The single, interoperable digital identity will be a dominant technology trend over the next decade, within the financial services industry and more broadly in our digital economies.
Often pushed by digitally-minded governments, there are digital identity schemes at all levels of maturity worldwide. And where they are already well established they have evolved differently in different markets over the past 20 years. Many of the best examples, that have delivered high population penetration and efficiency and security for consumers and businesses, have had bank collaboration at their heart.
In these cases, banks have been able to leverage their trusted role in the economy, their technical expertise and experience with shared infrastructure, to drive a level of success in opt-in digital identity schemes that governments have not been able to achieve on their own.
But banks can’t take their prime position in digital identity for granted. Even in countries where banks have already driven the digital identity agenda, regulation and market structure can change and new competition will emerge.
In countries that are still formulating federated digital identity frameworks, or looking to expand government national ID schemes into private sector usefulness, banks also need to be aware that the big tech giants and other globally networked companies have serious potential to upend the global market for digital ID.
If banks get digital identity right, they stand to realise benefits in streamlined sales processes and customer onboarding, reduced losses from fraud and regulatory fines, and the potential for new revenue generating identity-based products and services. But more importantly, they can maintain their central role as arbiters of trust and stay relevant in the transforming digital economy.
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