Having a trusted, verifiable identity will be essential for the new Data Economy.
As digital interaction brings information online at an unprecedented rate, data comprising our identities are being widely shared – creating both opportunities and vulnerabilities. Digital identities can provide countries with economic value equal to as much as 13% of GDP by 2030. Also they can save 110 billion hours through streamlined e-government, and save businesses up to $1.6 trillion, according to the McKinsey Global Institute. Globally there is an estimated 1 billion people who have no official proof of identity and 3.2 billion people unable to effectively use an identity on digital channels online. Collaborative and user-centric digital identity models guided by shared principles have the potential to be empowering.
The Economic Value Of Digital Identity
Businesses could benefit from improved efficiency, lowered costs and fraud reduction, and save up to $1.6 trillion thanks to digital identities. Estonia, for example, facilitates public services including healthcare, banking, and voting via a digital identity system; in 2014 alone it was used over 80 million times for authentication and 35 million times for digital transactions. It saves people an estimated five days per year that would otherwise be spent dealing with bureaucracy, and it cuts costs equivalent to 2% of GDP.
Meanwhile India’s “Aadhaar” digital identity system is a centralised, national means to promote social inclusion and access to government services – as of 2017, it covered 95% of the population and had saved the government an estimated $9 billion by reducing fraud, according to Deloitte and the Center for Global Development.
Identity Fraud & Cyber Resilience
The exponential amount of personal data being collected and exploited creates security challenges.
The growing use of digital identities online – in combination with the massive volume of personal data increasingly being collected by governments, businesses, and everything from wearable devices to household appliances – creates vulnerabilities. According to the Breach Level Index, an online database, more than 15 billion data records have been lost or stolen since 2013, and the 3.4 billion compromised records in the first half of 2018 alone represented a 72% increase compared with the same period a year earlier. New threats continue to emerge: according to the US Federal Reserve, the fastest-growing financial crime, “synthetic identity fraud,” involves using fake information to establish a bogus credit file and then make transactions. Several approaches have emerged to better secure identities and build resilience, including minimal data collection and disclosure, and informed consent. Bolstering digital literacy and helping people better understand the need for password-free, multi-factor authentication can also help.
Digital Inclusion & Opportunity
Bridging the digital identity divide can bolster human dignity and expand opportunity
According to the World Bank, more than 1 billion people have no legal identity, with about half residing in sub-Saharan Africa. Nearly 40% of the total population in low-income countries has no legal identity (compared with less than 10% in middle-income countries), while one in two women in low-income countries have this problem. There are several ongoing efforts to help integrate excluded populations through digital means. The World Bank’s ID4D initiative, for example, provides countries with technical assistance and expertise to help them implement inclusive digital identity systems. Meanwhile the UN Refugee Agency and the World Food Programme are using iris scans to register refugees and displaced people, and help provide humanitarian aid.
Conclusion
In the new Data Economy, having a trusted and verifiable digital identity is crucial. Digital identities can provide countries with significant economic value and save businesses up to $1.6 trillion through streamlined e-government. However, the exponential growth of personal data being collected and exploited creates security challenges, including identity fraud and cyber resilience. Collaborative and user-centric digital identity models guided by shared principles can be empowering and bolster human dignity, expand opportunity, and bridge the digital identity divide, benefiting excluded populations. Efforts to integrate excluded populations through digital means, such as the World Bank’s ID4D initiative and iris scans to register refugees and displaced people, are ongoing.
