The WEF and digital identity systems

The WEF and digital identity systems

Simon Deane-Johns, consultant solicitor and online financial services expert at Keystone Law, explains the necessity of digital identity systems in today’s tech-centric society, but suggests that the recent World Economic Forum (WEF) report is mistaken in thinking that the major financial institutions will be the ones to fully develop the systems needed.

What are digital identity systems as opposed to physical identity systems?

Broadly, digital identity systems can be defined as any electronic means of establishing a person’s identity, whether by reference to something physical (such as biometric information, like an iris scan or fingerprint) or data (especially behavioural data, such as your location or online activity, rather than static data from a database).

Whereas, a physical identity system involves the physical processing of an item that proves your identity, such as a passport control official viewing a physical passport that was handed to them by the passport holder, or a postal worker checking a driver’s licence to verify the identity of someone collecting a parcel.

What is the benefit of digital identity from the perspective of financial institutions? What benefits and additional capabilities would accrue to financial institutions, regulators and governments from the implementation of digital identity systems?

The theoretical benefit of digital identity systems from the perspective of financial institutions are twofold:

  1. it would be easier, quicker and more convenient for their customers than the current processes, particularly if the digital identity process was widely adopted/accepted
  2. it is thought to be more cost-effective for the institution, particularly in demonstrating internally and to the authorities that they have indeed verified the customer’s identity

It has been suggested there may also be new revenue opportunities, but I disagree because for the traditional financial institutions the situation is about catching up. Nevertheless, newer financial institutions do have the opportunity to deploy digital identity solutions as a further means of outpacing the more antiquated

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