Digital IDs: How to accelerate global interoperability

By Andrew Black, Managing Director, ConnectID

If you work on developing digital IDs and interoperable global systems, you’re well aware that this field is rife with contrasts.

On the one hand, there is the immense energy and potential of creating an international interconnected system to raise growth and efficiency. However, there are also so many significant challenges that we’re constantly facing the risk of paralysis.

Global digital identities can transform international trade and drive economic growth. McKinsey calculates that expanding digital ID coverage in just seven countries they analyzed could generate economic value equivalent to 3 percent to 13 percent of these nations’ GDP by the end of the decade.

A United Nations Economic and Social Commission for Asia and the Pacific report emphasises how global digital identities could improve supply chains and trade by improving resilience and efficiency.

Despite these incentives, creating a globally connected system has proven complicated and has deterred most players so far.

The list of hurdles is long. Differences in technology, legal systems, and visions about privacy hinder collaboration. The technological integrations required to ensure data crosses borders safely and seamlessly are complex.

The absence of international unified legal frameworks compounds the difficulty of harmonising different technological standards. Key market players’ power, which can influence the adoption of benchmarks that may not be universally applicable, further complicates the issue.

The sheer magnitude of these obstacles can make many of us feel disheartened and lead to immobility.

Leading by example

So, how can we avoid this scenario despite so many difficulties?

We must concentrate on gradual and decentralized implementation by promoting bilateral or consortium agreements.

This strategy offers several advantages. It enables countries and companies to test and refine solutions, identifying and improving the most viable alternatives through practical application. It also promotes trust by creating channels of collaboration that facilitate the exchange of experiences and reduce misunderstandings or concerns.

Another significant benefit of creating and implementing bilateral agreements is that they create use cases showcasing the social and economic benefits of a globally aligned system.

For example, in Australia, marginalized communities and digitally excluded people, particularly within First Nations Australians, require solutions that can support their identification process. These important solutions can overcome barriers to accessing essential services, such as education, employment, and healthcare.

Successful examples like this can nudge reluctant nations to cooperate as they will try to avoid being left behind.

However, it is crucial that these initiatives align with parameters established by larger entities, such as the UN or the European Union, and are flexible enough to ensure that bilateral systems can eventually integrate within broader frameworks.

If we fail to ensure local and bilateral efforts align with globally interoperable technical standards, we will just create another challenge to further integrate countries. That is why it’s critical to ensure that even bilateral agreements can be expanded and integrated without significant difficulties.

Moving towards a dream state

A recent collaboration between Australia and Japan is a good example of how to do this.

In June 2024, Japanese companies Dai Nippon Printing and MUFG Bank partnered with

Australian ConnectID, National Australia Bank (NAB), the Commonwealth Bank of Australia (CBA) and Meeco to enable the use of verifiable credentials and digital certificates between these businesses.

With increasing tourism and trade between the countries, the companies involved recognised an opportunity to test improved data transfer methods and minimise risks like identity theft and information leakage.

As part of the process, the partners established a Japan-Australia Cross-Border Interoperability Working Group and will test several use cases to improve consumer convenience in Japan and Australia.

These tests are the first of their kind involving Japanese and Australian private sector companies. The systems align with the European Commission’s technical specifications for the European Digital Identity Wallet (EUDIW) and use the OpenID Foundation‘s data formats and communication protocol to facilitate further integration.

Another example of progress is the Digital Economy Partnership Agreement (DEPA). Chile, New Zealand, and Singapore started the implementation in 2021, aiming to increase trade and promote interoperability between different digital identity systems.

The agreement encourages establishing and maintaining frameworks to enable technical interoperability or common standards for digital IDs, including protecting them through legal frameworks and recognising their legal and regulatory effects.

Agreements like these demonstrate how even private players can collaborate to overcome legal and technical limitations.

Focusing on concrete actions like this offers a practical path to achieving interoperability and has the potential to produce a domino effect that encourages other businesses or countries to follow suit.

By learning from each initiative and building on its successes, we can move closer to the dream state we all want to see, where digital identities are seamlessly integrated inside countries and across borders, minimising risks, making life easier, driving economic growth and fostering global cooperation. It is time to act decisively and transform this potential into reality.

About the author

Andrew Black is Managing Director at Australian-owned digital identity exchange ConnectID.

Article Topics

connectID  |  digital economy  |  digital ID  |  digital identity  |  interoperability  |  standards