Financial services firms to feds: You could complete us (with digital ID)

The financial services industry wants the federal government to do something — almost anything — to give consumers confidence in the idea of digital identification, according to a recent discussion hosted by American Banker.

That means that financial services firms, which have spent years battling against a comprehensive federal privacy legislation realize the straits they are in when it comes to digital ID. They are admitting they cannot pull off this epochal transformation.

Developed economies around the world, including the United States, have moved toward this future just to stay alive in a COVID-19 world.

But peers to the United States are making hard decisions and national investments in digital ID that here are politicized, ignored or mishandled. Those governments are updating their economies in ways that accept a future of ubiquitous contactless transactions and prepare their citizens for a power-sharing formula for individuals’ personal data.

The former makes economies more efficient and the latter is designed (the jury is still out) to make management of personal data as trusted as government and private industry postal delivery.

And trust goes beyond having faith that government will act ethically with personal data.

A participant in the seminar, Jeremy Grant, coordinator at the Better Identity Coalition, said $1 billion in ID-related cybercrime is occurring every month globally. That figure, $12 billion a year, is what the entire facial recognition market is expected to reach by 2026.

Onfido sponsored the gathering, inviting Grant and Jeff Pasquerella, chief compliance officer of DriveWealth, an investment infrastructure company.

Industry “folks know what the rules are out there,” said Grant. The question is, how are the rules going to change in the near future. Or will they change much at all?

Pasquerella said one of the first things the Biden administration did was pull back on cryptocurrency policy until the White House could digest what is happening and what government agencies are doing about it.

The digital ID landscape has much in common with cryptocurrency infrastructure. “There is a need to be able to track a person through the system,” he said.

And where several peer economies have national databases to use for tracking, and that which could be used for know-your-customer (KYC) regulations, Pasquerella said, there is nothing remotely like it domestically.

“Maybe the Real ID (document program) could be a part of that system here,” he guessed.

Real ID is one U.S. government effort, and there are others among federal agencies and some states.

But, added Grant, no one is looking broadly enough to address which public or private efforts are not working much less how they might work together.

Digital ID has not gotten the necessary federal focus it needs. “We’re starting to fall behind,” he said.

Article Topics

Better Identity Coalition  |  biometrics  |  cybersecurity  |  data protection  |  digital identity  |  financial services  |  fraud prevention  |  identity verification  |  Jeremy Grant  |  KYC  |  legislation  |  Real ID  |  secure transactions