Friday, December 9, 2022

From tangible to intangible: The impact of digital IDs

Digital IDs

Technology has made it a point to transform the tangible into the intangible.

Online banking services and the rise of Fintech is slowly making our economies cashless, the Internet of Things (IoT) is giving us easier, and more seamless control over the every day items around us, and artificial intelligence (AI) has allowed a few lines of codes to do an infinite number of jobs in the blink of an eye.

As the world edges closer to the rollout of the fifth generation of mobile networks, many aspects of day-to-day life will change drastically. The first one currently on the worldwide agenda, is the global adoption of digital IDs.

What are digital IDs?

Unlike their tangible counterparts, digital IDs are forms of identifications issued by national or local governments, a consortium of private or non-private organizations, or single entities that authenticates the identity of its possessor on various digital channels.

According to a report by McKinsey Digital, ID systems collect and validate attributes to establish a person’s identity and provide proof of that identity in the form of a credential—typically a physical ID card, passport, or driver’s license.

“A digital ID provides the credentials necessary to show that a person is who he or she claims to be online,” the report explained.

Pretty simple, isn’t it?

Well this digital conversion, brings with it a plethora of impacts, opportunities, and risks, while very well causing a massive debate over individual privacy and surveillance.

Let’s jump right in.

Naturally, digital IDs have the ability to simplify and render interactions between individuals, governments, and businesses rather seamlessly as well bring significant impact on the way we lead our lives.

  • Individuals and governments: Digital IDs are key enablers to modernize public services such as healthcare, welfare payments, certifications, and licenses.

    “It boosts convenience for users, eliminates potential travel costs, and minimizes waiting times by allowing remote online authentication. From a government perspective, the technology enhances administrative efficiency—reducing paperwork, speeding up processing, and reducing the risk of identity fraud,” the report highlighted.

    Beyond public services, digital ID can support citizen participation, an example of this can be seen through the integration and adoption of e-voting that comes along with it.
  • Individuals and businesses: the technology would support customers and businesses in a myriad of ways such as streamlined registration and authentication processes, secure digital payments, and digital high assurance contracting; an obvious example of this can be seen in digital notary services.

    Digital IDs are considered to be a data-collectors’ dream, which can be easily synced with know-your-customer solutions, while also being included in customer relationship management (CRM) solutions and campaigns.
  • Governments and businesses: Digital IDs have the potential to bridge together both private and public sectors in a multitude of ways, bringing a big layer of transparency into the mix.

    Data shared from both sectors can contain anything from corporate registrations, taxes, economic support, permits, and authorizations. In parallel, not only can these processes greatly save up on costs, but would allow for the support of regulatory compliance, as they provide fraud-secure paths.

    “A functional digital ID is a big step toward a digital society, in which individuals and organizations can trust each other online,” the report said.

Unlocking the opportunities of digital IDs

According to a recent study by the World Bank, almost one billion people around the world still lack any form of legally recognized identification to this day; in parallel, almost 3.4 billion people have some sort of legally recognized identification, but are limited in use.

All while the remaining 3.2 billion of the world’s population have a legally recognized identity which allows to participate in the digital economy, but not as effectively and efficiently.

“Digital ID holds the promise of enabling economic value creation for each of these three groups by fostering increased inclusion, which provides greater access to goods and services; by increasing formalization, which helps reduce fraud, protects rights, and increases transparency; and by promoting digitization, which drives efficiencies and ease of use,” the study by the World Bank said.

The dream of worldwide integration of digital IDs is slowly stepping out of the shadows and into the mainstream as 5G networks edges closer to global rollout, technology improves, Internet and smartphone penetration top the charts, and the general direction of a more cost-efficient economy looms in the background.

“The foundational digital infrastructure that supports digital ID grows in reach and drops in cost every day. More than four billion people currently have access to the internet, and nearly a quarter-billion new users came online for the first time in 2017,” said the World Bank.

This places digital IDs in prime position for rollout as the technology required is ready and more affordable than before.

Denmark has recently allowed its citizens to choose between carrying a physical driver’s license and their newly introduced digital driving ID that can be presented in the form of QR code from their smartphones.

This would allow authorities to scan the code seamlessly, while also being able to use it within the country’s banking sector.

“Currently, the digital license is only available to citizens of Denmark as a Danish passport is required to enroll. Additionally, motorists are still required to carry their physical license when driving abroad, as the new digital ID is currently only approved for use within Denmark,” a statement by the country’s Digitization Agency said.

However, these digital IDs are only valid as long as their physical counterparts are as well, thus making the digital form to be an option rather than a fully-fledged replacement.

These digital IDs were made possible through joint collaboration between the Ministry of Justice, National Police, the Ministry of Transport and Housing, and the Danish Transport Authority.

The potential risks

Seeing that the tech would contain highly sensitive citizen data, governments of the world should be spearheading the digitization efforts instead of outsourcing it entirely to big tech companies.

According to McKinsey, governments should consider retaining control over the framework on digital IDs and involve the private sector within this framework.

“Digital ID, much like other technological innovations such as nuclear energy and even the ubiquitous GPS, can be used to create value or inflict harm. Without proper controls, digital ID system administrators with nefarious aims, whether they work for private-sector firms or governments, would gain access to and control over data,” the report by McKinsey explained. 

Thus, when improperly designed, digital IDs can be used against the interests of their users, both on the civilian and governmental front, ignoring personal rights in favor of financial gains by means of collecting and storing personal data.

Not only that, but the tech can be used for manipulation or exerting social control over groups of people via online surveillance as well as restricting access for payments, travel, and social media.

The risks are damaging, and could potentially trigger massive societal change; it’s up to the governments of the world to decide how this tech can critically shape the fabric of society, taking it anywhere from a completely transparent framework that aims to nurture economic growth, to a big-brother state that incentivizes surveillance of its masses.

Required digital ID attributes

There are a series policies and frameworks that must be followed, applied, and implemented for digital IDs to become a positive force within society according to the McKinsey report:

  • Verified and authenticated to a high degree of assurance: High assurance digital ID meets both government and private sector institutions’ standards for initial registration and subsequent acceptance for a multitude of important civic and economic uses, such as gaining access to education, opening a bank account, and establishing credentials for a job.
    High assurance authentication maintains these same standards each time the digital ID is authenticated. This attribute does not rely on any particular underlying technology. A range of credentials could be used to achieve unique high assurance authentication and verification, including biometrics, passwords, QR codes, and smart devices with identity information embedded in them.
  • Unique: With a unique digital ID, an individual has only one identity within a system, and every system identity corresponds to only one individual. This is not characteristic of most social media identities today, for example.
  • Established with individual consent: Consent means that individuals knowingly register for and use the digital ID with knowledge of what personal data will be captured and how they will be used.
  • Protects user privacy and ensures control over personal data: Built-in safeguards to ensure privacy and security while also giving users access to their personal data, decision rights over who has access to that data, with transparency into who has accessed it.

Humanity is currently at a crossroads with technology, the outcomes of which will severely impact the way we lead our lives, our relationships with businesses, governments, and each other.

Thus, we need to be wise and vigilant in how we decide to progress forward, to ensure that the chapters ahead are filled with the tools we need to progress and innovate on every level, and not the other way around.