Beyond financial services: digital identity as a universal necessity
New WEF report pinpoints distinct gaps in identity landscape
Phnom Penh, 4 October 2016 – As the world becomes increasingly interconnected, the changing nature of transactions have mandated the development and growth of digital identity systems. A new report released by the World Economic Forum, “Disruptive Innovation in Financial Services: A Blueprint for Digital Identity” is calling on financial institutions to take the lead in creating robust digital identity systems. Financial services is in a unique position to own this development as it is a trusted industry, with access to a wide range of data, and in many cases has more sophisticated technology than other institutions.
The Blueprint for Digital Identity project is the most recent phase of the Forum’s ongoing Disruptive Innovation in Financial Services work. The report draws on over 12 months of research, which engaged 200+ industry leaders and subject matter experts through interviews and multi-stakeholder workshops. The report is part of the Distributed Ledger Technology project and was developed in conjunction with Deloitte.
“We need strong, convenient and secure methods for people to prove their identities, and the systems that we have today aren’t up to the task,” said Rob Galaski, partner with Deloitte Canada. “This creates inconvenience and risk for users, and also places a huge constraint on the development of digital-based services. This research looks at the potential for digital identity to replace the physical identity systems that we use today, and specifically how digital identity systems should be configured to deliver benefits to all stakeholders―from users to society as a whole.” Galaski also leads the Deloitte team engaged on WEF’s Disruptive Innovation in Financial Services work.
The future of the digital identity ecosystem rests on the commitment by financial services to drive the solution. According to the report, a universal digital identity system would be a social benefit for the greater good, pulling together existing systems into a single comprehensive resource. Ultimately, this technology will streamline and partially or fully automate many processes, with great potential to improve core financial services processes and open new opportunities.
While innovators are pushing to maintain pace with the call for new technology, barriers remain for implementation. “Many new identity systems are under development around the world in response to the pressing need for digital identity and technology capabilities. But not all have been successful, highlighting the challenges of failing to meet stakeholder expectations, ineffective technology, limited support and unsustainable operation,” said Bob Contri, Global Financial Services Industry leader, Deloitte Global.
“Digital identity offers financial institutions new and improved capabilities, including tailored risk profiles, streamlined global implementation and a better gauge of overall risk exposure. With input from policy makers and government leaders, the private sector has a unique opportunity to take the lead on developing new digital identity systems, ultimately making them more sustainable and widely adopted,” added Contri.
The report also acknowledges there is not a universal remedy for identity systems, as approaches will differ dramatically to suit the cultural and geopolitical needs that they serve. Designed to integrate new parties and serve changing user needs, identity systems should be built upon open technology and data standards, ensuring viability and sustainability.
“Identity is critical to financial institutions as their businesses are entirely transaction-based, involving transactions with a high degree of risk and require a high degree of certainty in completion. In Southeast Asia, where its financial systems are at different stages of development, creating digital identity systems will have great potential to serve its 622 million-strong population, of which more than 250 million are active internet users. However, much work needs to be done to create a common digital identity and authentication infrastructure unique to the needs of each country in the region,” shared Ho Kok Yong, Southeast Asia Financial Services Industry Leader, Deloitte Southeast Asia.
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