Trust at center of digital ID for financial services in Southeast Asia, UK still struggle

Southeast Asian countries increasingly rely on the public perception of service providers’ integrity when considering the deployment of digital IDs for financial applications, according to a new digital financial services (DFS) report by the Tech for Good Institute, which focused on the region’s relationship between consumers and financial service providers.

According to the new data, the levels of trust in banks and digital financial service providers are high across all countries surveyed: the Philippines, Malaysia, Indonesia, Vietnam, Singapore and Thailand.

Further, the report suggests digital literacy is the most consistent predictor of the use of digital ID wallets and non-e-wallet DFS usage in all the nations covered.

“For unbanked and underbanked individuals who had been excluded from the formal economy, basic digital literacy skills are crucial for them to access and use financial services on their mobile devices,” reads the report.

Regarding direct-to-consumer applications, the Tech for Good Institute research says DFS features such as digital ID systems can eliminate physical barriers to accessing financial services, and new payment methods offer underserved consumers more flexibility and options to join the economy. 

“Innovative product designs like gamification or robo advisors simplify financial services like insurance, loans and investment, making them less daunting and more accessible.”

There are barriers to the advancement of DFS, however, including gaps in pervasive cash culture and physical and digital infrastructure. Also, consumers need more digital literacy, financial literacy and trust.

Despite these barriers, several of the countries participating in the Tech for Good Institute research have already widely adopted digital technologies for payments.

The government of the Philippines, for instance, has recently confirmed they will use Daon’s digital ID and biometric tech to verify GoTyme bank customers.

In Indonesia, Bukalapak has joined forces with Standard Chartered Bank. In Singapore, the World Bank has worked with the country’s Government Technology Agency (GovTech) to create a case study of the island nation’s digital identity scheme Singpass.

UK lags behind in digital ID wallets

Meanwhile, the UK is lagging behind in adopting digital payments and wallets, claims France-based biometric expert Thales.

Writing in a blog post over the weekend, Justin Walker, vice-president for digital transformation at Thales, warned that if the UK does not keep up with European plans for a digital ID wallet to be completed by 2024, Brits will be left behind.

“The real truth is that banking, driving licenses and passports will eventually all be digital, and you will only use a physical passport or bank card for countries, which have not caught up yet with this technology,” Walker explains.

“You will need a secure platform to issue those digital credentials, securely provision them and store them into a digital wallet to keep those items safe. If we don’t lead the way in the UK, the rest of the world will create the rules, and we will have to abide by them.”

Walker further explains that a digital ID wallet can include biometrically secure personal IDs like passports, birth certificates, driving licenses or Land Registry details. 

“The combination of biometrics and digital wallets can not only close criminal avenues but also speed up your life by removing red tape and daily hassles,” the executive writes.

Further, Walker believes that if governments enable citizens to keep visibility of their data via digital wallets, that will also empower friction-free travel, trade and business.

“That is not related to the technology – it is related to the government. All of our future digital networks will have to connect internationally,” Waler adds.

“In the future, only far-flung outposts will use physical bank cards and leather-bound passports. These nations will be left on the outside looking in.”

Thales has recently received approval from Mastercard to start working on quantum security for its bank cards.

Article Topics

biometrics  |  consumer adoption  |  digital ID  |  digital wallets  |  financial services  |  identity verification  |  Southeast Asia  |  Thales Digital Identity and Security  |  UK