The importance of digital identity
December 6, 2021
It’s no secret that digital identity has taken centre stage in the world of tech, for the consumer as well as for business. Indeed, more and more individuals now use an online identity for daily tasks, such as accessing government benefits, education, bank accounts and booking medical appointments. In some cases, it is even impossible to access services or perform tasks without it.
This shift highlights the fact that activities with the greatest value are also those where users must provide their digital identity, i.e. personal information that proves they are who they say they are. As such, the potential benefits of digital ID for citizens, governments as well as businesses are not to be ignored, as they could lead to growth and a more inclusive economy. The implementation of digital identity systems to further achieve these objectives is therefore important.
A solution to even the odds
A World Bank study revealed 1 billion people do not have any proof of identity, with 45 per cent in the poorest 20 per cent of the world population. Cumbersome identification procedures, fees, lack of access and simple lack of knowledge of personal identity are the main barriers that keep individuals outside traditional identification systems.
Digital identity ensures democratised access to services. In other words, it unlocks a range of essential services now available online, be them financial, health-related or educational. Furthermore, although 1.7 billion people still do not have a bank account, a growing number of people now own mobile phones allowing them to create an identity online. Indeed, smartphones are a compelling solution for governments to provide a secure and simple access to online services. With this in mind, a Juniper Research report predicts that, “civic identity apps, where government-issued identities are held in an app, will account for almost 90% of digital identity apps installed globally in 2025.”
Digital identity programmes can help ensure equal access to basic administrative resources. Moreover, a McKinsey Global Institute study estimates that solving the identity problem could add three to 13 per cent to a country’s GDP by 2030. Therefore, the economic benefits should not be overlooked.
However, one must not forget that for digital identity systems to work efficiently, guidelines need to be put in place to ensure the security of personal data, preserve privacy and uphold civil rights. The adoption of shared standards and practices, as well as a common framework at the global level, would therefore be beneficial as it would help avoid data falling into the wrong hands when it is transferred from one country to another. It would bring citizens worldwide closer to getting universal access to a legal ID and the benefits stemming from it.
Setting up digital identity systems
Even though a digital identity is required for a wide variety of activities online, there is no “one-size-fits-all” approach to implementing ID and access systems. Nonetheless, the need for strong identity verification systems is crucial, to allow for a secure and simple experience, and encourage the fast adoption of digital ID solutions. As such, the political and corporate world are pushing for numerous Digital ID schemes to support transformation and ensure online access to services for everyone.
The European Union, for instance, has adopted an eIDAS regulation to facilitate electronic identification, trust services as well as the exchange of administrative documents across the region. This European digital identity will be available to EU citizens and businesses and will allow them to access public services in any member countries. In addition, citizens will benefit from European digital wallets, enabling them to digitally identify themselves, but also to manage and store identity data and official documents in an electronic format. To accelerate progress, active discussions and coordinated action between the parties involved across sectors, industries and regions are equally important and essential to setting up digital identity programmes. Vulnerabilities in existing systems will also need to be addressed and corrected.
In all, as more activities move online, the political, corporate and social spheres must work to integrate digital identity within their frameworks. This evolution will ensure an equal access to basic services, like health, education and banks, as well as the safe inclusion of millions in the digital economy, allowing it to accelerate over time. Nonetheless, as the landscape evolves, more work still needs to be done to understand the opportunities and challenges brought by digital identity, and for stakeholders to take action accordingly. It is only then that we can curb the problem of identity, but also ensure a fair and equal access to essential services.