Digital ID, please?
In 2019 you can pay with your face or fingerprint, you don’t need to remember all your passwords and you can apply for a passport or visa within the comfort of your own home. It feels like traditional paper ID documents are outdated, inconvenient and arguably unsafe. Carrying around that piece of gradually decaying paper with your most personal information on exposes you to the risk of theft, damage or loss while you could be the furthest possible from your motherland. And who feels that adventurous nowadays? It must have happened to a few people before we moved forward to a new era: that of digitalisation. Digital identities are slowly making their way to become the new standard. Think about it. The way we interact, shop, transact, trade, job-seek, house-hunt and even match-make is largely done online, leaving well-engraved digital footprints that follow us for a lifetime. This shift from the analog to the digital, along with the vast information we blissfully share online, is making our digital identities more sophisticated, thorough and continuously updated sources of information, far more than our traditional ones ever were or will be. Our digital identities have resulted in enormous amounts of data trails, giving rise to an entire new industry that processes our digital interactions. Cool right?
Yes, it is very cool when you think that these digital IDs have unleashed the potential of the things we can do online by increasing our convenience, our security and debatably, our privacy. We are now able to confirm our identity without providing additional paper documents and at the same time, through a quick Google search, can have a fuller idea of the people we meet online, as well as offline. The long list of passwords to memorise is eliminated as we can now log into websites without them — the art of selecting “sign in with Facebook” and Apple’s “add to keychain”. We are even able to save time and money browsing the internet as our digital profile permits us to be paired with relevant products and services on the market; we are individually assigned tailored algorithms of efficiency. Additionally, online businesses like Monzo and PayPal make use of our digital identities so that we can avoid long queues at the bank or any retail store. Monitoring irregular activity for your digital identity, many companies are now turning to digital information to fight fraud. Our digital IDs have largely succeeded in enhancing our safety, comfort and customer experience, ultimately benefiting us and the economy, which paves the way for opportunities. Sadly, this is only true for a fraction of the world.
The benefits of having a digital identity are not enjoyed by all since up to now, a big percentage of people in developing countries don’t even hold a paper identity, let alone a digital one. Getting a driver’s license or renewing our passport is something we take for granted, while over 1 billion people across the world don’t have a formal identity. They are therefore not eligible to travel, open a bank account, receive government support or even own a piece of land. In a world where personal identity is a fundamental human right, it comes as a really surprising fact that some people don’t own one. Now, more than ever, the adoption of digital IDs is an issue that should be raised on a global level.
Digital ID Under the Global Spotlight
Our ability to prove who we are in an increasingly digital economy is of paramount importance; it was at the centre of attention in this year’s World Economic Forum in Davos. Global leaders announced future plans to promote digital identity and payments, as well as to increase transparency and globally include small and medium sized businesses in a sustainable way. McKinsey’s research demonstrates that digital IDs can unlock 3% to 13% of economic value in the GDP of emerging markets. Initiatives such as the ID2020 Alliance and governments’ favorable legislations are paving the way for an immediate movement towards social inclusiveness through the widespread adoption of digital IDs.
In the developing world in particular, we can see a direct correlation between the lack of digital IDs and the stagnating socio-economic growth. The lack of such identity possession is jeopardising healthcare, education and financial services adding to the problems of inefficiency, inequality and isolation. African economies are among the ones held back because individuals are not digitally identifiable. There are many horror stories of long queues at rural health centers where clinicians have to go through a pile of paperwork in order to find the name and history of their patients, some of them infants, that are dying because they were vaccinated twice. The provision of a digital ID system has become vital if African countries are going to be able to meet the health standards of the developed world.
Luckily, there is growing attention to the digital development of emerging economies and the establishment of a digital identity is at the very core. We are slowly seeing the efforts of governments, NGOs and the private sector intersecting as more and more synergies are created. A great example is taking place in India where the government has provided the core technological infrastructure, the Aadhaar, the world’s largest biometric ID system; where residents of India obtain a 12-digit unique identity number based on their biometric and demographic data. The system has been so far adopted by 90% of the Indian population. The technological contribution provided by the Indian government is engendering innovation from private businesses who use this existing infrastructure as a springboard. Financial services are just one of many examples where Aadhaar has completely transformed the landscape.
Solving a fundamental human right for the many
Blockchain Technology
However, depending on our digital identities to participate in the modern economy comes with threats and challenges as you also have to relinquish control of your personal data. And that is why the space of digital ID is evolving alongside blockchain technologies. It has already started but during the next few years, we will see a rise in blockchain digital identity startups. This will be a milestone for data privacy. So far, our digital identities are used by a centralised network of apps and organisations. This new wave of decentralised, blockchain systems that respect self-sovereign identity rights will eventually combat fraud and enhance cyber security. We see big players in the space leading the way with partnerships such as that of Microsoft and Samsung with Mastercard, and the Canadian government with their financial services industry. All efforts are directed towards establishing a new standard of securing digital identities.
Platform Solutions
More hands-on than the blockchain model, Zaka is looking at solving the African identity crisis through its platform solution. In conjunction with other companies and governments, Zaka is using healthcare as a universal touchpoint through which they are creating digital IDs of patients in Rwanda. Patients register on Zaka and they are given the opportunity to transact with the platform’s local businesses. Through the use of digital IDs, these businesses are then better able to provide users customised products. By leveraging existing technology and heavily depending on network effects for their platform, Zaka is introducing a mutually beneficial relationship between Rwandan citizens and local businesses.
On a macro level, a platform solution like this, can fundamentally transform the way rural people engage with services and give them more access to healthcare, financing, education and utilities both within and across borders. As Nick Mason, the Co-Founder and CEO of Zaka noted, sub-Saharan African economies face one big challenge; 16% of their trade is among African countries while in comparison, European countries trade 70% of their commerce among them. It seems that economic identity can play a major role in facilitating broader trust in the market, giving consumer greater access to services across borders, and businesses an unencumbered movement of economic assets across borders.
One of the unresolved challenges of digital identity is that the data we share is quite narrowly segmented into each organisation. The data is collected according to the necessities of the organisation’s specific revenue model. Consequently, our digital identity is distributed into fragmented and inefficient distinct groupings. This leaves us exposed and vulnerable to the major threats of our time: security breach and identity theft. Cases such as Cambridge Analytica and Equifax call for the establishment of robust and trustworthy frameworks. In contrast, platforms such as Zaka, allow consumers to let their economic identity mature and develop as they transact with any service on the platform. The consumers’ information is kept secure within the platform, enhancing efficiency and empowering the individual. By proposing a more holistic and all-encompassing approach, Zaka lays a foundation for an intelligent, growing digital identity.
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Data has become the necessary asset to be part of a modern economy. New businesses will need an advanced technology, a relevant and timely value proposition as well as a transparent user base. Fine-tuning the balance of protecting the user and holding a competitive advantage, the businesses of the future will be defining vessels in sustainably serving the market. We will be seeing a lot more startups using blockchain technology and introducing platform solutions in order to reach the untapped market of people waiting to become digitally identified. Hopefully, someday, not far from now, everyone in the world will have a digital ID they didn’t forget on the bedside table.
Takeaway messages
- The effects of having a provable ID in developing countries are of a well-illustrated macro importance. These benefits will be shared among the economy as a whole, as it will boost the activity of small and medium sized businesses, as well as among individual citizens who will be able to conduct online obligations and access better healthcare, education and financing.
- The space will encourage the adoption of blockchain-powered technologies with a special focus on decentralisation. The emergence of self-sovereign identities will join the fight against fraud and ID theft while metrics will be developed in order to measure the accountability of these digital IDs.
- Special attention will be given to platform solutions in emerging markets, trying to lessen data segmentation and to increase efficiency. A particular focus needs to be placed on the network effects of such platforms. Populating these platforms with abundant users will welcome more and more businesses to join, connecting the dots of the economy. Hence, the more the better.
- It takes a village! None of this will be possible without a network of cross-industry organisations. Governments, NGOs and the private sector will all need to cooperate and provide sustainable solutions.
- Many new startups will be entering the space as the infrastructure of digital ID matures with more sophisticated business models and an up-to-date value proposition designed to serve currently untapped markets. These will not just stop at digital ID development but instead will go as far as digital ID verification and digital ID management.
Original content published on DataSeries
