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2+2 for Global Compliance – Your Expectations are Unreasonable

Due to increasing data requirements and best practices encouraged by various government and financial directives (like the 4th Money Laundering Directive – 4MLD) concerning customer due diligence in the UK and European Union, GDC has had many requests to provide enhanced levels of electronic identity verification combined with Watch List/PEP and Sanctions checks to meet these compliance needs.

While some customers are satisfied to have input-data verified against a single authoritative data source, many others require checks to be verified against multiple authenticated, in-country data sources of varying data types.  This difference between the single and multi-source checks has come to be called 2+2 vs. 1+1 – electronic Identity Verification (eIDV).

The data elements available in the source may vary – for example, below you see two sources described: one Credit and one Government each with three elements to match.

However, the source is typically of a single type, which is not a fit for the new EU compliance regulations (See post on 4MLD).  The types of data source that can be matched for either a 1+1 or 2+2 are:

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1+1 Identity Verification

GDC’s Worldview platform has been providing 1+1 electronic identity verification since its inception. Customers and partners typically work in the fraud or e-Commerce space mostly with high-volume transactional use cases.  Their goal is to reduce friction in a process (customer onboarding, sales, etc.), increase speed and efficiencies and cut cost.

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Most of what is gained in a 1+1 is efficiency and cost savings but there are compliance and regulatory rules met with this 1+1 check.  In the example below, we check the input of name, DOB and address against a single credit source and we may receive either of the matches listed in the OR and achieve a pass.

2+2 Identity Verification

By definition, GDC sees a 2+2 request as matching 2 different definitions of input against 2 different data sources.  For GDC to fulfill a 2+2 request, we check to a minimum of 2 different sources.

Thus to accomplish a 2+2 request  GDC is sending to a single request to a data provider which controls multiple unique sources (for example, a single partner with both an Electoral Role sources or a Public Utility source) or to multiple “best available” providers in country with unique data sources.

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As a rule GDC requires a match based on two input elements verified against two independent data sources. For example, a match could be made on COMPLETE NAME plus DOB in a credit data source (1) and  COMPLETE NAME plus ADDRESS in a government (2) data source.

So Why are Your Expectations Unreasonable?

The rules sound simple enough, so you are probably thinking to yourself, what do you mean we have unreasonable expectations?

Country/Source Coverage

Country and source type are the two most important considerations in assessing potential match rates, across the world, data sources and data privacy regulations vary greatly. What works well in the United States and the United Kingdom does not neccessarily work in France and Poland.
In our many conversations with prospects, customers, and partners, the 2+2 topic immediately moves to:“Our compliance officers require the same levels and inputs for all countries: 2+2 checks with credit and government sources for Countries XYZ and we need a match rate of 70% or higher.”
This approach is not country-specific, and creates a challenge when trying to apply the same mindset to countries around the world.  For example, while matching COMPLETE NAME+ADDRESS and COMPLETE NAME+DOB in the Unites States returns great results, matching both a Credit and Government source in France is not possible. It is, however, likely to produce a 50% or better match rate in Australia, where there are multiple credit and government sources to leverage.

Why is France a challenge? The French data sources are tightly controlled and not available for access – further France does not really have a credit bureau open for query. However, matching COMPLETE NAME and DOB in two different telco sources in France is possible.
What is the take-away? In thinking about data sources, there is a major difference between “unique and from independent sources”vs. “unique and from Credit or Government”. Furthermore, 2+2 may be achievable with COMPLETE NAME and ADDRESS in a “telecom/mobile” source in Spain and a “commercial” source in Spain, but with no credit and very little government data source access. Thus, you cannot expect to use all the same inputs in every country ALL over the world and achieve the same match rate results.

What are the options?

So, looking across the globe there are three elements you can control inside an electronic 2+2 identity verification to improve or optimize match and pass rates for your compliance use cases:
• Improve the quality of the input elements to match
• Tightening or loosening the rules on matching criteria
• Continue to add additional data sources to increase coverage and thus potential match rates

Improve the quality of the input elements to match upon

Data quality is a challenge in most organizations and if you are not able to produce input elements for matching in eIDV requests you will severely impact potential match rates. For example, GDC typically uses address verification, standardization and correction to enhance the quality of input address data and allow for more accurate matching on street/thoroughfare, house number, postal code and locality/city input elements.

Tightening or loosening the rules on matching criteria

After the quality of the input data the next piece that can be considered is the actual definition of a match and a pass. This is a good bit of what has been hinted at in the title around expectations. The most common place we see for making rules less stringent is in name matching. In many countries matching on a given/first name can be a supreme challenge, but many of these same countries will allow for higher match rates on first initial, sur/last name, full address and even date of birth. Matching first initial+last name or even a fuzzy match or distance match in place of the often-mandated exact match will sometimes drastically improve match rates.

Continue to add additional data sources to increase coverage and thus potential match rates

The final piece of the puzzle is the data sources themselves. If you are using two data sources and each cover 35% of the population your best result is 70%, but is more than likely closer to 30%. This does not consider the 2+2 rules that might require an exact match on first and last name when only 1 of the 2 sources has a first/given name available. The GDC approach is to recognize that the best match rates for 2+2 really require as many sources, that do not duplicate, as possible. These sources need to be different but ultimately 6 data sources (telco, government, credit, utility, postal, and consumer) – will produce a higher 2+2 match rate than just 2 of the data sources. Simply put, you are covering more of the adult population and thus have a better chance to match and pass.

To conclude – reasonable expectation to great expectations

When interpreting and crafting the compliance rules, such as for Customer Due Diligence, for your organization be aware and willing to utilize the data sources available within the required country, and country sensibilities and privacy regulations. Each will potentially be different. Be certain to provide the highest quality input data possible and let data quality work for your eIDV efforts not against them. Don’t be limited to 2 data sources in a 2+2 match but leverage as many as possible to get the job done. Lastly, don’t let your compliance rules hand-cuff your success with eIDV in a country – use what is available, how best it can be used to achieve success.

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4th Anti-Money Laundering Directive Prescribes Electronic Identity Verification for Customer Due Diligence

The 4th Anti-Money Laundering Directive (4MLD) came into force as an upgrade/replacement of the 3MLD (3rd Anti-Money Laundering Directive) on June 26th, 2017 with a clear goal of expanding the risk based approach established with 3MLD.  Further 4MLD expanded the requirements and general principles in the European Union which government the necessary checks required to meet money laundering and compliance guidelines.   

The overall focus for 4MLD is listed in the table below: 

Key 4MLD Focus areas of increased requirements:
Increased focus on risk based approach Required not just for Financial org. anymore
Focus on Tax Crimes Expanded Customer due diligence
Third country equivalence Politically Exposed Persons
Cross-border wire transfers Beneficial ownership

The 4th Anti-Money Laundering Directive (4MLD) came into force as an upgrade/replacement of the 3MLD (3rd Anti-Money Laundering Directive) on June 26th, 2017 with a clear goal of expanding the risk based approach established with 3MLD.  Further 4MLD expanded the requirements and general principles in the European Union which government the necessary checks required to meet money laundering and compliance guidelines.   

The overall focus for 4MLD is listed in the table below: 

(17)  Accurate identification and verification of data of natural and legal persons is essential for fighting money laundering or terrorist financing. Latest technical developments in the digitalisation of transactions and payments enable a secure remote or electronic identification.

It is this section that lays the ground work for eIDV’s requirement to meet CCD and 4MLD requirements.  Stay tuned to our next blog post where we break down the 2+2 rule set which meet the regulatory requirements for customer due diligence and discuss how your compliance team has unreasonable expectations for electronic Identity Verification. 

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From Russia with Love – How Do Russians Acquire an Identity? – Part 2

In part 1 of our series, we remember that the Lektor decoder was so valuable to MI6 that they tried to get their hands on it.  It was in fact part of a trap in which a cipher clerk, Tatiana, and Bond would steal the decoder. After it was stolen, SPECTRE came after them in an assassination attempt to get the Lektor and sell it back to the Soviets.

Just like the Lektor is highly valuable and sought after, so are Russian passports, the physical proof one is who they say they are.  Now let’s look at the importance and requirements for Russians to maintain and prove their identity.

Once a Russian citizen reaches the age of fourteen, the citizen then is required by law to carry an internal passport which is issued by the Ministry of Internal Affairs for the Russian Federation. These passports are only issued to Russian citizens. These passports are very similar to travel documents issued to Russian citizens; however, the internal passport will have no Latin lettering anywhere in the passport – it is only meant to be used within the Russian Federation and is not a valid document to travel outside of the country. Inside of the internal passport, Russians have all of the necessary information which follows them through the rest of their lives. Passports are meant to be updated at all important life events.

The first page of the document states the name, sex, date and place of birth of the citizen. Following this, there are pages which document required information about each Russian citizen. Russian citizens are required to register themselves in the place that the live. This registration is maintained within the internal passport. After the age of 18, males are required to serve military service or receive a deferment for study – this information is also included in the internal passport. If a citizen is married, the registration of their marriage is located within the passport. If a citizen has children under the age of fourteen, their identities are registered within their parenrussia-nesting-2ts’ passports. Within the internal passport, citizens also keep their driver’s license and any other documents required within the Russian Federation – these would vary based on the person’s profession, age, or special talents.

On the eighteenth page of the internal passport, information is found about the citizen’s blood type and tax identification number.

Internal passports must be renewed at certain points in the life of a citizen in the Russian Federation. The first required renewal is at age twenty. After that, the passport must be renewed again at age forty-five. After the age of forty-five, the internal passport is good for the rest of the life of the citizen

Citizens of the Russian Federation who serve in the armed forces are given additional information in their passport that register their military service history as well as the place of their service.

Citizens of the Russian Federation who enroll in higher education usually enroll at the age of seventeen or eighteen, after their graduation from secondary school. Upon enrolling in a institute of higher learning, a student is issued another form of identification meant to be used in conjunction with their internal passport – this is called a “Student Ticket” or студенческий билет. This document is meant to be used on campus for student privileges around facilities on campus such as libraries, sports facilities, and cafeterias. Most universities in Russia operate on a closed-campus system; in order to enter the dormitories, students are usually given a separate piece of identification called a “Permission” пропуск which must be displayed with the Stufrom russia with lovedent Ticket in order to enter dormitories or classroom buildings on campus. The Student Ticket is also used by university students around town to receive student discounts on services like public transportation or for discounted entry into museums and movie theatres. Each year of a student’s studies, the Student Ticket is updated to show the year that the student is enrolled. This is done by the leader of the department affixing his or her signature and a stamp from the university on one page of the Student Ticket. The other page of the Student Ticket gives a photo of the person and their name.

Russians who travel outside of the Russian Federation are required to have an international or external passport for travel. This passport is very similar to the internal passport in every sense, except that the internal passport does not use biometric information and the internal passport does not have any Latin lettering. The biometric information in the external passport includes fingerprint, handwriting sample, height, weight, eye color and voice. The international passport includes a firstrussia-map-1 page which states the citizen’s name in Cyrillic and Latin lettering as well as the place and date of birth, sex, and passport number – which is different from the internal passport number. These passports are issued by the Ministry of Foreign Affairs and are also overseen by the Federal Immigration Service. Russian citizens must renew external passports every ten years. The rest of the passport’s pages are blank for visas to foreign nations. Currently, only twenty-eight percent of Russians have an external passport according to TheVillage.ru.

As you can see from the past two posts, Russian identity is complex, even more complex in the digital age.  Let the Global Data Consortium’s Worldview platform be your Lekto decoder to know your customers.

 

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From Russia with Love – How Do Russians Acquire an Identity? – Part 1

The 1963 James Bond action thriller, “From Russia with Love”, starring Sean Connery, see Bond willingly falls into an assassination ploy involving a naive Russian beauty in order to retrieve a Soviet encryption device that was stolen by SPECTRE.  The Lektor decoder, at it was called, was a highLektor decoderly sought after decoding machine, used by Soviet Intelligence to de-compile coded and highly sensitive documents.

Decrypting a Russian name can be highly complex and sought after as well, especially in the electronic identity space.  Let’s examine exactly how and what is in a Russian name – one of the verifiable attributes of a digital identity.

A Russian begins to acquire an identity before he or she is ever born. The first element of a Russian’s identity is his or her name – two parts of the name are determined before the Russian is even born. First there is the family name (фамилия) which is taken from the father. At marriage, Russian women take their husband’s last name. The last name, if it is a Russian last name, is changed to show gender. Russian male last names ending in -skij (ский) will change to -skaya (ская) for a woman. Russian last names ending in a consonant for men will add an a or ya (а/я) to show the female version of the name. If a family name is not Russian (Jewish, Estonian, German, Latvian, etc.) then the last name will not changeThe second part of a Russian’s name determined before birth is the middle name or patronymic (отчество) this name is also derived from the father and translates as son of or daughter of. All Russians who share the same father will have the same patronymic, again changed to show gender. This name is derived from the father’s name with the addition of a suffix -ovich/evich (ович/евич) for sons and –ovna/evna (овна/евна) for girls.

The first name that a Russian gets is chosen entirely by the parents or family and can show particular traditions within a family. For example, if a family is very religious, they may choose to name their child after the saint for that day on the Russian Orthodox calendar. Russians may also name the child after significant family members, writers, people of renown in Russian culture, or after favorite russian nesting doll musicians. Some Russians who are more western choose to give their children more European names like Rutger or Margarita. From the first name, many diminutive or nicknames can be formed. These are usually only used within family or friend groups. Male and female names that have the same roots will form the same diminutives. For example, a man named Evgenij (Евгений) and a woman named Evgeniya (Евгения) will both have the same basic diminutive of Zhenya (Женя). This name can then be further diminutivized by adding further suffixes and creating names like Zhenochka (Женочка).

The Global Data Consortium’s Worldview platform has one of the most unique and privileged access solutions to identify Russian individuals.  As with the Lektor decoder, it can be one of the most sought after solutions to help fight fraud in the international digital world.

Be on the lookout for Part 2 of our series – How Do Russians Acquire an Identity?

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Singapore: “Chili Crab” or ID?

The island nation of Singapore is known for many things.  Specifically, it is a “melting pot” of sorts including a mixture of cultures, languages, alphabets and nationalities. The city state is known for its cuisine, especially for its famous dish, the “chili crab.” Just like the food, the people are a fusion of all who come to reside there – Chinese, Indonesian, Malaysian and the list goes on.  One thing is for certain, the needs for identity verification are as dynamic and diverse as the cultures.  For those of you looking for the best places for “chili crab” in Singapore you can look here.

Chili Crab

Chili Crab

First, let’s take the Singapore national ID card.  The ID card represents the melding of peoples in the way it represents individual’s identity attributes.  Document validation, to verify identity, will tell you accurately that the format is correct (but not necessarily verified).  When a National ID/Passport scan or image is sent to the Document Validation provider they perform an automated analysis checking the validity of the information on the document ensuring the information makes sense and goes together, and that none of the images or data is forged. A Document Validation service provider may check the following data points:

  • Full Name
  • Nationality
  • Date of Birth
  • Photo
  • Gender
  • Document Expiration Date
  • Passport MRZ (Machine Readable Zone – two 44 character rows that convey the data on the Passport)
  • In the case of Singapore, the national ID includes elements very like a passport given the nature of the multicultural country.
  • Full Name – English then Native
  • Race – Example Chinese
  • Birth Date
  • Country of Birth – China, Singapore

Document Validation providers may also check characteristics of a document to ensure it has not been forged or altered.   This can include checking the background print, micro text, whether the document photo has been replaced, whether the fonts used are consistent and correct, and other authenticity checks.  These checks generally require manual review and often supplement automatic checks of the document data points.

However, verifying the data associated with a National ID against trusted sources is a different matter. For example, let’s look at one of the elements on the National Registration Identity Card – race. Surprisingly, Singapore allows TWO RACES in accordance with their race diversity disclosures.  

Front

Front

This is called “double-barreling” which applies to all babies born as of January 1st, 2011.  The ID card represents the melding of peoples in the way it represents race.

Here’s how it works.  Your race must be a logical combo of your mom’s and dad’s races. e.g. Malay-German or Malay-Caucasian. The race in front is regarded as the dominant one e.g. in the above example, “Malay” is the dominant race.  All siblings from the same parents must have the same race, if the kid gets married to someone else of mixed parentage, only the dominant race counts for both.

Next, let’s examine the card and how it represents the melding of peoples in the way it represents names. If you are of origin in another country – perhaps China, but have a Latin English name you will see both the English name and the Chinese name listed on the card in the order – English to Chinese. In other cases, the name may only be the traditional Chinese name, and it can vary and exposes a challenge of using only document verification.  

Name and race are two examples of the challenges of validating identity using document checks without electronic identity verification.

 The best solution is to combine document validation/authentication (Doc check) and electronic identity verification (eIDV).  This both checks the characteristics of the document and the accuracy of the data on it.  Combining Doc check with eIDV check for countries like Singapore will allow you to accurately and correctly verify one’s identity.  

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An Update on What We’re Doing at GDC (Hint: lots of global electronic identity verification)

Dear Friends,

You will notice some recent changes to the GDC website, and more are on the way. Let me explain what’s going on.

Two years ago we saw an opportunity to extend the Global Data Consortium model to electronic identity verification. This is where companies use independent reference data to instantly verify the identities of their customers. Think of opening an online bank account. Your bank is required to verify that you are who you say are before you can start moving money around. They want to do this as quickly as possible as you go through the registration process, otherwise you might lose interest and move on. Yes, we live in an instant gratification world!

We had a hypothesis that GDC could take the model we proved with global address hygiene- negotiating over 50 partnerships worldwide and building the technology to access all this distributed data in real-time – and apply it to identity information. And in true agile startup fashion, we started a customer discovery process to validate our assumptions. In talking with dozens of people across a range of industries, this is what we heard:

1. It’s not just banks! FinTech, eCommerce marketplaces, the sharing economy, social networks (I could go on) all want faster ways to verify identities as they move into new country markets.

2. All these companies are generally unhappy with the options available for global electronic identity verification today. This leaves them using document authentication services, which are too slow, create friction with customers, and cost too much.

3. They want a solution that gives them one point of access to as many countries as possible. (Many had tried building a similar technology in-house but failed. It was too hard!)

The feedback was enough for GDC to build a simple solution and put it quickly into beta mode. With just seven countries to offer, we found several early-adopters and two key strategic partners. They each used the product hard and gave us tons of critical feedback. We iterated, working out the kinks and proving out the technology and the economics one step at a time.

GDC is now over a year past that beta launch, and it’s time to show the world what we have to offer. I couldn’t be more excited.

We have already expanded the platform from seven to 19 countries, integrating services from over 45 data partners along the way. And we are only accelerating from here, gearing up to pass 50 countries (135 data partner integrations) by the end of next year. We are serious about becoming the one point for the market to access global electronic identity verification services.

So checkout our revised website. In the coming weeks we are adding more content to describe our services in each country, and we will be adding new countries.

www.globaldataconsortium.com

If you need help with global electronic identity verification, reach out to me and let’s talk about what GDC can do for you.

Also, if you are a data provider in a country we don’t yet offer, we would love to learn more about your services and consider adding you to the GDC platform as a Consortium partner.

Best,

Bill

bill@globaldataconsortium.com

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Spotlight on Brazil and Electronic Identity Verification

Next month the eyes of the world will once again be on Brazil, this time for the 2016 Summer Olympics. Despite all its recent turmoil  – the trifecta of political, economic and health issues – I’m optimistic that Brazil will put on a fun and safe show for us all. More importantly, I’m optimistic about the country’s overall prospects.

The turmoil has kept many companies away from Brazil. But over the long run, businesses with ambitions in Latin American will have no choice but invest there. It is, after all, the world’s sixth largest country by population and seventh largest economy by GDP. Ignore it during this short-term instability, and you might lose your chance to participate in the long run.

The big eCommerce marketplaces recognize this. The financial press prints story after story of Alibaba, Rakuten, Amazon, Mercado Libre and others investing heavily in Brazil. Why do this in the face of the country’s current instability? Because competition among them is brutal. If any of them cedes market share today, competitors will be all too happy to take over relationships with their sellers and buyers.

GDC got the chance to see this competition firsthand earlier this year. We launched a Brazil electronic identity verification service to help eCommerce marketplaces onboard sellers quickly.

Verifying the identities of merchants before they can begin selling goods on marketplaces has become common practice in the industry. Without it, bad actors are quick to infiltrate a marketplace with counterfeit goods and other forms of fraud. Using identity verification – asking the seller to provide information proving he is who he says he is – stops fraudsters from registering under false pretenses. They never get access to buyers, so fraud goes down and customer satisfaction goes up.

One of the big eCommerce marketplaces recently started using the Brazil electronic identity verification service. Previously, they had a clunky seller onboarding process. It leaned heavily on a manual workflow, used multiple data reference sources, and required new merchants to provide a lot of personal information. For example, applicants had to scan and submit photo ID’s to a document verification service as part of the process. The whole thing was time-consuming, inconvenient for sellers, and expensive for the client to maintain. Worst yet, they were losing sellers. The friction of onboarding had legitimate merchants abandoning their registrations before they could be approved.

GDC was glad to help. Our Brazil electronic identity verification service consolidated their entire process into a single registration form. When a seller submitted his name, address and national tax ID, a single API call to our platform queried multiple sources of credit, government, commercial and consumer identity reference data from our in-country Brazilian partners. The various sources cover over 95 percent of Brazil’s addressable adult population, and we were able to help our client match and approve nearly 75 percent of all applications within seconds.

We streamlined their process, limited the need for manual intervention in the workflow, and reduced their dependence on document verification and multiple data services. Most importantly, we got rid of the friction that had so many sellers abandon the registration process.

This is what GDC does both in Brazil and in the many other countries integrated into our global electronic identity verification platform. We give you one point of access to instantly verify the identities of customers, partners or counterparties no matter their country of origin. We help you bring in the good customers quickly while weeding out the bad ones.

If your business is expanding into Brazil, and you need help with verifying the identities of your customers, let’s talk. In the meantime, enjoy the Olympic show Brazil has prepared for the world.

Thanks for reading!

Best,

Paul

Paul Dryden
Global Data Consortium
paul@globaldataconsortium.com

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The Patagonian Express- Connecting Latin America Then & Now

I recently reread Paul Theroux’s book The Old Patagonian Express. His book details his journey by train from the suburbs of Boston to the tip end of Argentina by rail. Yes, one can truly travel the length of North, Central and South America by relatively contiguous passenger rail service. The first time I read this book was over 30 years ago when I was in high school. Now rereading it after having traveled extensively and establishing partnerships with companies throughout Latin America I have a greater appreciation for Theroux’s experiences captured in this body of work.

The Americas are full of rich and diverse cultures. In the age of the Internet these cultures have become more connected and accessible. eCommerce platforms such as Linio and Mercado Libre are thriving on the continued growth of consumer access to the Internet. At our company we have seen an intense interest in helping many companies validate and verify consumers and businesses in Mexico, Brazil, Columbia and Argentina. Age Verification to restrict minors from making inappropriate purchases online, Seller Verification to help ecommerce marketplaces ensure the quality of products offered on their platforms and Customer Identity checks for Fintech companies needing to complete AML/Compliance checks. All of these are services needed on a country by country basis.

An example of the robust nature of some of our data is in Mexico where GDC is able to offer coverage for about 96% of the population. What this means is that we cover the people in most of the major cities and population centers. We do not likely have significant coverage in Papaloapan or Tapachula which is located in the southern border region of Mexico. Those regions are slowly but steadily joining the rest of their brothers and sisters with access to the Internet but it will take more time to see them fully represented.

As I read about Theroux’s journey through the jungles of Mexico and the pampas plains of Argentina I marveled at where our paths crossed in the major cities of the Americas. I haven’t traveled by train in Latin America but I have experienced some of the same cultures as he did during his journey. Engaging with business owners in each country served to broaden my understanding of what the challenges are to produce a good ID Check and why the same data inputs captured in the US or Germany would not be the same type of needed data input in Columbia or Ecuador. Understanding that diversity in cultures is what makes my company unique in our community of vendors. More importantly our network of in country data providers understand the diversity of cultures that are resident in their respective countries and regions.

In Identity Verification, one size does not fit all. Different countries allow for the verification of different elements of a consumer and a business’s key details. Knowing the required data inputs to create a good match for a desired output ID is a key function of what we help provide at GDC. Whether it is producing a NAP (Name, Address, Phone) match or doing a CURP or other National ID verification, GDC can help. Helping an eCommerce or Fintech company reduce the amount of paper documentation needed to conduct seller verification is something the GDC Worldview platform can do in a real-time or batch-based process.

Now is Carnival season in the South. Celebrations are being had and people are visiting their lineage homes to celebrate with family and friends. I imagine Theroux’s trains are crowded with passengers taking the journey North and South on the Patagonian Express. I also imagine many of them are using mobile phones to connect with friends and family and to conduct commerce transactions as they roll through the night.

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GDC Integrates New Russia Address Partner into Worldview

This week GDC announces the newest member of the consortium, a Moscow-based data business that specializes as Russia’s best in-country source for address data.

 

Let’s call a spade a spade: This one was tough. It was tough to identify the right Russian partner. It was tough to “lean in” to a Russian solution during a time of uncertainty when so many eCommerce businesses are avoiding that market. And it was tough to work through the technical aspects of making the best in-country Russian solution work for a client base that knows very little about Cyrillic-based alphabets.

 

After a few months of working through these challenges, we now see why other global address services have struggled so much to offer a quality Russian solution!

 

But that’s what makes this Russian address solution such a valuable addition to the consortium. Through rigorous analysis and testing, the GDC team has verified that this new partner offers true benefits. Its combination of wide geographic coverage, extensive data records, and sophisticated business logic provides a superior source of “lift” over what you can get from any of the global generic address solutions.

 

In the end, the “tough” is worth it. We can provide our Worldview customers with address information they simply haven’t been able to access before. In the process, we are helping open up Russia to eCommerce merchants, platform companies and delivery services that previously saw these same obstacles and couldn’t find a way around them.

 

With Russia fully integrated into Worldview, we now offer best available address services with localized intelligence for 35 countries (see the list here) in addition to the full global service from our postal-based generic address partners. We continue expanding with up to three new local providers each month.

 

Let’s consider briefly what that Russian opportunity represents for eCommerce, then we’ll highlight the specific challenges of transliteration, and finally we’ll share a little more about this partner and why we chose them.

 

The Russia Opportunity for eCommerce

 

There’s something about companies that lean in to promising growth opportunities even when the headwinds are strong. They take on some risks, sure, but if everyone else goes away than they also stand to make all the gains.

 

We’ve been seeing elements of this in Russia over the past year. There’s no question the country has promising growth prospects for cross-border commerce. According the The Paypers, Russians buy over US$16.5 billion in eCommerce goods each year, and that amount is compounding at nearly 20 percent year over year 1. Yet with all the uncertainty there (slide in oil prices, rampant inflation, military action in Ukraine and pockets of civil unrest), many Western companies have pulled back investments. They haven’t had the appetite for all the near-term risk.

 

But other companies have taken the lean-in approach, doubling down in Russia because they believe the opportunities there trump today’s risk. A recent report by China Securities Journal says that eCommerce firms like Alibaba and Taobao have taken advantage of Western firms pulling back to grab 70% of Russia’s annual US$3.5 billion cross-border spend. 2
As Russia stabilizes, will it be too late to win back market share from the Chinese eCommerce giants? For the companies now pulling back, the long-term risk seems to be missing out on the chance to build deep relationships with Russian consumers. One you concede that, it can be very hard to get it back.

 

The company OZON.ru gets the lean-in mentality better than most. Under the guidance of its French CEO, Maelle Gavet, OZON has been relentless about grabbing market share in Russia. Guided by her belief that the country will ultimately have one hegemonic eCommerce platform (like Amazon in the US, Alibaba in China or Mercado Libre in Latin America), Gavet has consistently invested for aggressive growth irrespective of Russia’s economic climate. While Amazon and eBay have dabbled a bit when the business cycle was at its best (but retrenched as the economy soured), OZON keeps plowing capital into inventory, warehouses, payment systems and its own courier service for distribution. 3

 

For Western eCommerce businesses to have a chance in Russia – be they platforms, individual merchants or all players in between – they have to find ways to invest now. Even as conditions seem so volatile for cross-border trade.

 

GDC has taken a lean-in approach to Russia. To help our clients gain a toehold in this important market, we’ve invested both in this address partner and in the technology necessary to support complex transliteration from Latin script alphabets to Cyrillic. We’ll turn now to a brief overview of that challenge and how it allows us to fill the gaps in Russian coverage left by the major global generic address systems.

 

The Challenge of Cyrillic

 

The transliteration and transcription challenges are tough, and that’s a dirty secret global address solutions don’t like to talk about.

 

It’s hard enough to move among all the languages that use the Latin script alphabets, but at least the letters stay the same. The bulk of the work is in creating ways to cross-walk, for example, the English word “street” to the German word “strasse.” You create the transcription elements, you program rules to cover the occasional diacritics issue, and then you fine-tune the logic to make sure the output presents in the ways locals expect to see it. That’s oversimplifying, of course, but it captures the basic idea. When you run into problems, it’s pretty easy to find solutions.

 

But when you’re dealing in different alphabets, the challenges are compounded. You can’t even transcribe until you’ve transliterated. For example, when someone inputs the Latin version of “Moscow,” you have to transcribe it to “Moskva” and then transliterate it from Latin to the Cyrillic script. The same is true for all elements of the address like the country names in the Russian Federation, the region names, the cities and villages, and all the streets. Now add to that abbreviations, short-hand and common misspellings.

 

There’s a lot to account for going from Latin to Cyrillic and back again, and it’s anything but a precise science. But if you’re creating an address intelligence service for clients looking to expand their business into Russia, you must invest in doing this.

 

Again, it’s tough. But Russia is an important trade lane and presents a lot of growth opportunity for eCommerce. Our Worldview clients have told us they want it, and so we’ve leaned in, making the investment both in finding the right Russian in-country partner and in developing a transliteration engine to move the addresses smoothly between Latin and Cyrillic.

 

About Our Russian Partner

 

Finally, a little about our Russian partner. While we provide our clients with access to generic global address verification through our Worldview API, we recognize the significant gaps in these generic services. So our model is to go into key countries, identify companies that provide best available address intelligence for those markets, and test the in-country providers against the generics. If the in-country providers demonstrate significant “lift” over the generics, we start the process of making them available through Worldview.

 

Country by country, we are filling in the gaps left by generic services. As we mentioned before, we have 35 best in-country partners now, and are expanding that number by integrating three new countries a month.

 

We found our Russian partner after a lot of searching. The company has spent over 10 years building and refining their data sets and business logic, and they has earned the trust of Russia’s largest companies in banking, insurance and retail. When they need to send parcels or critical documents to Russian businesses or homes, they first verify their addresses through this service.

 

They offer wider coverage of Russia than the generics, both in terms of geography and population. They pull data from a wide range of sources, spreading beyond postal and mapping data used by most generics. They offer sophisticated business logic for verifying and enriching Russian addresses. And they refresh the data frequently to ensure it’s as up to date as possible.

 

Most importantly, they offer that “lift” over generic services when it comes to Russian addresses, qualifying them to be part of Worldview.

 

So, we welcome our new Russian partner into the Global Data Consortium. We’re excited to open up access to Russia for Worldview customers. And if you’re looking for help in Russia, or any other country in our global platform, give us a call. We’d love to help expand your Worldview.