Digital identity, or “digital ID,” is well and truly established as one of the most significant technology trends on the planet. Unlike a paper-based ID such as most driver’s licenses and passports, a digital ID can be authenticated remotely over digital channels. It’s a set of e-information that represents a person’s or entity's identity online. It can include information such as a person's name, date of birth, address and other identifying characteristics, as well as online activity and connections. Digital identities can be used for a variety of purposes, including online transactions, social media interactions and access to online services and accounts. They can be created and managed by individuals themselves or by organizations on behalf of individuals.
Understanding the Risks of Digital ID
Digital ID, much like other technological innovations such as nuclear energy and even the global GPS, can be used to either create value or inflict harm. Without proper controls, digital ID system administrators with wicked aims, whether in private-sector firms or governments, could gain access to and malicious control over data. Digital ID, if improperly designed, could be used in yet more targeted ways against the interests of individuals or groups by the government or the private sector.
Yet even when digital ID is used expressly for creating value and promoting inclusive growth, risks of two major sorts must be addressed. First, digital ID is inherently exposed to risks already present in other digital technologies with large-scale population-level usage. Indeed, the connectivity and information sharing that creates the value of digital ID also contribute to potential dangers like data breaches at credit agencies or on social media, failure of technical systems or concerns over the control and misuse of personal data. Policymakers around the world today are grappling with a host of potential new dangers related to the digital ecosystem. Moreover, cybersecurity threats also pose an increasing risk across the digital ecosystem, and digital ID programs are no exception. The number of accounts online and the amount of data created are rapidly increasing. The International Data Corporation predicts that by 2025, the global data sphere will grow tenfold from its level in 2016.
Second, some of the risks associated with conventional ID programs are also relevant to digital ID, including human error, unauthorized use of credentials and exclusion of individuals. Digital identification could significantly reduce these risks by minimizing the potential for manual error or misconduct. For example, for conventional ID programs, data reconciliation between databases may be impossible or error-prone, whereas digital ID programs can more easily integrate data sources and implement data quality checks and controls.
Implementing Digital ID
For countries, digital IDs can create economic value primarily by formalizing economic flows, enhancing individual participation in a range of services and digitizing sensitive interactions that require trust. According to Mckinsey’s research, by 2030, digital ID has the potential to create economic value equivalent to 6% of GDP in emerging economies on a per-country basis and 3% in mature economies, assuming high levels of adoption.
Furthermore, a digital ID can also unlock noneconomic value, potentially furthering progress toward ideals that cannot be captured through quantitative analysis, including those of inclusion, rights protection and transparency. It can promote increased and more inclusive access to education and healthcare and can contribute to greater levels of civic participation. For instance, the opportunities for the banking sector in Africa are immense; according to the World Bank, 57% of Africans still do not have any kind of bank account, including mobile money accounts. This translates to about 360 million adults in the region and approximately 17% of the total global unbanked population without access to formal financial services, a recent study by BPC and Fincog found. On these terms, South Africa’s Financial Sector Conduct Authority (FSCA) notes that banking regulations for digital services in most of Africa are slow to evolve, with a study from the Africa Center for Strategic Studies showing that only 15 African countries have completed national cybersecurity strategies for threat monitoring and response.
Exploring the Benefits
A digital identity offers many benefits to users. It offers easy and selective access to information since you no longer have to store physical files. Instead, you store them virtually and prevent anyone from accessing them with a password. Digital ID also helps bring products and services to a wider audience. Based on these and other offerings, digital identity has unlimited potential. Here’s a look at some of the most important benefits.
- Access to Services: According to the World Bank, one billion people in the world don’t have an identity. One in every two women also doesn’t have an ID. That means they can’t access critical services related to economic empowerment, education, healthcare and more. That results in a poor quality of life for many people. It’s for these reasons that 161 countries have already established the technology to generate unique IDs for their citizens to enable them to access these critical services and improve their overall health and quality of life.
- Financial Empowerment: More than 1.7 billion people don’t have a bank account, which means they have zero access to funds through a formal financial channel. What’s more, they’re unable to leverage government schemes and incentives that can empower them financially. A digital identity can change this situation; it will bring these people into a formal banking channel. In turn, that will open up opportunities for financial assistance and empowerment.
- Equality: Complex socio-economic structures create many disparities in our world. Maybe a digital identity can’t solve them all, but it’s a positive step forward toward that equality. This is because it creates a digital presence for every individual and enables them to access digital services to improve their lives.
It is important to protect and manage your digital identity carefully, as it can be vulnerable to identity theft and other online threats. This includes using strong, unique passwords, enabling two-factor authentication, and being cautious about sharing personal information online. In the end, such protection can enable the safe and effective use of this important technology.
