Institutional Capital Network ( iCapital ), a New York City-based fintech company focused on alternative investments, has agreed to acquire Parallel Markets, a provider of digital identity solutions within the private markets. Terms of the deal were not disclosed.

Integrating Parallel Markets' advanced technology with iCapital's onboarding and compliance monitoring processes will provide fund managers and wealth advisers with a more seamless user journey within the iCapital ecosystem while ensuring compliance in a constantly evolving regulatory landscape, iCapital says.

"Onboarding and verifying digital investor identity and compliance is a major friction point in private markets investing. Parallel Markets has pioneered software that supports a reusable investor passport, streamlining these duplicative processes for advisors, investors, and fund managers,” notes iCapital chairman and chief executive officer Lawrence Calcano.

“As we continue to evolve our tech stack, we will enhance automated entry for alternative investing and leverage AI ( artificial intelligence ) and machine learning to offer a complete, intuitive end-to-end solution. This is expected to result in faster onboarding, reduced costs, and a more efficient investment process.”

According to iCapital, its new investor passport will offer a turnkey onboarding solution for all fund investors, both institutional and wealth management, creating a universal reusable investor identity that can be used across its marketplace.

An estimated US$2.5 billion is spent globally on identity verification services and compliance across the financial services industry. With universal passport identity technology, fund managers have the potential to realize significant reductions in onboarding time and overhead costs.

This digital identity will function as a data locker for storing, managing, and sharing personal information needed for fund subscription and compliance verification in private markets. It will make it easier for investors to manage and share their KYB ( know your business ) and KYC ( know your customer ) data while helping fund managers scale more efficiently and ensure consistency in compliance, including AML ( anti-money laundering ).

“We built an industry-leading onboarding and KYC/AML passport solution for financial institutions who are looking to streamline and scale their business by eliminating redundant processes. As of today, we have focused on fund managers and the broader private wealth channel which is an increasingly important focus for leading financial institutions,” says Parallel Markets co-founder and CEO Tony Peccatiello, who will be joining iCapital as part of the acquisition.