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Who is going to be in charge of digital identity? The banks?

Everyone from Ripple - the blockchain payment provider, to banks  and governments are struggling with the e-Identity problem, while identity fraud booms. But who is going to be in charge of solving this problem?

In an important article, ‘What Can Banks Offer in the Debate Over Digital Identity?’ in American Banker, Penny Crossman wrote:

  • Most people, if they thought about it, would admit the way digital identity is managed in the U.S. is suboptimal. Those truly in the know find much stronger words.
  • "We've been using this cobbled-together identity system," Karen Gifford, special adviser to the payments tech provider Ripple and to the startup global ID, said Monday at American Banker's Digital Banking 2016 conference in New Orleans.

But how identity should be managed, and who should manage it, are shaping up to be hotly debated questions. Crossman continued:

  • “the United Nations has set a goal of providing a legal identity to everyone on the planet by 2030. At a conference at the UN headquarters in New York last month organized by ID2020, a "startup NGO" seeking to further this goal, one of the most discussed concepts was "self-sovereign identity" — essentially, giving individuals control over their information and allowing them to transport it.
  • the Windhover Principles, a manifesto Gifford helped to write in 2014, similarly recommends a portable identity solution that could enable strong privacy protections for users.
  • Some bankers and industry observers see a natural role for banks as the stewards of people's digital identities. One audience member suggested this could be an a la carte service banks could offer, unlinked to any financial account, for a small monthly fee.”

The problem for banks are that many experts have different views:

  • “Steve Ehrlich, lead analyst for emerging technologies at the research firm Spitzberg Partners, noted that many have lost faith in financial institutions since the financial crisis in 2008. "But people still trust financial institutions with their money much more than e-retailers and e-commerce sites and social media," he said. "And people are still willing to provide data to obtain value-added services like additional recommendations, discounts and cash-back bonuses. So people are still willing to trust banks with that type of information, so they have an opportunity here. There's a role to play." 
  • “while Susan Joseph, the CEO of ID2020, told conferencegoers she sees banks as a "second layer," at least in the developing world, since not everyone will qualify for banking services.”
  • Ehrlich also mentioned the concept of contextual integrity — not giving all your information to a third party, just the information relevant to the services that will be provided.

Read more in the full article here.

CTMfile take: The scrap for dominance of the e-Identity business is going to run and run. There is no obvious winner, but the UK government’s business model seems most practical.

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