5 Digital ID Trends Reshaping the Financial Landscape

There’s no doubt that technological advancements are taking us towards an unpredictable future, and with the explosion of decentralized technology, digital identity verification solutions are proving to be the most promising way of deterring criminal activity. As millions and millions of people are continually added to the digital economy, it could open up a new frontier for digital interaction and economic growth.

The protection of digital identity is playing a crucial role in the protection of customer’s identity in major businesses and financial institutions. Financial giants are spending almost $1 billion every year on identity management, and it’s predicted that the market will expand to $15 billion by 2024. Customer awareness around establishing and protecting digital identity is evolving around the globe to combat illicit money transfers and criminal activities.

Below are the top 5 ID trends that are reshaping the landscape of 2021 with the utilization of artificial intelligence and machine learning to avoid chargebacks.

1.  ID is becoming mobile more than ever

You don’t need to be an expert to see that we’ve successfully entered a modern era of digitization where mobile connectivity is dominating the whole world. Digital transactions are becoming a new normal - especially during the pandemic of COVID-19 to avoid physical contact - and the implementation of digital identity is playing a vital role in banks and financial infrastructures.

In 2021 five billion people will have access to the internet and according to Statista, 50% of the worldwide internet traffic became mobile in 2020. These figures look set to grow in coming years, and show us that organizations that offer online banking must acquire appropriate security measures for identity theft protection.

2.  Mandatory security measures

Robust security measures are high in demand by customers adopting digital banking services - they now expect nothing less. The creation of a harmonious digital bond is becoming mandatory for securing the relationship between broader society and new mobile identities. Adopting these measures will help boost security, combat fraudulent activities and make customers feel more comfortable using digital banking services.

In 2018 the Cambridge Analytica data privacy scandal showed us that financial institutions needed to acquire a robust digital identity framework. The General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) represented a remarkable step regarding privacy protection. Laws like these impact almost 500 million people and provide the best range of opportunities for public authorities to re-energize the sovereign bond with people.

3.  Unrivaled opportunity for local creativity

Technological developments are expanding at a remarkable pace and the conversion rate of the environment is already one of the defining trends of the current century. The rise of smart cities ensures consistency among all the digital links between people, their public authorities and broader communities.

This model includes mGovernment or eGovernment, where digital identity plays a crucial role. The message from public authorities is clear - a national digital ID creates an unrivaled opportunity for local creativity. Act locally and think national.

4.  New opportunities for harmonious growth

Governments are inevitably searching for new opportunities for harmonious and sustainable growth considering the challenges they currently face in the economic landscape. As the regulatory environment acquires shape, digital communication operators, local and central public authorities and close collaboration between financial worlds will encourage effective solutions and ensure the implementation of best practices.

The role of public authorities is to support and build natural momentum, coordinate and encourage local government investments through which local transformations close to community can operate at a high rate of efficiency and effectiveness. Public authorities also need to ensure that multiple local initiatives create an interoperable and coherent spectrum of solutions to uptake digital ID verification solutions.

5.  Blockchain is leading us towards decentralized identities

Maintenance of a centralized database for user identities is a time-consuming process for organizations that involves higher security risks and data breaches. Blockchain technology has proven to be revolutionary for decentralized models, where users are allowed to create their own identities, register authenticating factors and get the information verified with the help of trusted third-party before being stored in a blockchain.         

Each block in the blockchain is identified uniquely using a certain code called “hash”. Identity Trust Fabric (ITF) technology is still under development and requires better management for privacy, security and accessibility before it can be implemented on a broad scale. The shift to decentralized identities parallels the predicted expiration of password-based authentication. Identities that are stored in a blockchain can be utilized to access applications from various service providers without the creation of points of vulnerability which is associated with password access.

Benefits of digital identity verification

Digitization is transforming at rapidly and enhancing customer identity verification solutions acquired by financial infrastructures to deter fraudulent activities. Below are some benefits provided by digital identity verification solutions in this modern era where hackers are evolving with the speed of light:

• Faster turnaround times, meaning financial institutions can provide services to a wide range of customers more efficiently
• Efficient deployment of resources resulting in lower operational cost
• Manual keying errors are reduced which proved to be better compliance and enhances the accuracy rate
• Latest data security features are acquired to make the data access complex for hackers using 2-factor authentication and multi-factor authentication
• Customer due diligence as a result of fast turnaround times and fewer touchpoints with a high rate of accuracy and efficiency

Final thoughts

It doesn’t matter which technology it is that financial institutions use to deter fraudulent activities and chargebacks when it boils down to customer identity verification. Higher authorities need to start enforcing regulations to ensure that the people are who they claim to be.

In our digitally-connected world, security plays a crucial role in developing a transparent relationship between customers and businesses, and unsurprisingly there are likely to be further advancements in view to creating an additional layer of biometric identification in digital identity verification solutions and services. Hackers can modify and hack what you know, but not what you are.