5 reasons to participate in digital identity ecosystems

There is huge value in moving to digital identity ecosystems – for both individuals and organizations. These systems can help create more efficient, secure and trusted services.

Digital identity ecosystems enable credentials to be stored and shared among multiple organizations in a way that protects the data while also enabling information to be verified in a more efficient and streamlined manner. This could remove the need for vast, lengthy and expensive identity-proofing mechanisms.

Globally, more countries are investing in digital identity. In June 2021, for example, the European Union proposed the use of a European Digital Identity Wallet under its revised eIDAS regulation, which covers electronic identification and trust services for electronic transactions in the EU’s internal market. Organizations should also begin thinking about the role they could play in these digital identity ecosystems and implementing strategies designed for this new world.

Over the course of 2021, a community of more than 30 industry experts, policymakers, and businesses convened to help create a new interactive guide, Digital Identity Ecosystems: Unlocking New Value. It aims to help organizations effectively navigate this process of transformation. Here are five reasons why they should participate in these new digital identity ecosystems:

1) To prepare for emerging regulation

Many governments have proposed new legislation and frameworks for digital identity recently, including the European Digital Identity framework and the UK digital identity and attributes trust framework. This will impact organizations in multiple ways. For example, a customer asking for credit will need to have their identity verified digitally, affecting how an organization interacts with customers across different channels. It will also impact how the organization conducts risk assessments on the applicant and its approval decision. Organizations need to be prepared for these changes.

2) To be able to hire, manage and trust digital workforces

The COVID-19 pandemic has caused an historic shift in the job market. With lockdowns enforced in many countries, home working has become the norm for many more people over the past couple of years. Even as lockdowns are being lifted, flexible working is set to stay with some experts estimating that as much as 70% of the workforce will be working remotely by 2025.

Increased trust is needed for employee identity verification, however. Throughout the pandemic, there has been an almost 30% increase in employment certificate fraud. Verification is not only needed at the point of onboarding but also continuously throughout the employment period. Digital identity ecosystems can enhance accuracy and security using trusted identity credentials, helping enable organizations to digitalize and expedite many of their HR processes.

3) To build better experiences with customers

Organizations want to build direct relationships with their customers to entice them to share more data. Identity is important in helping organizations build these relationships because user centricity is key to a frictionless and positive user experience. A customer should also have control over the amount of data they want to share with an organization. This allows for greater personalisation because the customer can choose how to share information to enhance or simplify their experience.

Digital identity ecosystems provide this more seamless user experience by enabling individuals to choose whether to re-use their identity credentials in multiple places, replacing the need for duplication of verification.

4) To support seamless travel

The travel industry has been hugely disrupted by the effects of the pandemic. The airline industry has seen a drop in revenue of more than $370 billion in 2020 alone and it is not expected to recover until 2024 at the earliest. It is estimated that the global economy has lost more than $4 trillion during 2020 and 2021.

As the industry does recover, enabling passengers to have a digital identity that is widely accepted across the travel ecosystem would support seamless travel, reducing friction and inefficiencies for all involved. It could also help accelerate touchless borders and increase travel by allowing verifiable identity data such as health status to be shared in advance of travel. This could reduce processing time and resources for the industry.

5) To reduce the cost and risk of identity fraud

With the rise of digitization in society, digital transformation is becoming more embedded in our daily lives. Organizations can leverage this change to their advantage by adapting processes to drive efficiency and gain benefits such as reducing costs and identity fraud. Around 14.4 million consumers (roughly 1 in 15 people) were victims of the latter in 2019.

For example, instead of using their own manual, repetitive and error-prone processes to substantiate basic identity claims, organizations could use digital identity ecosystems to share verification checks, potentially minimizing customer onboarding costs by 90%.

Organizations need to understand their role within the digital identity ecosystem to realize new benefits and opportunities and to provide better experiences for their users and customers. Businesses must focus on digital identity, their role in building and participating in new ecosystems – or engaging existing ones – and how to both define and deliver value for users and customers.