Whether it's getting on a plane, opening a bank account or just picking up a package from the post office, possessing valid identification is critical to modern life. As more and more interactions take place online, a secure digital ID will be crucial to trust that the person is who they say they are.
What is a digital ID?
Digital identification makes it easier to prove or authenticate a person's identity when conducting a transaction through the web or an app. A digital identification can include standard identifying attributes, such as name, address, entity issued ID such as a social security number, employee ID or driver's license, and date of birth. Unlike a physical ID card, it can also include biometrics such as a fingerprint or face scan to assist with authentication. Each country might have different rules and regulations about what a digital identification can be used for and how much it can be tracked.
Instead of providing a physical ID card or passport, a digital identification is stored in a digital wallet (an application that stores the data securely) on a smartphone, computer or other electronic device. When proof is required, the ID can be easily displayed on-screen, scanned if needed or shared digitally through the web or an app. Because it is stored on an electronic device that has its own level of security, a digital identification adds an extra layer of safety by making it harder to steal or use than a physical counterpart.
Digital identification adoption is driven by the fact that we now live in an internet-powered, mobile-first world: 93% of Americans use the internet, while 85% of Americans own a smartphone. In an increasingly digital world where more people want to do more business online, digital identification is increasingly important.
What is a digital ID doing to change how people do business?
A digital ID has the potential to replace any physical type of identification. It is possible that your future driver's license or passport could be digital. In addition to being used to interact with government services, a digital ID can enable all the services and commerce people already use ID for, such as verifying age when buying alcohol or ensuring that a credit card transaction isn't fraudulent.
Digital identification will make it easier for businesses to help reduce fraud by ensuring the customer they are talking to is who they say they are. Once validated, the business can then offer access to credit, services or accounts to generate more customer value and improve the customer experience. It can also unlock more entrepreneurship by making it easier to access loans and services. Countries that implement digital ID could unlock economic value equivalent to 3%-6% of their GDP by 2030.
What is a digital ID doing to improve accessibility?
According to the World Bank, there are roughly 1 billion people in the world today without official proof of identification. Without an ID, these people are locked out of everything from government services to the ability to set up a bank account or receive a financial remittance.
As part of their Identification for Development (ID4D) Initiative, the World Bank identifies three principles a regulatory body should use when designing a digital ID system:
- Inclusion: A digital identification system that is free from discrimination should ensure universal coverage for any individual from birth to death.
- Design: An effective digital identification system should be robust against fraud and error, useful for a variety of stakeholders and sustainable over time.
- Governance: Digital identification systems require a comprehensive legal and regulatory framework that safeguards data privacy, security and user rights.
What is a digital ID doing to protect identities?
As it becomes more common, the average person may have dozens of digital IDs across different government and commercial bodies, companies and employers. ID providers and users need to ensure data quality and security for each one, and the IDs need to be simple for users to access, manage and use.
For digital identification providers, it is key to adopt technology that allows people to store their identity in a secure safe on their own devices so that it can be accessed and validated at any time. Users also need to use security functions like multifactor authentication and biometrics to ensure that their ID doesn't fall into the wrong hands. By using biometrics, security can be improved by eliminating the need for a password—which can be easy to forget or steal—while also improving the user experience by giving people one less thing to worry about.
As more organizations add digital ID functionality, along with more people using it as a part of their everyday life, expect to see businesses using identification in new ways to ensure user authenticity, reduce fraud and protect customer data.
Learn more about how Verizon ID provides a next-generation technology that integrates blockchain identity solutions, multifactor authentication and biometrics into a user-transparent process that helps to keep your customers' identities secure.
The author of this content is a paid contributor for Verizon.