What does a good digital ID look like?

Being able to prove and verify your identity is a necessity at the very start of life and at the very end. Your birth is registered and the certificate is likely to be needed when it comes to obtaining a passport, getting married or opening a bank account.

And yet, approximately 1 billion people in the world don't have a way to formally prove their identity. They are among the ‘left behind’ and are missing out on many things taken for granted elsewhere – access to economic opportunity, education, healthcare rights, and more. All as a result of being outside of formal channels of ID verification.

As the range of services migrating to the digital sphere increases, the importance of having a strong digital ID is becoming just as important.

A digital ID uses technology to verify your identity: Around 3.2 billion people worldwide have one, according to a new report from the McKinsey Global Institute, which has analysed the use of digital ID in Brazil, China, Ethiopia, India, Nigeria, the UK and the US.

A digital identity can streamline transactions between governments and citizens, and dramatically reduce many of the lengthy processes involved in complex negotiations such as buying or selling a house.

And for some companies working in regulated markets, it can help simplify the process of finding all the details needed for an audit or for meeting 'know your customer requirements. Digital ID can deliver all the necessary checks and balances instantly while also providing customers with a record of activity.

As a result of easier, faster and more accurate transactions, McKinsey believes digital ID can create economic value. Analysis suggests that digital IDs could unlock value equivalent to between 3 and 13% of GDP by 2030.

The gains will come from formalizing economic flows, promoting higher inclusion of individuals in a range of services, and allowing incremental digitization of sensitive interactions that require high levels of trust.

McKinsey defines a good digital ID programme as one that is:

There are some concerns, however, about the safety of digital ID strategies and their potential for abuse or misuse.

But McKinsey says a well-designed digital ID programme can overcome many of the most common worries. Minimizing the data that is gathered, restricting access and the sharing of information as well as robust governance are all important tools to help guard against potential risks.