Michael Salmony, Executive Adviser at equensWorldline SE, sees great opportunity for banks in digital ID. He will share more of his thinking at Mobey´s Member Meeting in Paris in September.
1. What role can banks play in digital ID?
Banks have tremendous assets and opportunities in eID. They are provably the industry with the most robust authentication and best protection of privacy. This could be unbundled and offered as an ID service to third parties (or do we want “sign on with Facebook” to be the paradigm of the future?). Banks also have a pervasive four-corner-network connecting all companies and consumers which could be used to link the many identity silos (rather than creating yet another isolated solution as most are doing now). Thus trust, technology, authentication, privacy, network, regulation/KYC are key assets that banks currently really only use for their own purposes – but could offer them to governments, merchants and more. This allows new revenues and strategic positioning for banks and a more secure and more private digital world.
2. Are there new business opportunities for banks in digital ID?
Of course – indeed identity has much larger volumes and value than payments! Not only in the Nordics has it been shown that bank-based identity for third parties has huge advantages for customers (better security, less passwords, better privacy), great advantages for merchants (less cart abandonment, bank verified shipping address, less fraud, reduced costs), offers secure identity opportunities for government and hence is a clear value-add on which banks can build a good business case. It is not only a commercial opportunity but – at least as important – a strategic opportunity for banks to position themselves as a central point of trust for customers also in the online world.
3. Why is digital ID such a hot topic right now?
Because Identity is broken. Massive cyberbreaches and identity frauds exposing hundreds of millions of users and hundreds of millions of dollars are daily news. Users experience endless daily frustration with countless passwords, PINs and registration procedures. Governments suffer from poor online acceptance and merchants experience high fraud costs despite massive IT investments. This is already not working and we cannot continue to base increasing numbers of digital services (now coming: robots, PSD2 TPPs, IoT devices, etc) on the existing 1970’s identity infrastructure any more. Password, asking for your mother’s maiden name and even rigid two-factor authentication cannot be the future. Intelligent, dynamic, risk-based attribute authentication which is both convenient and secure is needed for current and future services. Banks can play a key role here.