Digital Identity: Changing the Landscape of Banking and The Gig Economy

Digital identity verification market is growing and developing at a fast pace. By 2024, it is projected to reach $12.8 billion, regardless of the fact that digital IDs are not as widely used across the world. Research has shown that for as much as 71.2% of financial services users password authentication was enough, just like email address verification and PIN codes. However, the innovative digital identity verification methods, such as biometrics, have arrived to provide superior authentication protocols and offer a customer experience that is times better, speeding up the process and protecting data from fraud.

Digital ID in Banking

Newly updated European regulatory environment, with the introduction of the European Union’s Revised Payment Services Directive (PSD2), placed new requirements on banks, making it obligatory to provide each other with access to account information and transaction data. This provokes thought about the need of creating a unified digital identity system, which would greatly simplify things by allowing customers to seamlessly verify their identities across various financial institutions.

Sweden has become a pioneer of exploring the advantages and opportunities that digital IDs offer. It was back in 2003 when a range of big banks present in Sweden, including Danske Bank, Länsförsäkringar Bank and Swedbank integrated the BankID system into their operation. The latter allows customers to complete digital identification through a BankID smart card or mobile application, which made issuing transactions and signing documents much easier and faster. At the moment, it is about 80% of the country’s population that uses the system and express satisfaction about it.

You might not know this, but another country that surprised the world with its speed of digital IDs integration is Thailand. The Stock Exchange of Thailand (SET) has recently launched a digital gateway, which enables a connection with the National Digital ID Platform that was recently created. Users have the possibility to access SET through the gateway, using their National Digital ID to authenticate and verify their identity remotely. Sensitive user and transaction data remains safe due to the application of blockchain and facial recognition biometrics.

Digital ID in the Gig Economy

Gig economy can also benefit greatly from the integration of digital identities. In the gig economy, employees really rarely meet their employers in person, which increases the importance of a reliable remote identity verification process for a guaranteed safety of the customer. Besides, this technology could help match gig workers to the suitable jobs, analyzing their qualifications and avoiding situations where the employee is underqualified for the assigned task. Digital ID system could also be highly beneficial for bookkeeping, salary calculation and tax managing purposes.

Maintaining the Security of Digital Identities

The security issue would definitely emerge at some point. All the benefits offered by the system are lost in case fraudsters gain access to the personal data of users. For customers this would become a primary concern, causing the reluctance to shift from password-based or 2FA systems to digital IDs, due to potentially higher vulnerability to cyberattacks. In order to change this, digital ID solutions should be based on biometric technology and electronic verification of government-issued ID cards, which would grant users higher control over their personal information.

All of this might be suggesting that soon the time of passwords will end, giving way to a more seamless, convenient and safe method of digital identity verification.