The complexities of a digital identity network
By Zac Cohen, COO at Trulioo
Although we don’t give it much thought, every interaction we participate in online is underpinned by the concept of trust and safety. Establishing trust and safety ensures that legitimate individuals can interact safely online while concurrently blocking nefarious actors from perpetrating harmful activities. This is critical for every organization with a stake in onboarding and serving users.
In order to fulfill this important mandate, as well as any applicable regulatory measures, organizations need to reliably verify and authenticate a person is who they say they are by introducing identity checks.
This is incredibly important when we consider the surge in popularity of peer-to-peer apps like Uber and Lyft. A credible user community is paramount or else users won’t feel safe nor comfortable when interacting with each other.
When a sense of trust and safety of transacting online is jeopardized it has disastrous consequences for the overall digital economy and the businesses and individuals that rely on it.
What’s more, poor or nonexistent identity checks in online retail or financial services can have serious impacts on people’s lives. For example, an individual’s personally identifiable information (PII) can be exploited by a bad actor to make purchases or apply for a credit card, and the problem is worsening with more activities carried out online as a result of the pandemic. The Federal Trade Commission’s (FTC) Consumer Sentinel Network received approximately 1.4 million reports of identity theft alone last year, more than double the amount of incidents reported in 2019.
In this fraught fraud climate, consumers have high expectations when it comes to online safety. Findings from a FICO report exploring COVID-induced digital transformation in financial services reveal that U.S. respondents have high expectations when it comes to identity verification. Sixty-two percent expect to have to prove their identity when opening an account digitally, and 42 percent said they would expect the need to set up biometric identification.
The complexities of building a digital identity network
Establishing a verified digital identity is a complex process as there is no single solution for authenticating identities safely that complies with regulations and prevents fraud.
- Identification verification procedures and infrastructure are not the same around the world. Technological capabilities, data normalization and privacy policies vary from country to country.
- The data sources and identity tools relied upon to verify identities are scattered across many different channels and providers.
- Consumers around the world have unique attributes with varying risk profiles based on location.
What’s more, each online scenario poses a different level of risk, based on the industry or type of business. For example, the process for opening an account with a bank involves Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance whereas the process of signing up for a social network is not as arduous.
A singular digital identity network would streamline the process of verification. For example, it can be relied on to determine risk level and layer the appropriate solutions for identity verification. The right amount of friction is subsequently metered out based on the risk profile of the individual user.
If deploying a self-sovereign model, individuals control what is shared with whom on a case-by-case basis. This would support data minimization, ensuring only the PII needed for a specific interaction would be accessed with our authorization.
Another positive of a digital identity network is the freeing up of the siloed identities and profiles we have created across online services. The process of accessing new services online would be easier with a portable digital identity that’s applicable to every transaction and interaction we need to make online.
The future of digital identity
The internet wasn’t built with an identity layer as its creators didn’t predict the emergence of online platforms that facilitate people-to-people interaction. Our digital presences are based on browsing or consumer habits and are siloed within various accounts and social networks.
Now the emergence of the metaverse raises similar implications. Proponents are envisioning a virtual reality world where we can shop, socialize and interact. What will verification infrastructure look like in the metaverse, and how will existing forms of identity play into this new concept?
As our digital lives become more nuanced, the future of identity will need to evolve to support us in safely and securely interacting with brands and each other.
About the author
Zac Cohen is the COO at Trulioo, an identity verification startup based in Vancouver helping solve global identity challenges. Zac is a versatile leader experienced in managing and scaling high-growth companies and a veteran of all facets of startup and tech operations, including strategic planning and execution, corporate management, and building high-performance teams. His expertise in risk and compliance software continues to drive innovative and effective solutions for businesses operating worldwide.
DISCLAIMER: Biometric Update’s Industry Insights are submitted content. The views expressed in this post are that of the author, and don’t necessarily reflect the views of Biometric Update.