Financial security needs a good digital identity system

In the contemporary world and with the situation caused by the pandemic we are experiencing today, as well as, with the penetration of the internet and new technologies in all social spheres, the existence and care of our digital identity.

Digital identity or 2.0 is the set of all personal information that we share on the internet. This ranges from data related to our physical environment, such as our address or photos, to our email and online behavior patterns, which are collected through cookies.

In the financial environment, this term also covers bank account numbers, card data, or credit history. Furthermore, since banks and other monetary institutions must comply with regulations against the legitimation of capital, they can request information on the origin of the goods, information that complements the identification form.

According to BBVA, the lack of standardization and intercommunication between banks regarding the management of the information collected is a brake that can harm customers. The institution states that, because each provider has a different way of storing and collecting information, as well as the lack of global regulation (either in a country or in larger environments), the risk of failures in digital security increases. . Phishing or identity theft can be mitigated if the institutions have a standard both when requesting information and when acting jointly against the crimes.

However, it is also important that users be careful while browsing, as many computer criminals take advantage of disinformation to search for their victims. Both banks and state entities should create education programs so that users are aware of appropriate practices when sharing personal information.

And why the banks?

A pertinent question at this point is why the digital identity system should be in the hands of the financial system? According to a report from the World Economic Forum (WEF), banks are the ideal institution to verify user information because “they already perform this function for commercial and regulatory purposes.”

Despite this, the WEF agrees with BBVA that the lack of standardization is an obstacle. The Forum indicates that Know Your Customer measures (Know Your Costumer, KYC) are carried out numerous times because banks “are not designed to trust each other and their data. This repetition exists even within the same institution through different lines of business. Similarly, identity is not accepted and trusted across borders. Existing customers often find it difficult to open a bank account with the same institution in another country. “

Similarly, although with the current environment it may not be ideal, the establishment of regulatory measures that standardize these practices can greatly benefit the financial and social ecosystem in general, since digital identity is key in today’s world for people to Unwrap in a safe environment.

IDMX and the attempt of a digital identity card

In Mexico, the initiative did not come from banks but from institutions dedicated to cybersecurity and data management. In mid-2019, the creation of the Digital Identity Association of Mexico (IDMX) was announced by Verisec, a Swedish digital security company; Argentina’s Identity Bureau, focused on digital authentication services; the Mexican data analysis company Acerta and the trust dedicated to payment technologies FIMPE.

The Association’s objective ranges from the education of people and the creation of a digital identity ecosystem to the creation of a legislative framework that regulates this area. In this regard, IDMX has collaborated with State institutions such as the National Population Registry (Renapo).

Gueorgui Nikolov Popov, head of the IDMX Normative Committee, expressed in September that a digital identity card would mitigate the risk of identity theft, which only in 2018 stole 2,288 million pesos. A robust digital identity program is the solution for the financial system.

Well, the secure digital identity will change the way we interact with our financial services and thus, finally, protect our data and accounts from cyber attacks.