THREATS AND OPPORTUNITIES FOR BANKS IN DIGITAL IDENTITY

In a global digital identity model there is, by design, competition for providing digital identity services. Banks are exceptionally well positioned
to drive digital identity systems because of their established mechanisms
for validating user information for commercial and regulatory purposes.

But it’s not a foregone conclusion that this will always be the case. While the framework for government digital identity schemes can take years to develop, innovation around the edges happens fast.

If banks don’t make best use of their established position, they could cede ground to the big tech giants already building out identity strategies on top of their dominance in consumer devices and social media data gathering. Other global networked nancial organisations such as Mastercard are also making signi cant investments in privacy-by-design digital identity. And within
more mature countries, as in Finland, governments may seek to increasecompetition or cap pricing for identity services by enabling new digital identitybrokers to operate on a level playing eld alongside banks.

If banks don’t make best use of their established position, they could cede ground to the big tech giants already building out identity strategies on top of their dominance in consumer devices and social media data gathering. Other global networked nancial organisations such as Mastercard are also making signi cant investments in privacy-by-design digital identity. And within
more mature countries, as in Finland, governments may seek to increasecompetition or cap pricing for identity services by enabling new digital identitybrokers to operate on a level playing eld alongside banks.

Banks also need to consider how they handle the ongoing verification of genuine presence when it comes to authenticating the ID for a transaction. Also, how can customers manage aspects of their identity themselves? And, in light of recent privacy regulations worldwide, how can authentication methods and identity be “forgotten” if requested by the customer?