Governments should center utility, trust and inclusion in digital ID to support fintech: panel
Digital ID could substantially expand the potential of digital identity infrastructure for fintechs in relation to government applications, was the message underpinning a webinar recently hosted by Global Government Fintech.
‘Government fintech adoption: what role for digital ID?’ was organized together with sister company Global Government Forum. The international panel saw the participation of Pirthipal Singh from Canada’s Treasury Board, Kendrick Lee from Singapore’s GovTech and Keyzom Ngodup Massally from the United Nations Development Programme (UNDP).
The digital ID experts discussed a variety of topics related to the technology, including how digital ID can facilitate government social payments and tackle money laundering attempts and how it can benefit from international collaboration.
“The model we’re looking at increasingly is the concept of digital credentials, which mirrors how things work today,” says Singh, executive director for digital ID at the Treasury Board of Canada Secretariat.
At the same time, the executive recognized that some individuals and businesses in Canada might not want to use digital ID, and therefore the government needs to retain its paper-based systems.
Singh also highlighted the Secretariat’s collaborations with several countries, including the UK and Singapore, as well as the European Commission.
Lee, director of the national digital ID program at Singapore’s GovTech, described the structural differences between Canada and Singapore’s governance models.
“In Singapore, we have just one level of government,” Lee explained. “We’re also fortunate that we have a foundational legal identity, which in a way we have sort of digitalized to create a digital identity.”
Lee refers to Singpass, originally created as a governmental account with credentials in 2003 and now transformed into a digital ID with a whopping 97 percent adoption by eligible users.
The GovTech executive also analyzed how Singpass is supporting the fintech industry in Singapore by helping individuals open bank accounts with auto-filling form capabilities and, more broadly, with SGFinDex integration.
“Ultimately, we are working to provide a platform in our digital infrastructure that enables the flow of data across systems, organizations and potentially across country boundaries,” Lee explains.
The digital ID experts added that there are three considerations for every country when planning the development of a wider digital ID infrastructure that is compatible with fintechs.
The first one would be utility, meaning the advantages brought by digital ID from a practical perspective such as simplifying user onboarding in banking. The second is trust, which according to Lee, can be placed by individuals in government or in the private sector.
“For every country, it would be different; for some, it may be more viable, plays the most significant role, and [in those cases] the government can focus on defining a framework, for example.”
The third consideration, according to Lee, is inclusion. The digital ID expert said inclusion is vital to ensure that everyone can access the digital ID infrastructure or have alternatives to it if they choose not to use these tools.
Keyzom Ngodup Massally, head of digital programs in the UNDP’s chief digital office, highlighted the importance of digital ID and fintech innovation for the UN.
“It’s important because it’s estimated that there are millions of people who do not possess proof of legal identity,” she says, “and thus cannot prove who they are to receive social cash transfer benefits or to improve their livelihoods or utilize services that are available or could be made more available to them.”
According to Massally, the UNDP is working to tackle these issues by providing countries with help in developing digital public infrastructure for identities that rely on open source technologies, which she said can speed up collaborative development efforts considerably.
At the same time, Massally believes digital sovereignty is also important, as it allows countries to have ownership of their source code and thus reduces the risk of vendor lock-in.
Trying to answer the main question behind the webinar, the UNDP expert said digital public infrastructure has a particular role to play in fintech innovation.
“[This] is because the public rails of the infrastructure really enable the private sector, social enterprises and other stakeholders to innovate on top of the common rails that support greater interoperability, greater protection of people and their rights to data,” she explains.
Lee, on the other hand, said the role of digital ID in government fintech adoption should focus on AML and combatting the financing of terrorism (CFT).
“I think digital ID solves mainly, initially, the KYC [know-your-customer] problem – making that more efficient, making that faster. And subsequently, if it’s a reusable digital ID, then ongoing authentication of the user,” he said.
Lee also highlighted the importance of digital credentials to speed up interactions, particularly for smaller companies.
“It’s about prioritizing sectors or use cases so that we build confidence and there’s widespread adoption,” he explains. “With Singpass, we started with government; we moved to F.I.s [financial institutions], people asserted that this is a better way of doing things, and they’re willing to try it in other sectors of the economy.”
Panelists discussed different models of government fintech adoption and how they can be secured and scaled, with each of them exploring the one adopted by their organizations. For details about each of them, a recording of the full event is available here.
“There are many solutions,” Singh concludes, “but I think there’s a purpose here, and perhaps there are other technologies that will come and play that role.”