Welcome to the future! The ‘20s promise flying cars, people living on the moon, and fast internet everywhere on the planet. In terms of identity, the UN has stated a goal of "legal identity for all, including birth registration, by 2030," a goal that Trulioo supports and is working furiously toward.
The key to making progress on full identity, which is a major factor for achieving financial inclusion, “is through the creation and use of digital identities,” as a 2017 International Telecommunication Union (ITU) report states. Digital identities offer consumers secure and private ways to interact and transact, and they offer businesses ways to build trust while ensuring compliance. By 2030 we hope that the scourges of money laundering, fraud and other financial crimes have been dramatically minimized and digital identities can help bring peace and prosperity to all.
Of course, that’s a lot to accomplish in 10 short years, so let’s examine some practical steps that regulators, organizations and consumers will take in the next few years to help achieve the laudable goals.
Technologies of trust
As the FATF states, digital identity holds “great promise for improving the trustworthiness, security, privacy and convenience of identifying natural persons.” The pace of innovation is accelerating, and what was once science fiction is becoming an accessible commodity. Combine 5G (or 6G), space-based internet, another eight generations of smartphones with better sensors, processors, and smarter applications, plus who knows what else and what do you get? Let’s face it, nobody knows, and any prediction here would look silly in hindsight.
However, we can look at trends and extrapolate their effects. The smartphone has continually subsumed other technologies into its form, from maps to cameras, newspapers to ride hailing. It’s not a big leap to suggest that identity documents, such as driver’s licenses and passports, will soon also reside on smartphones.
Or, perhaps identity will leapfrog the device all together and become cloud-based. With advancements in facial recognition, 3D scanning and other biometric capabilities, simply walking into an environment where identity is required could be enough to prove who you are.
In either case, the central enabler is digital identity; by digitalizing the identity process, forgeries and alterations become highly complicated, costs are driven down, more data points become available and updates become easier to roll out. Of special note, digital identity syncs with the nature of the online world, enabling identity to serve as a fundamental building block online, as it does in the physical world.
It’s not only the front end, the consumer-facing side, of identity that digital identity will affect deeply. Organizations of all types rely on identity for compliance reasons, to help mitigate the risk of fraud, and to build trust and safety of their services. With better identity frameworks, these organizations can lower costs, lower risk, improve their ability to expand into new markets, and better build trust with customers, employees, suppliers, third-parties, and all their connections.
Digital identity is not some magic wand, though, that will solve all problems automatically. As we’re talking about people, all the politics and social considerations of human relations come into play. There’s inertia and natural resistance to change, self-interest, different value systems and many other complexities that require consideration.
For organizations that are regulated entities, legal and regulatory compliance is mandatory; acceptance of digital identity will require stipulations or guidance in Anti-Money Laundering (AML), Know Your Customer (KYC), and other pertinent laws and regulations. This on top of all the numerous other regulatory requirements will continue the rapid expansion of the RegTech industry, with spending expected to reach $127 billion by 2024. The good news is that not only will the technology improve the speed and user onboarding experience, there’ll be cost savings for KYC of nearly $1 billion.
The fight for data rights
According to IDC, 60 percent of the world’s GDP will be digitalized by 2022. As so much of the world’s economy is online, control and access to all the layers of data is a critical competitive advantage — and responsibility. Of course, securing the 40 zettabytes of information that exists on internet, with all its personally identifiable information (PII), is fundamental. New encryption standards, security protocols and legal protections to better enable enforcement are in the works and will be staples early in the new decade.
More so, it’s about who has the right to collect PII information, what they do with it, who they share it with and who, in effect, owns it. While the impact of GDPR is still too early to tell, there are indications that major privacy issues remain in the EU. President of the European Commission, Ursula von der Leyen, stated "it is not about damming up the flow of data. It is about making rules that define how to handle data responsibly. For us, the protection of a person's digital identity is the overriding priority."
Other major privacy legislation, such as the California Consumer Privacy Act, is just coming into force, and we should expect much more as legislators try to come to terms with the massive amounts of sensitive data that is online. Some experts even call for a breakup of the biggest online companies in the world, which would be a long, expensive battle, if it gets that far.
The battle for data will have many fronts, from lawmakers and courts to the top items on news feeds. Data breaches will snare more victims, fines will continue to escalate, as will the costs to contain the damage. For organizations dealing with PII, having proper data audit, design and policies will help ensure the required transparency, delineation of responsibilities and necessary data handling procedures are in place. Having technologies and systems that are secure and flexible, able to defend attacks and adapt to changing requirements is no longer optional. The cat and mouse game between data criminals and ethical defenders will continue, but those that practice good data practices will gain an upper hand using powerful technologies, proper training and awareness.
Inclusion for everyone
Of all the many scourges on the planet, one of the most damaging is poverty. Poverty affects healthcare, food, shelter, education and other fundamental quality of life issues. Poverty also contributes to global issues such as war, environmental damage and inequality. Improving financial inclusion — providing access to basic financial services for the billions of people who lack it — is one clear way to help end poverty and improve the world.
Advancing financial inclusion also drives economic growth, with one estimate suggesting that it can create over $100 trillion in new economic activity.
As mentioned, digital identity helps solve the financial inclusion problem. However, there are many other inclusion problems that digital identity, if done properly, can help provide solutions for:
- People who lack access to government services
- People who can’t vote
- Social media fakes
- Censorship of freedom of speech
- Exclusion based on race, religion, gender, age and other discriminations
These are massive, complex, ambiguous problems that may never be solved. However, there are elements where digital identity can help move the needle forward, providing transparency when there is a need for transparency, or providing anonymity when anonymity is required.
Balancing the different needs and requirements, integrating different layers of identity to fit the use case, providing information on a need-to-know basis, all are possible with an intelligent, scalable and adaptable digital identity framework.
Here at Trulioo, our enthusiasm holds no bounds for what this decade can bring. We know it’s tough to build an identity system that covers everyone; three billion people was tough, four billion tougher and five billion tougher still. We understand that, going forward, nothing will be easy. This decade is the time for trust, privacy and inclusion and all good things that come with it.
Happy New Decade!