Digital Identity: the focus of the digital revolution

A new advancement in the digital economy is starting to take shape: the rise of digital identity. The use of digital identity is establishing itself as one of the foundations of an increasingly digitised economy, with many governments putting it at the top of their agendas.

Beyond the convenience and security aspects, there are economic benefits to setting up a digital ID system: a study by McKinsey showed that full digital ID coverage could unlock economic value equivalent to 3 to 13 percent of GDP in 2030 as it increases inclusion, formalisation and transparency. This impact will be even greater in large emerging markets where technologies add greater value and promote inclusive growth.

The European Union has made digital identity a priority, aiming to make online services safer and easier across the area e.g. enrolling in a foreign university, opening a bank account, or accessing public services, giving people increased control over their personal data and privacy while respecting user anonymity.

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The UK has also committed to digitalised identity: “Digital identity products are a vital building block for the economy of the future. They will enable smoother, cheaper, and more secure online transactions; they will simplify people’s lives, and boost business,” said Matt Warman, Minister for Digital Infrastructure.

As the Brexit deadline looms, the need to put mechanisms in place to ensure streamlined access to international services and businesses gets more urgent. The UK government has already said it intends to collaborate with the private sector, academics, and civil society organisations to bring forward what is considered ‘paramount’ to a successful and inclusive digital economy.

Digital inclusion and the ‘digital emergency’

The need for a robust and inclusive digital identity policy is no longer a luxury: it is, in fact an ‘emergency’, as cited by EU authorities in reference to the realisation that unless governments set digital strategies as a priority on their agendas, other initiatives like the carbon neutral economy and supply chain streamlining would not be feasible.

Asian economies have demonstrated great mastery of implementing and improving digital infrastructure ahead of the future economic and social needs which will require further connectivity. India, one of the world’s largest emerging markets, started to roll out a digital identity programme in 2009, and around 1.2 billion people in the country have digital IDs.

The true value of digital identity lies in its multi-purpose capacity: it can be used for individual IDs, products, legal purposes, business operations and more, considering the increased use of digital channels for transactions and communications.

Digital identity will form the backbone of the data-powered economy of the future: the forecast from International Data Corporation shows that by 2025, the global datasphere will grow to 163 zettabytes, which represents ten times the level of data in 2016.

“The question of digital identity is about survival; any business is profoundly impacted by digitisation. This is not something new, but the pandemic has accelerated and made the gaps that were there already more visible. This is as fundamental as the trade routes were back in the old days: without those, no trade and no prosperity,” comments innovation specialist and digital identity consultant Ronny Khan in our latest #FinancialFox interview.

The question of digital inclusion is another ‘emergency’ in itself. According to the World Bank, nearly one billion people around the world do not possess any kind of legally recognised identification, while a further 3.4 billion have an ID with limited use in the digital world.

This need is more acute in developing countries, but even in advanced economies, many citizens have poor internet connection. In Europe, for example, 40 percent of people in rural areas still do not have access to fast broadband.

Addressing security concerns

One of the worries arising in the digital identity discussion is the associated risk, particularly in the context of privacy and data protection. Significant questions over privacy concerns remain one of the hottest topics on the current political agenda, which raises the importance of ethical data surveillance and ethical data handling regarding the storage of citizens’ and businesses’ data in digital identity platforms.

The implementation of a digital identity programme must contain “built-in privacy provisions like data minimisation and proportionality, well-controlled processes, and robust governance, together with established rule of law,” states the report by McKinsey.

It is also worth noting that despite data security risks, digital identity represents a safer and more efficient alternative to paper-based documents that can be easily lost, forged or misused. Indeed, the use of digital identities should be understood as a necessity and an urgent step towards innovation; the lesson is to ensure that the plans will have a comprehensive approach and employ state-of-the-art technology.

Solutions for privacy concerns are already being developed by actors in the space. Belgium-based AntumID deploys blockchain technology to create a global authentication system that ensures extra privacy and extra security and can be used in multipurpose online platforms to safeguard against cybercrime, hacking and frauds.

In the UK, London-based start-up Yoti is one of the best-known names on the scene, offering a range of services spanning identity verification, age estimation, e-signing and AI anti-spoofing technologies, with more than eight million app downloads. Yoti has recently made headlines with its AI-powered age verification platform intended to check the requirements of the UK’s ‘Challenge 25’ age-checking policy.

VIDEO INTERVIEW

Watch our new #FinancialFox interview with Ronny Khan, innovation specialist and consultant on digital identity technologies.

Be sure to follow us on social media @cassiopeia_ltd to keep up with more news and updates in this exciting sector, and don’t forget to subscribe to our channel to hear about further upcoming interviews on FinancialFox.

London-based boutique leading Public and Investor Relation consultancy firm. Awarded Best International Investor Relations 2018. https://cassiopeia.agency/

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