Digital Identification as Evidenced by McKinsey & Company
Following are some of the key findings from the report released earlier this year by McKinsey & Company.
It seems like almost every day, we hear about another large firm mishandling its users’ data which leads to billions of dollars annually in repercussions. As technology continues to change rapidly, the need for digital identity becomes more and more apparent. A self-sovereign digital identity may be one of the most important economic advances as it gives social and civic empowerment, as well as economic gains in control of one’s data.
Infrastructure to Expand Digital ID
More than four billion people around the world currently have access to the internet; the number of smartphone users is increasing daily. The possibility of a global digital identification infrastructure is more attainable than ever with declining implementation costs, especially when considering the potential value creation that digital identification can bring.
The main components needed to execute digital identity composes of a smartphone/tablet and internet connection. The price of smartphones has been falling in emerging markets such as Asia, Latin America, and the Caribbean; in Africa it declined 20–30% from 2008 to 2016.
Technology needed for digital identity is more affordable than ever: bio-metric technology for registration and authentication is becoming more accurate and more inexpensive. Thanks to blockchain technology, barcodes on cards that were once only capable of storing numerical data can now secure signature, fingerprint, or facial data.
Benefits for Individuals and Institutions
Individuals can use digital identification to interact with businesses, governments, and other individuals in six different roles: as consumers, workers, micro-enterprises, taxpayers and beneficiaries, civically engaged individuals, and asset owners.
These roles would correspond with the institution’s side as how institutions can decide how to use an individual’s identity. For example, as commercial providers of goods and services, interacting with consumers; as employers, interacting with workers; as public providers of goods and services, interacting with beneficiaries; as government, interacting with residents; and as asset registers, interacting with individual asset owners.
Emerging vs Mature Economies
McKinsey & Company has assessed that 23 countries may drive potential value from digital identity based on the factors of inclusion, formalization, digitization, and ID coverage. They’ve predicted that by 2030, digital identity has the potential to create economic value equivalent to 6 percent of GDP in emerging economies on a per-country basis and 3 percent in mature economies in the assumption that they have a high adoption rate.
These numbers could potentially increase the economic value of each country’s economy. Emerging countries may experience rapid growth merely through basic digital ID with essential functions while mature economies may have already integrated digital processes and would require more advanced digital ID programs with data-sharing features to drive potential economic value.
Many of these predicted numbers won’t be possible without mass adoption. There needs to be a driving factor that increases the rate of adoption. Although India’s Aadhaar system has over a 90 percent adoption rate, Nigeria’s National eID launched 5 years ago and the adoption rates are below 10 percent. Mature economies without data-sharing functionality have seen low adoption while higher-functionality digital ID has experienced over 70 percent or more adoption rate in countries such as Estonia, Sweden, and Norway.
Closing Thoughts
Digital Identification is a growing need in today’s economy as people continuously experience cyber attacks and fraud with one’s own personal data. Centralized databases will soon be a thing of the past; digital identity may follow the footsteps of the internet 20 years ago and open up an array of possibilities. Although we can well imagine how a digital identification infrastructure will impact today’s society, the amount of development in the coming years should be something to look forward to. People deserve to have ownership of their own identity — our core mission since the very beginning.
Love,
Team Metadium
Follow us on Medium, Facebook and Twitter, and join our Telegram Group to receive the latest updates. Download our Keepin application on the App Store and Google Play.
