The Centre for Finance, Innovation, and Technology (CFIT) has published a Digital Company ID plan to crack down on fraud and support UK businesses.
CFIT led a coalition of over 70 organisations including financial institutions, government agencies, tech firms, policymakers, and academics, to develop and analyse Digital Company ID.
According to the report, the solution could reduce the annual £6.8 billion loss to the UK economy due to fraud.
New technologies are emerging that will limit the impact of fraud and will be able to better safeguard businesses and consumers. Artificial intelligence (AI) is a main driver of innovation in fraud detection technology but also is being utilised by hackers
and fraudsters in developing more sophisticated schemes.
Lloyds Bank CEO, business and commercial banking, Elyn Corfield, said: “The coalition has proven that digitising how banks undertake know your customer obligations will help make compliance checks more user-friendly for Britain’s small businesses and support
the UK’s fight against financial crime. Delivering easier and quicker access to bank accounts and finance will also enable businesses to secure greater investment for growth and deliver more jobs for people across the UK.”
The introduction of Company ID can improve transparency, security, and trust while lowering the risk of fraud for UK businesses. This executive summary of the blueprint highlights what Digital Company ID is, and what it can do for the UK economy.
What is Digital Company ID?
Digital Company ID is a solution for financial crime, designed for scalability and economic growth, that can be implemented in the onboarding journey when SMEs open new bank accounts.
CFIT offers Digital Company ID as a solution that will promote the growth of SMEs, maintain economic resilience, regain social trust from consumers, and reduce fraud prevention costs.
The coalition led by CFIT conducted research over eight months to develop and create a framework for Digital Company ID, addressing challenges and risks that arose along the way.
What were the key findings of the report?
CFIT listed several key findings from the blueprint, outlining four main points on why Digital Company ID could be a transformative solution:
- Data sharing – Digital Company ID offers unified data sharing across networks, which can prevent fraud disruption in gaps of data.
- Real time data – Having access to real time verified data allows for transparency and promotes growth across businesses who can develop new products and services as a result.
- Cuts costs – Digital Company ID cuts compliance costs, with CFIT research finding that the solution delivers a 50% drop in verification and KYB costs, 60% reduction of time required for onboarding new businesses for bank accounts, and 33% increase in drop-off
rates thanks to onboarding efficiency.
- Scalable within a robust governance framework – The report found that Digital Company ID could excel in the private sector if governance structures are maintained, and compliance requirements are met.
Sage CEO, Steve Hare, commented: “The adoption of Digital Company ID has the potential to drive growth and foster greater economic prosperity. For UK SMEs, which make up 99% of the business landscape, this presents an opportunity to drive productivity while
reducing compliance costs and cutting through admin. Overall, an important step towards a more digitised economy.”
CFIT’s next steps
CFIT outlined seven points of action to fully implement Digital Company ID, which would require the government, regulators, and financial institutions to collaborate.
To summarise, these points include developing a prototype for the product with support from the Financial Conduct Authority (FCA), enabling data sharing across the financial ecosystem, appointing a lead authority to oversee the implementation, and creating
a taskforce to develop Digital Company ID.
Furthermore, CFIT recommends that the industry promotes standards for international interoperability, reviews the regulatory framework for Digital Company ID to ensure it meets the needs of the market, and have government agencies adopt Digital Company ID
to lead by example.
Chair of CFIT, Charlotte Crosswell, stated: “CFIT has brought together some of the brightest industry minds to work together and find solutions to reduce the fast-rising, multi-billion-pound annual cost of fraud to the economy. Fraud stifles economic growth
by burdening businesses and banks with unnecessary costs, slowing access to setting up bank accounts and the loan finance needed for businesses to invest and grow.
“These challenges must be addressed if we’re to support the Government in its mission to deliver economic growth and safeguard the UK’s reputation as a safe place to do business. Access to verified, authenticated, and centralised data sharing through Digital
Company ID would help dismantle these systemic barriers, close the loopholes exploited by fraudsters, reduce compliance costs for banks and transform the business landscape in the UK.”