Interac Corp. has acquired Ottawa-based company 2Keys, a specialist in digital identity, to help the payments processor build new technology for securing and verifying who is involved in financial transactions.
Founded in 1998, 2Keys has about 100 employees and creates secure digital identities, access points and other cybersecurity measures for governments, financial institutions and other corporate clients. 2Keys already performs four million identity verifications a day, and will add its expertise to Interac’s vast payments network, which processes millions of payments each day, through debit cards, e-mail transfers and online purchases. Financial terms of the deal were not disclosed.
Interac previously worked with 2Keys on a project to create secure access to government services using banking credentials, and that relationship spurred merger discussions a year and a half ago. Interac’s goal is to work with governments to help issue and manage secure digital versions of key identity documents such as driver’s licences and birth certificates, and to use that information to more securely underpin the flow of money.
The agreement marks the first acquisition by Interac since it overhauled its corporate structure last year, eliminating an unwieldy division that had split its activities between a non-profit corporation and a standalone company. The old structure would have made it difficult to make such a deal, according to chief executive Mark O’Connell. But he has since created a new group within the company with a mandate to launch new ventures and pursue acquisitions.
“I think, in pursuit of our strategy, more acquisitions are likely," Mr. O’Connell said in an interview.
In banking circles, there is an increasingly urgent need for better ways to authenticate clients’ identities. As payments systems are modernized to settle even the largest transactions instantly, and an array of new cyberthreats emerge, developing safer ways for customers and businesses to share information is becoming a necessary precursor to financial-sector innovation. And digital-identity technology is seen as a key plank in the movement toward open banking, which would make it easier for customers to share their banking information with a range of financial-services companies.
That will likely require broader partnerships between the public and private sectors, and possibly changes to legislation that would allow banks and other financial-services providers to verify clients’ identities digitally. In a white paper and speeches, the Canadian Bankers Association has called for a “federated,” but decentralized model of digital identity.
And there are signs that consumers are increasingly eager to protect their digital identities. In an online survey of 1,500 Canadians conducted for Interac, 83 per cent of respondents described their identity as one of their most valuable assets.
“What we bring is, we have reach and ubiquity, not only to all of the [financial institutions] in Canada, but also connection into acquirers and merchants, and we provide services to the government," Mr. O’Connell said. “We can be one of the nexus points as an exchange because digital ID starts really at the foundational documents of Canadians.”
Interac isn’t looking to corner the digital-identity market, Mr. O’Connell said, but rather to “co-exist” with other providers such as SecureKey, which has backing from Canada’s largest banks, “in a complementary, healthy digital ID ecosystem in Canada.” But he says he hopes Interac’s foray into digital ID through 2Keys can earn “a reasonable return" on its investment.
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