The virtual you German online ID startups ready to take on US titans

Three startups plan to snatch a slice of the growing online identification market from Facebook and Google. They’re banking on Germany’s reputation for data privacy.
Keep it simple, folks.

People who can’t be bothered to use a plethora of passwords for online retailers, social networks or media subscriptions are increasingly using the login buttons of Facebook or Google that give them access with a single password.

As usual, the Americans dominate this niche but a number of German newcomers plan to challenge them. NetID launches in October, Yes at some point in the fourth quarter, and Verimi has been live since April.

NetID and Verimi offer more than simplified Internet logins – they also want to give customers an overview of where they have stored what personal data. Yes, by contrast, pledges not to store any data and will act as an intermediary on behalf of the consumer by creating a so-called “hardened identity” that allows people to buy cellphone contracts and insurance without having to identify themselves afresh every time.

They’re following in the footsteps of German startup WebID Solutions that offers video legitimation, a security service used by banks to remotely check the ID of customers who want to open accounts or get bank cards. WebID is banking on the “Made in Germany” reputation for quality and data security and plans to expand in the US. Earlier this year, it cleared an important hurdle by obtaining a US patent.

Yes we can

Yes already works with Germany’s 400 saving banks who use it as an authentication service. “We want to get started properly in the first quarter of next year,” said Yes boss Daniel Goldscheider. “Integrating Yes into online banking is a complex task.” The cooperative banking sector comprising some 900 banks said it was also considering using Yes. If it does, the startup would get a massive boost because the two banking groups together have more than 60 million customer accounts, meaning all those customers could use Yes if they use online banking.

NetID was created by the media groups RTL Deutschland and ProSiebenSat.1 and by Internet services company United Internet. Its partners include retail groups Otto, Conrad Elektronik and Douglas as well as media companies like Süddeutsche Zeitung and Spiegel, the online comparison sites Immobilienscout24 and Autoscout24 and courier service DPD.

NetID and Yes will cooperate on providing online logins and processing ID data. “The concrete cooperation is still being set up. The aim is to make the payment process as simple as possible for the customer when shopping online,” the head of the European NetID Foundation, Sven Bornemann, told Handelsblatt.

The alliance will likely hurt rival Verimi, which also plans to offer a combination of login and identification services. Verimi’s backers include Allianz, Deutsche Bank and Lufthansa. Unlike Yes, customers of Verimi must register via WebID Solutions. Verimi won’t say how many customers it currently has, but by mid-June, only 13,000 had registered with the service.

The company’s launch has also been marred by internal quarreling over strategy that led CEO Donata Hopfen to quit shortly after its start.

Elisabeth Atzler covers banking for Handelsblatt while Katharina Schneider reports on finance, both from Frankfurt. David Crossland adapted this article into English for Handelsblatt Global. To contact the authors: [email protected][email protected]