Banks could be the key to trusted national digital IDs

Banks could be the key to trusted national digital IDs

Even before COVID-19, banks were well placed throughout the developed world to take the central (non-political) role in making digital IDs broadly successful.

Add in banks’ involvement in national government intervention and support strategies related to the coronavirus, and the industry looks like a solid choice to be the operational hub for digital identification.

That is what several e-ID industry insiders have concluded in a June report and a new podcast. Both pieces of content were published by Mobey Forum, a global industry association of financial institutions.

Participating in the report and the podcast were Mobey Digital ID Expert Group members Mikko Hiekkataipale, senior product manager of Nordea Bank; Dan Johnson, vice president of digital ID at Mastercard and Arjen Hollander, digital business development manager at information systems maker Thales Group.

“Banks are in a unique position to seize the opportunity presented by digital identity, and best placed to lead the discussions and implementation,” according to the report. The have a chance to “lead the development of a fairer, more trusted approach to digital identity.”

Hiekkataipale, speaking on the podcast, said payment cards, which are mostly issued by financial institutions, are a form of digital ID that is already used and trusted around the world. That trust would translate into a lot of consumer acceptance, he and others in the industry say.

Financial history has witnessed an incremental and grudging tug-of-war between governments’ demand to know about accounts and the industry’s tectonic reluctance to reveal anything.

Indeed, financial institutions might have a uniquely successful record of rebuffing government demands. That would be useful when separating what a government actually needs to know and what customers want kept private.

It is worth noting that, in making his case, Hiekkataipale may be underplaying the fact that financial institutions dominate the payment card sector. Visa has 336 million card holders — one for every last person living in the United States, with six million cards left over. Given the convenience of the cards, consumers might throw in with the carnival industry if it was realistically the only issuer.

That highlights another argument for bank issuance and management of digital IDs. No other industry has the practical and time-tested experience with national- and global-scale card infrastructures, including authentication services, he said.

And now might be an opportune time to push this idea to governments and businesses.

Belgium’s itsme digital ID, according to Hollander, has thrived during the COVID-19 crisis.

Prior to the pandemic, the growth of itsme registrations had been “linear,” he said. But users went from 1.7 million in early March to 2.3 million people now, a 35 percent increase.

And, Hollander said, 4.5 million itsme-related transactions were recorded in March. Eight million transactions are occurring monthly now, and he said that monthly total looks like it has legs.

It might take more convincing to get residents of the United States on board. Distrust of institutions, especially of government, has reached peaks few could have conceived 10 years ago. And some of that sentiment has been prompted by government steps to curb the coronavirus.

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