Who Should Lead The Digital ID Push?

Despite all the discussion about verifying digital IDs without creating friction for the user, recent incidents like cybercriminals using AI to impersonate an energy company’s CEO to falsely request money could give security professionals nightmares.

There’s no question the world is moving in a digital direction. The digital identity verification market is projected to reach $12.8 billion by 2024, despite the fact that digital IDs are still largely underused worldwide.

There’s not exactly a groundswell of interest from consumers in the U.S., though. PYMNTS’ Digital Identity Lifestyle Capsule found that 71.2 percent of financial services customers were satisfied with password authentication alone, and similar shares were satisfied with email address verification and PINs.

Ease of use (48.7 percent) and convenience (47 percent) were the leading reasons cited for satisfaction with basic password authentication, so it would seem that if digital IDs could prove their value as easy to use and convenient, they would stand a greater chance at mainstream adoption.

The latest Digital Identity Tracker explores the latest developments in the world of digital IDs and raises the question about who should lead the charge for change: government agencies or the private sector?

Private Sector Developments

Companies like Gemalto have forged ahead to create their own products like the Digital ID Wallet, which is intended to keep electronic ID documents in one place. The app stores digital versions of documents like drivers’ licenses, health cards and other forms of identity. The advantage is that users could prove their ages if necessary without revealing their birthdates or other personal information.

Use cases for the digital ID wallet could include accessing age-restricted places like bars, signing into services like online tax filing or verifying identities at polling stations.

A similar offering from London-based digital ID startup Yoti, which recently secured £8 million ($9.9 million USD) in funding, has been used by dating platform The Meet Group to ensure users are of legal age.

Yoti users can also now use the app for age-restricted purchases at convenience stores in the U.K. This development came from an agreement with the Association of Convenience Stores to recognize Yoti’s digital IDs, making it the first smartphone-based ID solution used by Britain’s brick-and-mortar stores.

Developers are responding to demand by exploring a range of options to help provide these digital IDs. Blockchain-based systems are particularly popular. Bank of America recently applied to patent a security system with a digital wallet interface that fuels a layered authentication system. It is believed that the financial institution could be developing a digital, or crypto, wallet.

Tech giant IBM is also turning to blockchain for its Trust Your Supplier ID platform, which is intended to streamline supplier validation by assigning them digital identities.

Government Initiatives

Digital IDs are growing more popular with governments as well. Countries like Australia, Malaysia, Thailand and the United Kingdom are just a few that are exploring the benefits for accessing governmental and financial services and also for serving as virtual ID cards.

For example, Australia could see economic growth of $11 billion AUD if its myGovID, an opt-in, government-provided digital identity, experiences widespread uptake after being launched in Apple’s App Store in June. PYMNTS recently spoke with Jonathon Thorpe, head of digital identity for Australia’s Digital Transformation Agency (DTA) – the government agency responsible for myGovID and the system’s origins and objectives – about how to convince citizens of the program’s value.

Last year, Scotland’s Improvement Service, responsible for “improving [local citizens’] quality of life,” partnered with Yoti to offer digital IDs via a mobile app. eIDEAS measures, which call for eSignatures to be used and accepted across the EU, took effect back in 2014.

This evolution isn’t confined to the EU, though. States like Colorado, Delaware, Idaho, Maryland, Wyoming and even the District of Columbia are currently testing or have already piloted the use of digital drivers’ licenses.

According to Renee Krawiec, driver services senior supervisor at the Wyoming Department of Motor Vehicles (DMV), and Sarah Werner, communications manager at the Colorado DMV, the general public definitely has interest in digital drivers’ licenses, but challenges did emerge in the pilot phases.

Securing digital identities on a federal level falls under the purview of the National Institute of Standards and Technology (NIST), a non-regulatory agency of the U.S. Department of Commerce. The agency has recently been devoting considerable resources to expanding its digital ID best practices to the private sector.

David Temoshok, senior policy adviser for the Trusted Identities Group at NIST, believes corporations could learn a thing or two about security from government entities. PYMNTS spoke with Temoshok about NIST’s efforts to improve security in both the public and private sectors, and about outstanding vulnerabilities that still need to be addressed.