August 22, 2016 -
The World Economic Forum (WEF) recently released a report on the importance of digital identity for financial institutions.
The report, entitled “Disruptive innovation in financial services: A blueprint for digital identity”, is intended as a guide for chief strategy officers at financial institutions, as well as policy makers, who are interested in the topic of identity and want to understand digital identity and their own potential role in the creation of robust digital identity systems.
The report lays out, in detail, the argument for financial institutions to drive the development of digital identity solutions, discusses the landscape of identity solutions, provides recommendations on the construction of identity systems, and discusses the suite of benefits that these systems would bring to stakeholders.
The report contends that the inadequacies of current identity systems are limiting fintech innovation, as well as the development of secure and efficient service delivery in the financial services generally.
The report therefore calls on financial institutions to lead the charge in developing robust digital identity solutions that would bring wider benefits to users, financial institutions, and society as a whole.
Some of the critical steps outlined in the report include: studying and understanding digital ID users, engaging with the public sector, and determining the technology backbone needed for identity systems.
The report notes that digital identity should be widely recognized as a foundational step in enabling economic transformation and that there is a need for a “concerted and coordinated effort” to build a truly transformational digital identity system.
While not intended as a roadmap, the report is designed to serve as a foundation for financial and government institutions wishing to understand and ultimately act on identity challenges.
The report provides a number of helpful case studies, including one that examines Aadhaar, recognized as the world’s largest universal civil ID program and biometric database, which is currently used by the Indian government to provide social and increasingly, financial services. To date, Aadhaar has issued over 900 million Aadhaar numbers, and has enrolled approximately 850 million people, with a goal of ultimately enrolling 1.28 billion people.
WEF’s “Blueprint for Digital Identity” report is the most recent phase of the organization’s ongoing “Disruptive Innovation in Financial Services Project”, developed in collaboration with consulting firm Deloitte. The project explores the potential for digital identity in financial services and beyond and lays out a blueprint for the implementation of effective digital identity systems.
The project was launched to examine the accelerating rate of technological change, combined with shifting customer preferences and an evolving regulatory landscape, which have dramatic implications for the ways in which financial services are structured, delivered and consumed. The WEF project, with its long-term, multi-stakeholder perspective on the industry’s trends and uncertainties, is designed to help incumbent players understand the implications of these innovations and craft a strategic response. This recent report is one of a number of reports that have been released on the subject.