Global fintech and funding innovation ecosystem

Digital Identity Should Be A Big Business For Banks

Forbes | David G.W. Birch | Sep 16, 2021

liquid avatar technologies ID verification apps prevent Identity theft - Digital Identity Should Be A Big Business For BanksI got an e-mail to remind me to pay my credit card bill, so I went to log in to pay it. The browser filled in my username, I entered the missing digits from my PIN and I opened 1Password to get the password and typed it in, but it was rejected.

I thought maybe I typed it wrong, so I typed it again. Nope. So I clicked on “lost password” and got taken to another page where I had to enter all sorts of personal details, including my credit limit. Catch 22. I need the credit limit to reset the password but I don’t know what my credit limit is without the password.

I give up on the web and open the app on the phone. It lets me log in without having to remember a password, so I select pay. My credit card provider likes a heritage approach to payments, so instead of an xPay option it presents me with a web screen from the 1990s and I have to get out my debit card and type in the details.

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I then get redirected to my bank app and I have to enter my PIN number, OK the transaction, enter my PIN number again (I don’t know why) and then get a message saying that the transaction has been declined.

Oh well. That’s 2021 for you.

What should have happened, of course, is that I go to my credit card provider, enter my username, authenticate the log in from my bank app using my fingerprint. Then I select pay, approve the transaction from my bank app and go about my business.

Change. Yes.

There has been a change in the environment around digital identity over the past year. The coronavirus catastrophe has required many individuals, companies and organisations, who never had to do business online before, to shift to the new normal in double-quick time. This has in turn meant that the ability to create digital identities, to bind those identities to real-world legal entities and to use those digital identities to support online persona with the necessary collection of credentials to enable online transactions has become central to business and government.  There has also been a change of attitude toward the business of identity and the perception of digital identity as a fundamental rather than as a “nice to have”.

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Now, however, while we may be no nearer calculating the costs of having a digital identity infrastructure we now have some very accurate figures for the costs of not having a digital identity infrastructure. This is because the escalation of fraud through the pandemic has been staggering.

Why Banks?

Why do I single out the banking industry? Well, in the past two years, 37% of American consumers have been victims of application fraud and slightly more have experienced account takeovers. Since financial institutions are on the front line, surely we should look to them for some co-ordinated action to bring the problem back under control? Where is the “bank identity”? The “financial services passport”? The “money monicker” or whatever we choose to label it?

Many countries already have some form of bank ID. Norway, for example, where the pandemic experience was utterly different from that of the USA or the UK. In Norway, the Ministry of Finance and stakeholders delivered the SME loan guarantee scheme within three weeks and the first loan was granted and on account one hour after the scheme was authorised. The pandemic compensation scheme was similarly developed within three weeks. They were able to do this because they decided to create wholly digital schemes to process applications and deliver automated payments.

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