Mobile Identity Powering Cross-Border Commerce
In most Western countries, the ability to easily access financial services using government-issued identification is something that is typically taken for granted. However, in the developing world it’s a very different story. Sub-Saharan Africa has both the highest rate of unregistered births as well as the highest population percentage without legal identification – 43 and 37 percent respectively.
As part of its mandate to reduce global poverty, the World Bank launched its Identity for Development (ID4D) program to help developing countries improve economic outcomes for their people by supporting the creation of modern identification systems. One of the areas of focus for ID4D is the use of digital identities in order to provide direct cash transfers to those in need while reducing duplication and fraud.
Using Mobile Phones as Proof of Identity
Another form of digital identity that has become widespread is the use of mobile phones. In European countries like Finland and Estonia, SIM cards that enable mobile phones to connect with network providers are also being used to securely verify people’s identities.
In less developed countries, where financial inclusion rates are low, there are very high levels of mobile adoption. Even though less than 40 percent of Mexican adults had a bank account in 2014, there were over 80 mobile phone subscriptions for every 100 people. Similarly, just over 50 percent of adults in India have bank accounts, while there are 75 mobile subscriptions for every 100 people. For people in countries like these, the use of mobile phones as proof of identity can empower them financially, which was previously not possible.
Global Economy Increasingly Cross-Border
We now live in a world with a workforce that is more internationally mobile than in previous generations. The Migration and Remittances Factbook 2016 reported that more than 3 percent of the global population, or nearly 250 million people, live outside the country where they were born, and the amount of funds transferred by remittance exceeded $601 billion.
Not only are workers going cross-border in higher numbers, but the level of commerce, especially eCommerce, has risen as well. Today, one out of every five dollars spent on the purchase of goods globally involves a product that is shipped from a different country, up significantly from one in seven in 1995. Cross-border shopping now makes up 25 percent of all eCommerce sales.
Mobile Identity Worldwide
There are several reasons why mobile phones and devices are becoming a standardized form of identity and helping to drive adoption internationally.
The telecommunications industry is among the most highly regulated in the world. They must comply with strict know your customer (KYC) regulations, typically using in-person verification processes for onboarding.
Mobile network operators (MNOs) already have a wealth of identity information for their subscribers as a result of the KYC requirements that they must meet. Combined with the ability for customers to connect to their own MNO from any other network, using mobile devices and SIM cards for mobile identity can be easily used across borders.
Secure and trusted
Due to their strong track record of managing identities, MNOs have earned the trust of their customers. In addition, today’s SIM cards have encryption that provides protection for identity information to be securely stored.
Consumer adoption and behavior
How likely will consumers accept the use of mobile ID? It’s already happening with two-factor authentication (2FA), which typically involves an SMS text message being sent with a verification code to the user’s mobile device. This code is then used online to authenticate that the account is being used by the authorized user.
Mobile devices are already commonly used for financial transactions, particularly in emerging markets, where the banking infrastructure is weak. In countries throughout the Middle East and North Africa (MENA) – such as Jordan, Lebanon, Kuwait, Saudi Arabia, Oman, Egypt, and the United Arab Emirates (UAE) – new mobile money services are expected to grow by up to 50 percent.
What opportunities do you see for using mobile identity?