Who Will Own Identity Verification?

One of the issues that was discussed at the recent Optical and Digital Document Security (ODDS) conference in Prague was the future of personal identity. Once considered part of the critical infrastructure of a nation and thus the preserve of central governments, we are now in the unprecedented situation that competition is emerging for the ownership of identity verification because of the financial rewards this could bring.

The trigger for the emergence of this competition is the rapid rise in the use of digital identity. In part it was stimulated by the pandemic and the need to remotely verify identity, but also in the emergence of competition from tech industry players. The end result is that we now find ourselves in an increasingly crowded and competitive landscape.

At the end of this article is the URL for the Call for Papers for the next ODDS conference. One of the questions in this call is ‘What is the function of governments and central banks when global technology companies are so powerful?’ The aim of this article is to start a debate on this with a view to exploring the consequences at the conference in Lisbon.

The emergence of competition

A study by the European Parliament Research Service notes that, since the pandemic, the provision of both public and private services has become increasingly digital. It also notes the range of entities that now have involvement in the collection of identity attributes or in the verification of identity. This is effectively the root cause of competition in the field of identity.

This also brings out another vector to this competition, the fact that it is not a homogeneous group that is entering the field of personal identity. Financial houses are regulated to both know their customers and to protect that data from intrusion under GDPR rules or their regional equivalent. In addition to these and (at least perceptually) with a different attitude to regulation, we have the tech giant companies.

There is one aspect of this competition that bears repetition – the fact that this is unprecedented and therefore that our industry should debate the ramifications of this.

We should also consider the fact that a move to digital identity based on information technology effectively gives technology insurgents a competitive edge. In other words this means that the competition is taking place in an environment that is more their ‘home’ than that of the ‘traditional’ secure document community.

Competition in financial technologies

The digital identity landscape is evolving rapidly and in the fintech sector in particular has become highly competitive in some markets. While this issue of commercial competitiveness may on the face of it seem good from a consumer perspective, there are some hidden perils becoming apparent. The balance between convenience and security, long a debating point at previous ODDS meetings, is the issue.

Solutions with an enticing promise of ease of use, interoperability and above all swiftness can win out from a consumer perspective. While these may offer a better user experience, the balance towards convenience and away from security may reduce competency in preventing identity fraud at the early, onboarding opportunity. This changing balance of security and convenience is one society should continue to monitor.

There is one further aspect of the wider move of fintech companies into the field of personal identity. As they have an obligation to verify identity for the purposes of Know Your Customer there is now the potential to further monetise this and offer these as a service to third parties. This was a topic at the 2023 ODDS conference and one we should continue.

A response from the European Union

This issue has already been the subject of debate within the European Union (EU) and their stance on this was published earlier this year.

The European Commission had noted that the balance of convenience and security had shifted more towards convenience in digital wallet solutions, leading to a loss of control of personal data and making fraud and cybersecurity threats more difficult to mitigate. Members of the European Parliament (MEPs) have proposed a new eID in the form of a European Digital Identity Wallet without having to resort to commercial providers, a practice that they see as raising trust, security and privacy concerns.

This type of scheme may point the way forward for other implementations. Each nation will nominate one or more schemes as a national eID with the aim of ensuring interoperability across the EU. This can be seen as a laudable attempt to return citizen identity to critical national infrastructure whilst in addition retaining the facility for the provision of services through a digital wallet.

Competition with new technologies

The challenges around this debate are by no means over. While the competition noted above is in the main concentrated on the smartphone platform it will not stay that way. Mobile devices in the form of medical and/or fitness wearable devices look set to cross over into the field of identity too.

This development has not gone unnoticed by regulators such as the UK Information Commissioner’s Office (ICO). They note that ‘the fitness and health sector which is expanding the range of biometrics they collect, with consumer electronics being repurposed for health data’ and is continuing to monitor the use of new biometrics through these wearable devices.

We too need to monitor this otherwise the tech sector will lead identity down this new path as well.

Additional resources

As noted at the start of this article, the topic of digital identity was a subject of debate in the 2023 ODDS conference. The 2024 meeting will take place in 8-10 April in Lisbon, Portugal and would be a good place to continue this debate. The call for papers is now available for this meeting.

https://opticaldigitalsecurity.com/call-for-papers/

A report entitled ‘Smartphones for Authentication’ is due for release in Q4 2023. It will cover the role of the smartphone in both product and personal identification, with case studies on already established applications in currency and payments, personal identity and product and document authentication.

It will also cover the emerging wearable device technologies and their further potential impact on the issue of personal identity verification.

https://estore.reconnaissance.net/product/smartphone-for-authentication/