Digital Identity
👥 Who are you ?
Every time you enter your detail anywhere online different data sources are building a picture of you and the more people you have to prove your identity to, the more places there are for your identity to be stolen from.
When we talk about digital identity to me, in my head that’s not something generic. In my head that means something very specific and what it means is, you’ve got things in the real world like ‘You’ for example and there are things in the virtual world you as the ‘Bank customer you’.
As this avatar somewhere actually does kind of virtual things such as the transactions and digital identity is the bridge between the two things. It exists as an edge, as a relationship not as a point.
🧑🏽💻 Digital Identity
How do I make the link between my physical person and my digital self the process is typically broken down into three domains:-
- Identification 📋:- It is the process of proving your real world identity with the help of documentation such as driver’s license or passports.
- Authentication 🔐:- Once you have proved who you are you are given a set of credentials that allow you to access a service usually these are usernames and passwords or more recently biometrics like your face or fingerprint.
- Authorization 🔮:- It is what you can do with those credentials i.e the types of products.
🛡️ Fraud prevention
Trying to prevent fraud nowadays is exponentially harder. Identity checking their customers is a regulatory requirement for the banks referred to as KYC, know your customer or client.
In checking your identity banks need to validate certain data points using third-party identity providers that are connected to systems such as the voter ID or the passport office to prove you are who you say you are.
Properly identifying their customers helps banks to serve them with appropriate products and services it also helps them to fight fraud and it also helps them with AML, anti-money laundering to help keep their customer’s money and data safe.
Financial institutions in the UK spend 28.7 billion pounds a year on AML compliance, but the amount of criminal funds recovered by these AML processes is much less than that amount, with 70% of that money going to people rather than technology. 😅
Banks are being forced to spend all of this money on KYC but they can’t use it, they can’t monetize it because it would be obvious that some sort of interchange around shared KYC would be better for everybody.
If there really was a digital identity scheme that actually allowed the provisioning access of data, the revoking of access of data it would fundamentally change the way in which financial services and many more industries as well could operate.
But currently, we do not have a central identity protection entity. It could be a bank, maybe a new entity or maybe ‘US’.
It could be us who would manage our own identity.
🤔 Self-sovereign identity
We could manage our own identity and what we have access to. This level of control is known as ‘Self-sovereign identity’.
But Self-sovereign is a concept most humans don’t yet understand and for some people the technology of self-sovereign identity may be too complex. I’m not sure if the average person in which I include me really wants the responsibility of having to look after their own identities. I’m far too lazy and irresponsible to be charged with that I really don’t want to.
⚖️ If it gets hacked, I want somebody to sue. Basically I sort of don’t want to have the responsibility of looking after those things.
🌏 Why no global identity ?
I think the future is still going to be pretty fragmented within different countries people are doing different types of identity systems. So our national level identity systems are different. That the the different cultural views of identity and privacy can be accommodated in that one system.
So you know the English have a very different notion of identity in your relationship to the states to for example you know the India.
But at the end of the end, you need an identity. Because without how would you open a bank account and function properly in the world which is going digital?
🛠️ Financial Inclusion
World bank has reported that there are one billion people in the world that are unable to prove their identity and that is because they don’t have the foundational documents that we talked about.
They might not have passports or driving license or identity cards and that is a real challenge because when we think about financial inclusion and the banking system, it’s then very very difficult for those people to be able to prove their identity and that makes life really difficult for those people that are then having additional risk put over their potential for them to be able to open bank accounts.
For example these are real challenges across every nation in the world and so in order for us really to move the needle on financial inclusion we really have to focus on identity inclusion.
