Our previous Medium post, Metadium, Our First Story, discusses how Identity integration and decentralization can benefit individuals in the digital world. However, markets in the digital world requires connection; a connection between users and service providers or among users through a service provider.
So, dear service providers, how do you connect with validated users?
The traditional sequence of user validation actions are embedded in the sign-up process. In order to comply with KYC policy while checking for users creating multiple IDs and preventing fraudulent activity among users, services request validation from their users, ranging from a confirmation via text (SMS), to uploading a valid form of identification.
But what if this process can be transformed from the Traditional Outside-in Connection, validation of users after the sign-up process, to a New Inside-out Connection which connects services with the validated users?
Let’s change things around
There are two key issues with the traditional outside-in approach. First is the time-consuming procedure potentially resulting in frustrated users abandoning the service altogether. As we mentioned in our first post, Metadium, Our First Story, difficult and time-consuming KYC procedures lead to frustrated users leaving the service. In the digital market, where mass market penetration is key to success, such a setback would be highly undesirable for service providers. Secondly, the cost of protecting sensitive personal data. Although services will ‘secure’ a scan of certified identification for 30 days, with the increasing data breach incidents and records of breach, neither the individuals nor service providers feel comfortable with storing certified personal identification on company databases.
Let’s talk with numbers
Accessing validated users or complying with government regulations in the identity sector are not our everyday topics of discussion. By providing a New Inside-out Connection, we believe we can significantly influence sectors of Consumer Identity and Access Management, Regulatory Technology and Data Security. To help you understand importance of these markets, let’s talk with numbers.
Consumer Identity and Access Management (CIAM)
In order to understand the possibility of New Inside-out Connection, understanding of a CIAM market is a must. The CIAM market is an industry which offers solutions for organizations and enterprises with regards to management of consumer identities.These solutions include authentication, identity proofing and other services which includes password management, registration and etc. To visualize the importance of the CIAM market, according to the Allied Market Research, the Global CIAM market was valued at approximately $8.0 billion in 2015, but is expected to reach $20.3 billion in 2021 with a compound annual growth rate(CAGR) of 16.7%. The reasons behind such rapid growth are the increase in mobile phone ownership, a rise in the number of data breach cases, and a growing list of regulations. At the same time, Smithers Pira analyzed that the market for physical identity will reach $9.7 billion by 2021.
CIAM helps organizations in the management of identities consumers and others to ensure secure and seamless services. Consumer IAM industry players help in implementing solutions that authenticate identities of customers across digital and non-digital channels. — Allied Market Research
Regulatory Technology (RegTech)
RegTech is a combination of two different words: ‘Regulatory’, and ‘Technology’. According to Investopedia, the term was created to “Address regulatory challenges in the financial services sector through innovative technology… to help businesses comply with regulations efficiently and inexpensively.” RegTech includes solutions to comply with KYC, Governance Software and etc. According to Medici, annual spending of financial institutions in the RegTech industry was $70 billion in 2017, and is expected to rise to $118.6 billion in 2020. With stronger and more extensive regulations, some financial firms have already spent up to $500 million annually to comply with KYC policies.
“Financial firms are spending up to $500 million on compliance with KYC and Customer Due Diligence (CDD)” — Thomson Reuters
Data Breach
Data breach is a familiar term with the rise of the digital market — but how does it look today? According to the Gemalto, Breach Level Index, 10 billion records have been breached since 2013. In 2017 alone, there have been 1,765 breach incidents, and 2.6 billion records breached. The surprising part is that 76% of breached records are accidental losses by the service providers: poor security practices, leaving the gateway open, leaked personal information, etc. According to the Cybersecurity Ventures, cost of cybercrime damages are expected to rise to $6 trillion by 2021. With the growing number of costs, and poor practices to secure data, ‘securing’ a scan of users’ certified identification must be eliminated.
The Solution
We believe there is a need to change from the traditional Outside-in Connection approach to a New Inside-out Connection. The inside-out approach of connecting with the users will be possible through identity decentralization. Users, by having the ownership of their own verified data, will have instant access to brilliant services enterprises created. Because user data is already authenticated and validated, the need for protecting scanned copies of users’ certified identification is eliminated. In the near future, storage of users’ scanned image of a certified identification will no longer be necessary.
Learn about our protocol, and share great ideas to inspire greater audience. For inquires, please contact us at hello@metadium.com
