From time immemorial, our identity systems have been based on face-to-face interactions and on physical documents and processes. But, the transition to a digital economy requires radically different identity systems. In a world that’s increasingly governed by digital transactions and data, our existing methods for managing security and privacy are no longer adequate. Data breaches, identity theft and large-scale fraud are becoming more common. In addition, a significant portion of the world’s population lacks the necessary digital credentials to fully participate in the digital economy.
Last month, the World Economic Forum (WEF) published an excellent report, A Blueprint for Digital Identity. The report lays out a framework for the creation of digital identity systems, discusses the benefits that these systems would bring to its various stakeholders, and argues that financial institutions should lead their development. It also includes a primer on identity, which clearly explains what identity is all about.
Identity plays a major role in everyday life. Think about going to an office, getting on a plane, logging to a website or making an online purchase. While all around us, we generally don’t pay much attention to our identity credentials unless something goes wrong. But, it’s a highly complex and interesting subject, which the report helped me better understand. Let me summarize some of what I learned.
“Why is identity important?,” the primer starts out by asking. “In an increasingly borderless and digital world, privacy and security cannot be ensured through the construction of walls around sensitive information. Identity is the new frontier of privacy and security, where the very nature of entities is what allows them to complete some transactions but be denied from completing others. To understand the importance of identity and the criticality of strong identity protocols that protect against cyber-risk and suit the needs of transacting parties, it is essential to understand what identity is, and its role in enabling transactions.”