Typically, the brands that players can see are the ones that define the iGaming industry. Online casinos, sportsbooks and game studios are the ones that get the most attention, as they are directly facing the customer. However, some of the best future businesses in the industry may run virtually behind the scenes.
When a player decides to go to the homepage of vbet, they may be entertained by markets, games, promotions, and account features. But behind the scenes, other systems process identity verification, payments, fraud detection, and regulatory compliance to ensure the quality of the experience. With the evolution of those systems, the next big iGaming technology firm could be built around know-your-customer services, and not casino content.
Identity Checks Are Becoming Core Infrastructure
KYC used to be considered a mere administrative procedure. A document submitted by a player, reviewed by an employee, and either approved or rejected.
It’s a model that no longer works for a large international operator. Platforms may have to check thousands of customers across multiple jurisdictions, each with its own set of age, identity, affordability, sanctions, and anti-money laundering (AML) requirements.
A modern KYC provider, therefore, should be able to do much more than just check passports. It might have to verify if an identity is legitimate, detect if a document has been manipulated, match a face with a photo and identify if there are any suspicious connections between accounts.
The system should also carry out these checks in a timely fashion. If the verification process takes hours, or if the player is repeatedly rejected whilst trying to convert, it can create a negative impact on conversion before the player makes a first deposit.
This renders KYC a component of the product and not a compliance practice.
Regulation Is Expanding the Addressable Market
Each new regulated gambling market generates demand for ID technology. Casino or sportsbook operators can’t just deploy a site or platform and use the same controls throughout.
A detailed proof of address may be needed in one country. Another might focus more heavily on source of funds checks. Some jurisdictions require linking with central exclusion registers and evaluating whether there is any financial risk involved.
The fragmentation poses challenges to operators, but presents opportunities to specialist suppliers.
One advantage of a KYC company that can support multiple markets on one platform is that the company won’t need to create new systems for each license. The supplier can upgrade technology if new laws are enacted, so operators don’t have to reconstruct their infrastructure to comply.
Moreover, recurring regulatory requirements could enable the sector to create a technology company of unicorn value.
Friction Is the Commercial Problem KYC Must Solve
There is a lot of tension between compliance and customer acquisition.
Fast registration is desirable to operators. Regulators would like checks to be comprehensive. Players expect both. Not only don’t they want to wait a few days for an account to be verified, but they want to know the website is safe. The companies that will solve this tension will be the best KYC providers.
Automated document analysis can reduce review time. Biometric verification can ensure identity without lengthy customer service interactions. Databases can be used to check if information is consistent with public and official data.
But speed isn’t the only thing. A system that approves risky accounts or has too many false positives can lead to greater expenses down the road.
The winner will be the product that has the quickest onboarding with high detection. It will enable legitimate users to flow seamlessly, with unusual cases being pushed to more in-depth human review.
Artificial Intelligence Could Transform Verification
The process of KYC covers a huge number of documents, images and behavioral signals that make it a natural application for artificial intelligence.
AI models can be used to search for inconsistencies in identity documents, check if the same face has been used on multiple accounts and recognize patterns associated with synthetic identities.
Technology could also assist platforms in reviewing account behavior after the initial registration process. A customer who successfully completes onboarding could then take actions such as using unusual payment methods, establishing related accounts, or engaging in behaviors that otherwise signal identity manipulation.
However, there are risks associated with AI as well. Operators must be informed about the reason a user is rejected/flagged. It may be difficult, if not impossible, for regulators to accept decisions made by a black box operation without a clear and understandable audit trail.
The best KYC businesses, then, will strive to bring together advanced automation and explainability. Their technology needs to be both quick and clear enough to be used commercially and subject to regulatory review.
KYC Can Expand Into a Larger Risk Platform
The most ambitious KYC companies will not be content with just identity verification.
They could expand to payments, fraud prevention, anti-money laundering monitoring and responsible gambling technology. After a supplier is onboarded to registration and account systems, it is positioned to gain insight into general customer activity.
One provider might provide the operator with a way to confirm identification, evaluate payment patterns, identify linkages between accounts, and create reports that a regulator might require. That means the operator is not integrating and managing so many different systems.
For instance, this model is of commercial value. The technology is spread over multiple key workflows, making operators more reliant on the provider.
The best KYC platform may be attractive to private equity or strategic buyers/public investors due to long-term contracts and high switching costs.
Emerging Markets Will Increase Demand
Mobile-first markets in Africa and Latin America also could offer new opportunities as regulated iGaming continues to spread across these areas.
In these markets, identity systems will need to work with local documents, local payment mechanisms, and the local digital infrastructure. May not work well when exported without being adapted for Europe.
Onboarding on mobile devices will be especially significant. Users can join with their phones that have low storage space, low camera, or slow internet.
Suppliers who can accurately identify customers in those conditions can prove to be key players for operators looking to expand into new markets.
Localization will be as important as technology. The provider needs to know the identity criteria and regulatory expectations in the area, and also have an ongoing platform that is consistent across the globe.
Operators Will Pay for Fewer Problems
KYC is viewed as a cost center, but robust verification can yield tangible commercial value.
It can cut down on fraud losses, limit chargebacks, and decrease manual reviews. It can also help boost the conversion rate by enabling genuine customers to complete registration quickly.
The best providers will be able to demonstrate to operators how they can help to enhance financial performance with their technology. This could include reduced verification expenses, increased success rates and fewer regulatory issues.
This is what makes it enticing from an investment standpoint. The service is not optional; demand is recurring, and failure is expensive.
In tough times, operators might curtail marketing; however, they can’t stop customers from being verified.
The Biggest Technology Winners May Stay Invisible
The next big name in the iGaming sector isn’t necessarily going to be a popular slot or backing a famous football club. It can work behind the scenes, verifying identities and averting issues before players or regulators do.
Its invisibility does not diminish its significance. KYC is increasingly becoming a part and parcel of market access, customer experience and risk management.
With the increasing complexity of regulation and sophistication of fraud, operators will require suppliers that offer a blend of speed and accuracy and transparency at scale.
Ultimately, companies that manage to crack the challenge with multiple markets may become one of the most valuable businesses in the iGaming sector. The next unicorn might not even offer casino games. It might sell the trust to play them.
