Here are my impressions on digital identity and its implications for the financial services industry based on a panel discussion at the Innovate Finance Global Summit 2019, a leading FinTech conference.
Digital identity is critical
In simple terms, digital identity is the digital embodiment of a person’s physical identity, encompassing information that is unique to that person and from which identity can be verified.
Expanding digital identity is critical for governments, businesses and society. According to the World Bank, almost one in eight people globally lacks an official proof of identity. Because of this, people in this group have limited access to critical services such as healthcare, education, bank accounts and even mobile phones. They can also be excluded from participation in political and economic life.
Now is the time for digital identity
In the view of the panel, four key drivers explain why digital identity should be adopted now:
- Willingness to adopt: people are increasingly savvy in their use and understanding of digital technology
- Ability to connect: more and more people are connecting to the internet, and for the first time more than half of the global population is connected to internet
- Demand in FS: there is a huge and growing demand for digital identity in financial services industry (over 1.7 billion adults lack a bank account globally)
- Technological enablement: new technology advances are driving digital identity, including improvements in camera quality, biometrics, artificial intelligence and machine learning
What are the roadblocks?
However, roadblocks are in the way. The main ones are:
- Privacy concerns: a lack of trust among people when it comes sharing their personal data, with some considering this an invasion of privacy
- Scalability: there are challenges around scaling digital identity platforms across geographies and industries such as a lack of open standards
- Regulatory pressure: regulators across the globe are coming up with stricter rules around data collection and storage
The United Nations’ Sustainable Development Goals aim for every person to have a legal identity by 2030. To achieve this ambitious target, governments and businesses should focus on the following critical steps:
Create an element of trust among people. Individuals should control their own data and be assured of its safety. User permission should be at the centre of everything, i.e. users should be able to choose to what extent their digital identity is shared with others.
Make it Universal
The value of any network or a platform is proportionate to the number of people who are using it, so the aim should be to make digital identity as widely used as possible. Eventually, the universal digital identity could be used to access variety of services spread across multiple sectors.
Imagine opening a bank account anywhere in the world with just one digital identity or accessing variety of services across industries such as retail or healthcare on the go with just a single identity.
Last, there should be increased collaboration between private and public sectors, and they should come together to create a marketplace for digital identity. Governments should be more proactive and build an open standard in collaboration with private sectors, which would help build universal identity by allowing all industries to plug into this standard.
Tackling the digital identity won’t be easy, but as one of the panellist said, “Managing digital identity is easier than managing physical identity”. It is critical that private and public sectors come together to build a new identity management ecosystem that makes life easier for everyone.