The way in which we manage our identity and use it to access new products and services has changed little in previous decades before the digital age. Before the rapid growth in the digital economy, we were able to prove our identity with a passcode or physical documents. Many traditional institutions, such as banks, checking-in to a hotel and voting have maintained this process or have made a shuffle forward to enable ‘remote services’ which were sending physical documents in the post.
With the advent of the digital age, companies looked to new ways to verify their customers identities online. Knowledge-based authentication, powered by the Credit Bureaus, appeared a quick fix for taking onboarding online. But these systems are no longer cut out for our modern world as they presented user frustration, were time consuming and eventually, no longer secure. These systems are a honeypot to attackers due to the volume of information and data they keep. In fact, last year it was revealed that over 21 million stolen user credentials belonging to Fortune 500 companies are available on the Dark Web.
Today, we’re seeing a surge in demand for digital services. 60% of consumers reported accessing more online services than usual since the pandemic. What started as a change born from convenience, is now a necessity and solidifying into a long-term behavioural shift. As a result, we’re seeing companies around the world rapidly innovating to continue their services online to serve new and current customers in a contactless world.
As businesses accelerate digital transformation initiatives to enable online customer onboarding at scale, digital identity verification becomes pivotal to knowing who they’re doing business with online. An identity strategy is essential in providing protection against fraud, increasing conversion rates, and providing a smoother user experience.
The new standard
Far more secure and with countless use-cases spanning different industries, digital identity can solve verification issues of security, convenience and speed. We used to have to reserve a few hours to physically go in-branch or in-store on the high street, queue up and wait for a teller to verify us to open an account. Now, thanks to machine learning and biometrics technology, users can do this by simply taking a photo of their ID and a selfie and be verified in seconds from the comfort of their own home.
Digital document verification first checks that the ID is genuine and is not fraudulent or tampered with, and then matches it to the user’s face. This ensures the person presenting the identity is its legitimate owner and is physically present. Unlike traditional Knowledge Based Authentication (KBA) processes, this protects against identity theft and impersonation, significantly reducing the potential for fraud in a world where cybercrime renders traditional, text-based methods weak and insecure for remote authentication.
We’ve seen rapid adoption of this technology particularly among the financial services industry, healthcare and remittance services as a result of the pandemic. In fact, in the first few months of the pandemic, we saw the weekly volume for financial services with remittances and payments increase by 1.3 times. Platforms like Curve and Natwest’s Mettle are recent adopters who are now enabling new users to securely onboard to their wholly digital banking services with their digital identity.
It has also been applied as a key to unlocking the travel and tourism industry, enabling users to bind their health test results or status to their digital identity to prove that they present a lower risk of COVID transmission. The approach of a digital health passport was hailed early on in the pandemic by the likes of Heathrow’s CEO, John Holland-Kaye, and separately, a trial has now been launched by the Commons Project Foundation and the World Economic Forum a CommonPass, a digital health passport, to enable safer travel and promote the reopening of international borders. The same approach is being used in hotels to verify the immunity status of visitors through the Sidehide booking platform, as well as providing a contactless check-in experience to reduce contact touchpoints for visitors and employees alike.
Government authorities are also getting onboard
We’re also seeing a growing appetite in government. As we enter the new decade, nations around the world are exploring how digital identities can provide more secure and convenient access to their public services.
Australia announced last month, for example, that digital identity will be a major focus under its $800 million technology budget package to help simplify and reduce the cost of interacting with government. Similarly, the UK government’s Digital Identity Consultation closed with a commitment to further the use of digital identities, both to support businesses through the development of proposals for a legal framework that will remove the regulatory barriers to their use and help establish safeguards for citizens, as well as to develop a next generation of digital identity use in government.
Other countries are going one step further and using digital identity as part of their national identity schemes. Singapore, for instance, is integrating facial verification technology into its digital identity scheme SingPass.
The decade ahead
It’s clear that a new standard for identity verification is on the horizon. Current systems are not fit for the task, especially as the increase in digitisation mixed with a need for limited contact are quickly revealing the weak spots of legacy authentication methods, which have a far higher risk of fraud and high user abandonment rates.
Digital identity has proven to be an area of vast improvement for verification, both in terms of security and in customer experience. The technology has shown itself to be a key area of investment that’ll continue into the new decade as new use cases are discovered to further facilitate and secure the way that we engage with services.
Clare Joy, Senior Strategy & Expansion Manager, Onfido