Most of the 7.8 billion people in this world are able to participate in the digital economy — we have an established identity that permits us to work, play, bank, access services and shop online without difficulty. Sadly, 1.5 billion people lack this digital access because they are unable to prove their identity through a valid birth certificate, passport, proof of residence or some other means to fulfill traditional KYC procedures.
Digital identity networks tear down barriers to digital access. An identity network is a marketplace of hundreds of data sources, verification processes and tools that work together to identify who a person is — no matter their unique set of identity attributes and risk profile. Businesses can use the network to access the verification methods needed to satisfy KYC requirements and build trust online.
Linked together, digital identity networks have the potential to create a global web of verification — what the World Economic Forum (WEF) might call a “truly transformational digital identity system.” While many efforts are underway to create such a system, the WEF notes the “need for a concerted and coordinated effort” to succeed.
The current state of identity standards
A foundational problem to this transformational system is a lack of basic identity standards. Experts at Deloitte and the WEF separated the identity problem into layers, citing standards as the very bottom layer. The issue with developing standards, these experts say, is a “lack of coordination and consistency.”
Standards organizations such as the Open Identity Exchange (OIX), the Kantara Initiative, and the Digital ID & Authentication Council of Canada (DIACC) are working to build this consensus by developing trust frameworks. Among other objectives, these trust frameworks establish a baseline of requirements that help private- and public-sector identity services to work seamlessly together. For example, the Kantara Initiative runs a U.S.-government-funded registry site for identity service providers that meet the Identity Ecosystem Framework (IDEF) baseline requirements.
Governments, too, seek to foster interoperability. The European Union (EU) adopted its eIDAS regulation, which established a single set of rules for electronic identification and trust services. This regulation allows companies and individuals to use their own national electronic identities (eIDs) when they do business or live in another EU country.
This interoperability supports the European Commission’s vision for a single digital market, which aims to:
- Improve access to digital goods and services across Europe.
- Create a fair and competitive environment for digital networks and innovative services to prosper.
- Help the digital economy achieve its growth potential.
Of course, standards are only one layer of the identity problem, and the WEF notes “there is a core need for a strong system [that] will enable effective action against each layer.” The WEF has issued a call to action for financial institutions to drive the development of such identity systems, in part because they have proven their ability to create new systems and standards (such as global payment networks) that are widely used within the private sector.
For universal digital access, focus on the user
Digital identity is not just about who a person is, it’s about what it allows them to do in the absence of face-to-face interactions. Essentially it’s about establishing real, demonstrable trust in a virtual, digital environment. Thus, a digital identity system has to serve the end user, wherever they are and whoever they are. To enable digital access for all, there must be a unified set of global identity standards that supports a trusted digital environment across borders.
In a recent paper, the WEF discussed the importance of “collaborative, user-centric digital identity” and quoted Ajay Bhalla, president, cyber & intelligence, Mastercard, who said, “To truly make the digital world work for all, we must rethink traditional notions of digital identity and break down artificial barriers. We need a new model that starts with the commitment to the fundamental individual right — ‘I own my identity and I control my identity data.’ And we need businesses, governments, NGOs and others to forge partnerships and invest resources in support of a common framework, principles and standards.”
While some “artificial barriers” do exist to creating a common framework, there are still very real obstacles to achieving a universal consensus. Some nations have limited access to resources, funds, the Internet or technology infrastructure. Others may not prioritize digital identity as highly as do other countries.
While governments hammer out an agreement on standards, a digital identity network offers underserved customers digital access now. With the network, businesses can tap into a vast and diverse array of data sources and verification methods that satisfy KYC requirements — even for higher-risk individuals — and build trust online. After all, every global citizen has the right to digital identity and to receive all the benefits and services available in today’s digital economy.