Layer of trust for the internet

Trust fuels the digital economy. Everything we do online, from clicking on a ride-sharing app to running a virtual storefront, depends on a safe and trustworthy environment. We need the assurance that the person or company we do business with will deliver the promised goods, services, and payments — and that our sensitive personal information will be safe and secure.

Digital identity is the cornerstone for building trust and safety online. Identity verification — which ensures that a person is who they say they are — enables customers, users, and companies anywhere in the world to confidently transact business.

But as anyone familiar with the history of the worldwide web will tell you, the internet was not built with a portable identity in mind. While there are protocols for transporting data from place to place, no such standard exists for transporting trust in the form of verified digital identity.

Without this foundation of trust, the digital economy can prove to be a breeding ground for serious crimes like money laundering and terrorist financing. The introduction of evolving Anti-Money Laundering (AML) and Know Your Customer (KYC) measures seem necessary especially as forms of decentralized currencies become new vectors for bad actors to carry out fraudulent activities.

And the digital economy’s reliance on traditional forms of identity like passports leaves 1.5 billion people without access to banking and other critical services. Finally, businesses must meet consumer demands for both low-friction digital experiences and proper security checks — never an easy balance.

Filling The Trust Gap With Digital Identity networks

Businesses, especially regulated entities, that operate in the digital economy need to create their own safe and trustworthy environment since the internet didn’t do it for them. They need a way to satisfy strict security requirements without lengthy identity checks that can alienate customers. This is especially true for the onboarding process, which should be frictionless but with the right layers of protection.

Countless identity providers strive to fill the trust gap. A single solution might verify one facet of identity, but that doesn’t go far enough in reducing the risk of fraud. It’s easier for a bad actor to get past the verification process if it only checks an ID document, for example, but doesn’t verify the personally identifiable information (PII) on that document or further authenticate the user with biometrics.

Deloitte researchers call for a way to “tie [these] solutions together so they form a strong identity system. Something convenient, effective, lets users control their information, and protects their information where it is in use. Something that can handle large transaction volumes and makes good sense for everyone involved.” In other words, a digital identity network.

Digital identity networks allow businesses to take a risk-based approach to identity. They collect only the PII needed based on the risk level associated with a user’s digital identity. For someone in North America, that might be a driver’s license and proof of address such as a utility bill. For someone in a developing country, that might be a mobile phone number tied to their name, a selfie (biometric authentication), and digital document verification. The identity network infrastructure matches the verification methods to the risk level to offer an optimal user experience with the necessary security measures.

Taking A Lesson From Card Payment Networks

Digital identity networks should work similarly to card payment networks. Over the years, Visa, Mastercard, and other providers have built up a vast worldwide payment infrastructure. Businesses or individuals can quickly and securely send money to another business or individual on these networks, called “rails.”

A cardholder on the payment network holds a trusted identity for conducting business anywhere the network is accepted. They don’t need their credentials verified each time they use their card. Numerous payment providers use the existing global payment networks — “ride the rails” — to build and deliver their solutions.

Likewise, anyone on a digital identity network can issue or accept an identity, and users choose which counterparties on the network to trust. The network — or system of rails — is a platform that orchestrates multiple identity solutions, verification methods, and data sources that offer digital businesses identity proofing on-demand and at scale.

With a digital identity network, businesses and users can now focus on managing risk and not on figuring out which verification method they need for a particular use case. And when combined, these networks create a global, interoperable system for identity verification. This system offers the trust framework for the digital economy that the internet failed to provide.

Final Thoughts

The digital economy is far more than a virtual storefront for big-name brands. It’s the sharing economy, the gig economy, online marketplaces, digital banking — all the new and exciting ways people around the world can connect. No matter what form the digital economy takes for a business or customer, the underlying need for trust is the same.

While we can’t go back in time and add that identity layer to internet protocols, we can innovate with a new trust layer that enables participants in the digital economy to do business with confidence. Digital identity networks are a way to build that trust.

This article first appeared on Toolbox.