As the world continues to become more digital, enabling trusted digital transactions between various kinds of organisations – from banking and financial services to travel and gambling - and those they serve, becomes more complex. The persistent growth of identity fraud and the creative ways in which fraudsters are acquiring personal information only adds to the complexities. Organisations have to know with complete confidence who they are dealing with and consumers must be able to provide trust in their identity, so that they can access the services they are entitled to. 

In my last Finextra blog, I talked about full digital ID adoption being just around the corner. For the financial service sector in particular where high levels of assurances are needed, digital ID promises to be a game changer in establishing and maintaining trust. The benefits for this sector will be significantly greater than fraud prevention alone. They will see greater user success rates at the point of onboarding, positive engagement first time and on return, reduced risk of loss, improved compliance and the overall cost of ID per user will come down.  

Crucial to making sure identity transactions can take place safely will be the trust frameworks that are being developed around the world. These frameworks aim to provide the rules and guidelines needed to govern the collection, verification, storage, exchange, authentication and reliance on credentials about a person, a legal entity, device, or digital object.  

There are three key areas that are vital to future digital ID success, but they have not yet been fully embraced by many frameworks. 

Putting both parties at the end of the process, first

Be it the end consumer or the organisations who want to get trusted information from those consumers, their needs must be met first in the design of a detailed trust framework. Most trust frameworks around the world, however, have started with the needs of the parties developing those frameworks. Their needs are important too and must be met, but there has to be a better balance if trust frameworks are to be successful. 

A more user-empowering digital ID – make it smart

There is a complex world of processes and rules that organisations must follow to proof people. This is made even more complex by the fact that those processes differ from sector to sector and across borders. They have to work through the various credentials that exist through constant liaison with the end customer to get the right ones. Both for the organisations trying to provide a service to their customers, and for the customers trying to understand what is needed from them and navigating an organisation’s specific processes and rules, it’s a painful experience. 

The danger here is that it will become a barrier. That’s why digital ID needs to be smart. Thought leaders on the topic of smart ID have been talking about smart wallets to help those organisations that will come to rely on digital ID work out which credentials will be accepted in the complex processes and rules they have to follow to proof someone. 

But we must not forget the end customer here. A smart digital ID should go even further than this. A smart digital ID needs to guide the end customer and make it easier for them too.

The detail behind the transaction should be down to the smart ID to figure out. Not only should it interpret each organisation’s complex rules for the end customer, it should work out both which credentials the customer needs and help them obtain the credentials they don’t have. And it needs to be structured in a way that does not require the end customer to understand the rules. 

This is when all the parties involved in a digital transaction will start to see the real benefits of digital ID. Whether smart digital ID come as a smart wallet or a cloud based digital ID, we need to be ready to deliver it. Trust Frameworks will be crucial to this and it is vital that they are designed to support smart digital ID.

Achieving global reach     

For global adoption of digital ID to be possible, it needs to be interoperable across the different frameworks. 

There are still many questions that need to be addressed, specifically around compatibility. There has to be agreement across borders and sectors on how common credentials or the same data from different credentials, are presented. Otherwise, organisations on the receiving end are left trying to interpret the data. 

Then there is the issue of trust. How will an organisation in one country know that a digital ID issued in another country can be trusted? Will the standards for proofing in one country be accepted by the other? What are the data handling and management obligations in each area? Who is liable if something goes wrong? 

There will need to be mass interoperability between frameworks and this is a significant challenge for digital ID. Different frameworks will need to be able to trust each other and there will need to be some form of independent assessment of their alignment and compatibility. 

One way forward is a ‘meta’ framework or a ‘framework of frameworks’ that will enable translation between one framework and another. There are initiatives underway that seek to bring financial institutions together with other sectors to achieve interoperability. 

Creating a world where trust can be established easily

Digital ID promises vast benefits to people, businesses, governments and society. In order to realise them, digital ID needs to achieve a global reach and be adopted by all. Successful mass adoption depends heavily on trust frameworks that work well - with the end users at the centre of their evolution, and both smart digital ID and interoperability driving their progress.