As you may already know, identity verification is hardly a new concept. In fact, it’s been around for thousands of years. However, over the past few decades, there have been tremendous changes in how we prove who we are.
At the moment, the global standard for proof of identity is still a physical document issued by a government authority or a recognized institution. In more recent years, there has been a movement towards using electronic identity verification, particularly at a time where traditional physical documents are easily forged and have become less reliable.
Identity verification is a vital part of the process for applying for financial services, whether it’s a bank account, credit, insurance, health, or other services. For the vast majority of individuals in developed countries, identity verification is simple because we usually have multiple forms of identity readily available, and we have established credit histories that make it easy for financial institutions to decide what services we are eligible for.
Unfortunately, this is not the case for 2.5 billion people around the world because they live in a very different reality. They are unable to access basic financial services, which often limits their ability to improve their economic situation and effectively support their own families. One of the common factors preventing the unbanked from gaining access to financial services (besides physical access to a branch office) is the lack of identity documents. Without a government-issued ID, these citizens don’t exist as far as financial institutions are concerned.
While the ability to open a bank account is vital, there are other important uses for identity verification. For example, in India, like most countries, financial institutions often call upon credit information companies like CIBIL to check credit history when providing access to credit and loans. In addition, employers and employment agencies frequently run background checks on job candidates before deciding whether or not to hire them. There is also a booming industry for Indian private investigators to carry out pre-matrimonial checks on potential spouses.
How is India leveraging innovations in technology to tackle their identity proofing challenges?
In India, the world’s second-largest country by population with 1.2 billion people, only 35% of its people have an account at a formal financial institution. In other words, nearly 800 million Indians are unbanked. In 2009, the Indian government launched the Aadhaar project, an ambitious and unique program to count every resident and assign them a unique identification number.
What sets this initiative apart from others is that the government is recording each resident’s biometric information, in this case, fingerprints and an iris scan. Once a person’s details, including biometric data, have been recorded in the system, they are issued an Aadhaar number and card. This form of identification can then be used for Know Your Customer (KYC) checks by banks and other financial institutions, as well as other businesses that maintain customer profiles.
While the Aadhaar card will not replace other identity documents, such as passports, driver’s licences, and ration cards, it is being promoted widely by Indian state and central governments as the definitive means of proof of identity. For example, the state of Punjab has recently launched a pilot project to link voter identification cards with Aadhaar cards. Another incentive for Indians to register for their Aadhaar card is the ability to obtain a passport in 10 days, rather than waiting for long periods of time for police criminal record checks to complete. Instead, the passport applicant must make arrangements for police verification after receiving their passport.
Despite concerns that have been raised by various people and groups related to the collection of biometric data and privacy issues, the central government has informed the Supreme Court of India that it will continue with implementation of Aadhaar. Opponents have argued that the use of biometric data is unconstitutional and an invasion of individual privacy. On the other hand, banks, state governments, and schools have embraced the initiative, undoubtedly on account of how Aadhaar can reduce identity fraud.
What other options are available in addition to biometrics?
Cyber ID data (CID) is another option to consider. It provides another means of electronic identity verification from sources including social networks, ad networks, and mobile and eCommerce site. CID addresses the basic question, “Is this person who he/she claims to be?”
CID has the advantage of using data that is already accessible with fewer privacy issues, compared to using biometric data. As a result, it is a less costly solution that is less time-consuming to deploy, since existing data would be used.
We’ve come a long way with identity verification since the days of tattoos and unique jewelry. As new technology continually becomes available, so will new forms of proving our identities.
What do you think is the next innovation in identity verification?