The Nordic countries have been spearheading digital payment innovation for decades and the adoption of electronic identity (eID) documents is no different. However, ensuring the market for eID services is open while maintaining privacy and security for end-users can be a difficult undertaking.
To meet this challenge, Findynet Cooperative, an initiative consisting of a group of banks, technology companies and the Finnish social security government agency Kela, recently received a €3 million ($3 million) government grant to build a pilot environment for a self-sovereign identity network.
The funding will be used to develop a secure and shared identity network — one that is “self-sovereign” and allows individuals to have ownership of their digital identities while maintaining control over their personal data.
The Findynet Cooperative will initially focus on financial data, but the notion of digital identity has the potential to impact more than just the way people pay and interact with financial services. It could also have implications for other spheres of social life including education, travel and democracy.
Findynet describes the network in more general terms on its website. “The trust network, which will now be built, promotes digital and human-centered data economies. This means that end-users manage their own data and can decide for themselves what information they share about themselves with different parties to preserve their privacy.”
Providing examples, the website explains that “this exchange of information could involve electronic receipts, credit information and proof of professional qualifications.”
Finnish eID after TUPAS
Findynet’s focus on interoperability comes at a time when the market for eID services risks fragmentation, a relatively new challenge for a country where not too long ago the eID scheme known as TUPAS dominated the landscape.
Developed by Finland’s largest banks, TUPAS was an authentication solution that once accounted for around 90% of all operations requiring strong customer authentication (SCA) in the country.
But after the government intervened to open up the market to competition in 2019, the TUPAS protocol lost its dominance. And after nearly two decades as Finland’s preeminent identity solution for the banking sector, its fate was sealed by the EU’s eIDAS regulation, which upped the bar for SCA to the point where TUPAS no longer met the SCA threshold.
Related: The Future of Digital Identity Verification: Driven by Technology, Shaped by Regulators
With TUPAS no longer the dominant technology, the Finnish Trust Network (FTN), a government scheme providing a single point of access to all eIDs, opened the market for digital ID services in the Nordic country. And by focusing on interoperability, the Findynet project can ensure that the newly open market remains accessible to all.
After all, if a shared standard and common network within which all participants are on an equal footing exists, there’s no reason why banks, FinTechs, government agencies and employers can’t choose an eID solution of their choice, without running the risk of users losing control over their personal data.
Paving the Way for eIDAS 2.0
The Nordics is a pioneering region for cutting-edge and innovative digital solutions, and with Findynet, Finland has an opportunity to become a model for other countries developing similar electronic identity systems.
Across the region, similar eID schemes such as Sweden’s BankID and Denmark’s NemID have some of the highest usage rates in Europe. For example, a report by Signicat found that 99% of the Finnish population used some form of eID, while Norway, the Nordic country in the report with the lowest adoption, still had a 93% usage rate.
Going forward, the kind of interoperability being pursued by Findynet will be an essential component of all European eID schemes in anticipation of an upcoming piece of regulation known as eIDAS 2.0.
With the European Commission currently working on an update to the EU’s digital identity legislation, the new framework is expected to enable every European to have a set of digital identity credentials that are recognized across the EU.
In the absence of the universal eID scheme, Europe’s mobile wallet operators have been forging ahead to build a more integrated ecosystem in which different wallets are fully interoperable.
Read on: EU Digital Wallets Take On Global Card Networks, Strive for Interoperability
In theory, the new EU-wide identity wallet would mean that a French eID could be used to open a bank account in Spain, or an Italian eID used to register with a doctor in Germany. It would dramatically streamline bureaucracies across a number of public and private sector activities and lessen the burden on EU citizens currently navigating the fragmented landscape of the bloc’s digital identity systems.
But beyond payments, progress has been slow, and much more will be required to get things off the ground.
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