing that team together with the product and tech and sales teams that we have, we think will obviously allow for a stronger collaboration, a tighter integration with some of the other data centric capabilities that we've got. We're also very excited about the customers that GDC services and the channels that they service, and partnerships,” he added.
Mirfin praised the quality and breadth of the data GDC has access to, and said the company has a “unique approach” to building that access. He said LSEG’s global reach would also help GDC scale its access to new markets around the world.
On the technology side, Mirfin described KYC as “an interesting data and technology conundrum”
He told us: “GDC has done a very, very good job of that. And it's about making use of the best technologies available, in a thoughtful way. We're providing solutions to our customers to help them to mitigate financial crime risk, fraud, money laundering. I always describe it as an arms race; the fraudsters and the bad guys on the other side of things, they're using the same technology to try and counter the solutions that are being taken to market,” he added.
KYC has become increasingly complex in recent years, driven not only by the proliferation of available data sets, but also the tools available to analyse them – and demands from regulators that institutions act on the data. Facial recognition is becoming the norm, and as Mirfin notes, a quick look at KYC headlines brings up technology including AI, machine learning and orchestration – along with reams of data privacy demands.
“It's making sure you've got quality data, you're able to make sure you've got the rights to use that data and allow it to be interrogated for transactions. It's about bringing secure technology to bear because you've got sensitive PII data flowing through these platforms,” said Mirfin.
WRAL Techwire, a Raleigh, NC, broadcaster, described GDC co-founder and president Bill Spruill as: “one of the region’s most outspoken leaders on issues relating to diversity and inclusion, and the disproportionate challenges Black entrepreneurs often face when raising capital.”
The firm has also been notable for eschewing venture capital investment, and instead bootstrapping its operations until 2020, when it accepted the investment from Refinitiv.
“It's clearly attractive to acquire a company that's developed more of an entrepreneurial culture. It's interesting how much is coming out of the Research Triangle, and out of the North Carolina area, there's a lot of high tech companies coming out of there,” said Mirfin.
“I've always been a big believer that the more diverse you can add diversity you can have in your team, the diversity of thoughts, experiences, cultures background, it helps you to actually progress as an organisation, it helps people feel like they can be themselves at work.
“And actually, it also helps you to think about market opportunities as you take customers to market because you've got different perspectives at the table, we've got people who have a different way of looking at things.”
Spruill said in LSEG’s press release: “I’m thrilled that GDC is joining the LSEG family.
"Building on the previous partnership followed by the investment, with the customer and third-party risk business, LSEG always felt like a natural fit for GDC.
“The opportunity to accelerate our global growth, leveraging the breadth and scale of LSEG, presents a compelling opportunity for our team to better serve our global customers delivering innovative new solutions for the market.”
Barring any regulatory hurdles, the acquisition is expected to complete by the end of June 2022.