By Arta Sylejmani, Digital Banking Strategy at Gemalto
Living in the digital age impacts almost all areas of our lives. So much so, that we’ve inadvertently created multiple online identities, in sharing logins, passwords and private information, for all the services we use. In many ways this has exposed one of the last remaining frontiers of the ‘analog’ world – in how we verify who we are.
Across Europe and beyond, we are still for the most part, reliant upon paper-based ID documents to authenticate our identity. Whether this is in airport security, paying taxes, applying for a loan or getting served alcohol. This creates a disconnect between the seamless and convenient nature of operating in a digital world, and the cumbersome process of proving your identity through uploading scans or sending off your paper-based ID.
To address this challenge, governments, private organisations and financial institutions are exploring digital identities. Digital identities include unique, verifiable information about an individual including biometric, biographic and behavioural data. This data can be verified remotely over digital channels, and in turn, unlock access to banking, government benefits, healthcare, education and other ID dependent services. Digital identities can be issued through a national or local government or even a third party, and use a combination of biometric data, passwords and smart devices to confirm your identity.
Let’s explore just how much value the onset of digital identities can create for both individual citizens and the industries deploying them.
Recognising the wider economic benefits
According to a recent McKinsey report, digital identities could unlock an economic value equivalent of 3 to 13 percent of GDP by 2030. While this is of course dependent upon significant levels of usage, there is nothing to suggest that these estimates are not reachable. With the correct infrastructure, digital IDs can provide a flexible, robust solution that can be used in a variety of industries.
The most direct use-cases are in banking services with Norway and Belgium already providing tangible examples of successful mobile schemes. BankID, for instance, is used by all Norwegian banks and provides secure, verified transactions, easy online on-boarding of new customers as well as automated digital signatures for the approval of online documents and notifications. Its mobile solution is used a staggering 3.5 times per week by customers and has fundamentally changed how the public interacts with online financial services.
Similarly, Belgium’s Itsme mobile solution has been supported by four leading Belgium banks and three of the country’s biggest telecoms operators. Thanks to its ease of use, security and flexibility, it attracted more than 350,000 users in its first year of operation. And now, as it eclipses two years in existence, it is reaching the one million customer milestone.
Bringing security, convenience and financial inclusion to individuals
Digital identities can also bring great economic benefits by driving financial inclusion. According to the World Bank’s ID4D database, there are approximately 1billion individuals without a legal form of identification, and just under 3.5billion with some form of ID but no recognisable digital trail. This means that over half of the world’s population is either unable or has no means to access critical online services and participate in the digital economy. For those in this bracket, the result is often societal marginalisation as they are unable to enjoy the same security and convenience benefits afforded by the connected world.
Digital identities provide a robust solution to this problem. They can create economic and social value for excluded communities by providing secure, yet flexible access to previously unattainable goods and services. Unlike paper-based ID documents, they are under the protection of a third-party, usually a bank, and can be used to unlock digital benefits in real-time.
Importantly, third parties, such as banks or government services, can use an individual’s digital ID to streamline access to public services and drive service innovation across the private sector. In this scenario, digital identities can be used by authorised government or banking institutions to verify ID requests without having to disclose the individual’s personal data. As the process is automated, individuals can benefit from instant access to financial services, improved passage to employment, streamlined government services and significant savings in time and effort. In real-world use cases, this translates as secure digital payments, digital tax filing, online voting, automatic school enrolment, automated background verification and efficient payroll services.
Using digital identities beyond banking and public services
However, it’s not just in banking and public services that digital IDs are primed for deployment. In travel and agriculture, electronic identity authentication has an opportunity to make significant progress.
Starting with travel and tourism, the sector is under increased pressure because of the growing number of travellers; this compounds risk and security requirements as well as infrastructure capacity limits. These pressures hinder a secure and seamless cross-border traveller journey and cause various pain points for governments, businesses and travellers. The integration of digital identities into the passenger experience could enable governments, in partnership with industry leaders and organisations, to conduct pre-vetting risk assessment and security procedures to enhance the seamless flow of travellers through borders. Security officials can then redirect attention and resources to identifying threats, as opposed to passenger processing, making the entire experience much safer and convenient.
While in agriculture, digital identities can boost financial inclusion and support supply-chain traceability and delivery of goods. For example, a comprehensive, government recognised digital ID service can help smallholder farmers formally register land and livestock, protect their assets, and access mobile, financial, and other services that allow them to work, sell and spend income formally.
Growing demand for ethical and organic produce has meant that smallholder farmers are increasingly asked to disclose the origin of their produce, especially when attempting to enter larger markets. This level of traceability relies on the ability to track produce back to a single farm of origin. In the case of smallholder farmers, this often means tracing back to a single farmer, which can be greatly supported by the use of a unique ID.
Achievable only through trust
Clearly, the value that digital identities can bring to both individuals and industries could fundamentally improve how society interacts through digital. Yet, these benefits are only achievable if it is built upon a trusted ecosystem containing all digital identity participants. It’s critical that whoever controls the verifiable data, be it banks, telco providers, government services or institutions, adopts secure yet scalable infrastructure solutions to protect the information as it travels from one party to the next.
This infrastructure requires the creation of a ‘trust loop’; the process of continuous service enrolment, application, authentication and approval that creates a loop of trust between the consumer, the service provider and other third parties. To work, this needs to be underpinned by the most advanced digital and biometric authentication technology to ensure all parties involved can trust the data that’s being shared. Without trust, the ecosystem will crumble and the digital identity opportunity ahead of us will never materialise.