The view from Sibos: Banks in danger of letting digital identity opportunity pass them by

The view from Sibos: Banks in danger of letting digital identity opportunity pass them by

As the haze descended on Singapore, banking delegates at the international Sibos conference were peering into the potential of digital identity as a source of new revenues.

Digital identity is, “the bank’s opportunity to lose”, noted Barclays Bank’s chief data officer, Usama Fayyed, during a well-attended panel session on Tuesday where he pushed banks to innovate faster and seize the day.

Fayyed and other panellists, including Sean Gilchrist, managing director, commercial digital from Lloyds Bank, identified established social networks and technology vendors as the most probable sources of competition. The spectre of the threat from Apple, Facebook and Google was inevitably raised.

The fragmented nature of data protection law and creating a frictionless consumer experience were cited as significant barriers to overcome.

“Customers should trust organisations that have a vested interest in their privacy,” said Fayyed. “Banks are already in this business. If the alternatives to banks are funded by search and advertising, then inevitably they are conflicted.”

Using the analogy of the physical safekeeping of assets, Fayyed put forward the view that banks have retained a head start in terms of consumer trust. From this position the industry should, theoretically, be able to build new lines of business and explore different charging models for identity based services.

He added: “Banks are increasingly in a declining margin business. We need to find models where we have an advantage and can serve the customer. This is a good one.”

Despite this positive outlook, the panel agreed that no single form of identity verification would prevail. Government and healthcare were the other major verticals to be accommodated within a federated view of identity.

In March, Barclays was named among a list of nine companies applying to act as identity providers for UK consumers accessing Government services online.

Convenience to the user, to use manage, reconcile and authorise multiple forms of identity was identified as one of the key gating factors to consumer adoption.

Exceptions to this view might arise from the lower threshold of trust required by millennials in developed countries. Or in the developing world by the numbers of unbanked citizens whose first experiences of using financial services comes via mobile phone and a non-bank payment provider, rather than a traditional bank on-boarding process.

Comments: (12)

Chris Pangopoulos
Chris Pangopoulos - DNB Bank - Oslo 13 October, 2015, 10:552 likes 2 likes

I understand that mr. Fayyed refers to the British banks. Digital identity, issued by Norwegian banks has been developed more than a decade ago. It is used in financial services, on-line shopping, interaction with governmental entities.

 

Roger Storm
Roger Storm - SIX Group /SIX x-clear - Zürich 13 October, 2015, 11:401 like 1 like

The picture is quite different in different countries. In Sweden, we also developed an electronic ID over a decade ago. It is in use for both tax filings and banking and other services, but the choice of taking on the role of identity trustee (and thus the role of provider of the core KPI component) is a key one for players to make. But the digitization and disruption race is on, so can anyone in the trust business opt out?

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 13 October, 2015, 12:151 like 1 like

e-ID service for 3rd parties was first launched in the early 90s in Finland. Now it is handling in practise all strong e-id needed by both the public and private sectors - also for signing contracts - also for work roles. Mobile ID is available both from operators and banks (at least Nordea).

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 13 October, 2015, 12:18Be the first to give this comment the thumbs up 0 likes

Old figures http://www.finextra.com/blogs/fullblog.aspx?blogid=7817

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 13 October, 2015, 12:20Be the first to give this comment the thumbs up 0 likes

More http://www.finextra.com/blogs/fullblog.aspx?blogid=5985

A Finextra member
A Finextra member 13 October, 2015, 13:21Be the first to give this comment the thumbs up 0 likes

PSD2 will enforce the role of banks in terms of e-identity as they will have to allow account access to others PSPs (TPSP). Moreover should they wish to embark the e-invoice story, then they will be key to deliver confidence between parties as they could provide treasury funding as a result. But as usual in many aspects of life, consumers will have various e-Id to be used in different circumstances of their life. 

A Finextra member
A Finextra member 13 October, 2015, 13:28Be the first to give this comment the thumbs up 0 likes

My warm Hello to Bo and Roger !

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 13 October, 2015, 17:27Be the first to give this comment the thumbs up 0 likes

Thank you Jean Yves! Feel free to recommend our public-private model - reusing existing familiar tools is getting exponentially more important - because citizens have run out of time - and governments out or money. If you can save 100 m tax payers money in Finland - it is a billion in France - easily. But above all you can save citizens nerves - as they can use something they already know and use ever so often anyway....

John Broxis
John Broxis - MyBank - Paris 19 October, 2015, 08:30Be the first to give this comment the thumbs up 0 likes

Hi all - I know I am preaching to the converted here, but we have developed MyBank and are now launching the MyBank Identity Verification pilot (http://tinyurl.com/nuffqt66) to allow consumers to verify who they are safely and securely using their familiar online banking. Just as they do in some Nordic countries!)

There is a great opportunity for banks here to offer services, at a time when privacy and online trust are key issues.

Let's see if they can take this opportunity!

A Finextra member
A Finextra member 19 October, 2015, 09:35Be the first to give this comment the thumbs up 0 likes

Hi John, 

the link is incorrect. Please check and send the right one.

Thanks

 

Michael King
Michael King - PeerPay Ltd - London 19 October, 2015, 10:16Be the first to give this comment the thumbs up 0 likes

Identity could manifests itself as ‘proof of process’, a transaction can only be completed when there is irrefutable proof that prior mandatory processes have happened. These can be different depending on what type of transaction is being completed. In my view blockchain technology can provide this proof that, for example, all relevant KYC checks had been performed by a trusted (regulated) body at the time of the transaction – the digital equivalent of a notarised proof of identity.