In addition to enhanced security of transactions, digital identification and verification provide a significant opportunity for value creation for individuals and institutions.
The pivotal role of identity authentication in the financial services industry lies in the ability to establish and verify the identities of customers and employees. This ability is seen as fundamental to maintaining customer trust and the security of transactions. The ongoing rapid growth in digitisation, new technologies and new user behaviours is revolutionising the ways in which financial institutions interact with their customers and employees. This process is dramatically changing the scope and procedures of their identity management obligations. As a result, banks are starting to re-evaluate their role in the identity supply chain, as the accurate verification and authentication of their customers identity online is becoming crucial to the functioning of society and the successful application of several unrelated industries, ranging from the sharing economy to gaming and Open Banking.
Enterprises across the world are increasingly spending on the digitisation of their businesses, including their payment and verification processes. Digital identity verification is an emerging market segment centred on distinct, coordinating and sometimes overlapping solutions. At present, it is dominated by a handful of large vendors with portfolios of established products, while smaller players are constantly innovating to disrupt the market and to capture some of its shares. The ID verification market is witnessing a consumer paradigm shift from manual identity verification systems to those based on electronic credentials. Due to the COVID-19 pandemic, 2020 became the ‘year of change’ where expectations around identity verification in a digital environment accelerated.
Digital identity is a foundational set of enabling technologies that can be pivotal in a wide range of digital interactions between individuals and institutions. At the same time, digital identity technologies may be seen as ‘dual-purpose’ tools that can be employed both to benefit society and individuals, but also for undesirable or even nefarious purposes by governments and other institutions, as well as individual actors, since it is not always clear where the user data actually ends up during the verification process.
An often overlooked aspect of the technology is that well-designed digital identity solutions do not only enable civic and social empowerment, but also make real and inclusive long term economic gains possible. Reliable and independent digital identity and identity verification systems offer compelling value addition, while improving the experience of individual identification/verification at the time of onboarding and authenticating the identity of customers, to authorise account or service access.
Transitioning from traditional, manual methods of verifying identity offers several immediate benefits and creates opportunities for the industry. In addition to improved turnaround times of validation checks by leveraging greater automation, levels of accuracy can be enhanced and compliance greatly improved. The use of reliable digital identity verification systems can possibly reduce the risk of human error in identifying and verifying the identity of an individual.
In addition to these benefits, digital ID verification boosts efficiency, lowers costs, and delivers a more favourable customer experience. Accurate customer identification could enable other CDD (customer due diligence) measures, including effective ongoing, real-time due diligence on the business relationship and transaction monitoring. The long-term aim for digital identification is to achieve the same levels of trust afforded to traditional paper-based identity documents, such as passports and bank statements. The identity verification process needs to be both secure and convenient, in order to build solid confidence in digital identity solutions.
Our latest whitepaper Digital Identity ~ Realising Critical Opportunities explores the current digital identity landscape, highlighting current trends in the market.