Digital ID: A Global Picture

UK Finance’s Payments and Innovation team has been looking outside of our borders to understand how Digital ID is being rolled out around the world. How will this innovation influence the nature of the UK’s financial services sector and how can we harness it for customers?

Last week, Sir Tony Blair and Lord Hague of Richmond joined forces to mark out the strategic future of the UK regarding digital innovation – proposing a revolution “that transcends the fray of 20th century political ideology” and moves beyond old left-right paradigms. At the heart of this technological revolution is Digital ID.

Why Digital ID?
Digital ID is fast becoming seen as the springboard from which our increasingly digital future could be launched. It will enable identity verification without face-to-face meetings or tangible documentation - saving time and minimising transaction costs for customers. In the future, property and asset purchases could be completed in minutes and seamless access to government services enabled. Digital ID is the enabling innovation with a breadth of use cases to unleash Britain’s economy and empower the financial sector.

However, Digital ID is not without its risks. Detractors validly cite privacy and ethical issues. Consequently, the financial services industry should play a leading role in underpinning best practice, working with the government and regulators to ensure a proportional and outcomes-focused approach, to allay these concerns. In a future which is becoming increasingly digitised, the choice is whether the UK should lead from the front and own the future, or risk falling behind our global competitors.

Digital ID being adopted around the world
Across the world other countries have made strides towards fulfilling these ambitions. In Australia the government issued Digital ID (myGovID) has over 6.5 million users who now have digital access to a variety of government services. This has led to the country’s three main payment services providers (BPAY, eftpos, NPPA) merging as Australia Payments + (AP+). Their ID system (ConnectID) will be trialled this year with Australia’s four largest banks, having been accredited under the country’s Trusted Digital Identity Framework (TDIF).

In Estonia 99 per cent of the country’s 1.3 million population have access to Digital ID, which they use to access banking services and payment processing. Similarly, Ukraine has moved rapidly on Digital ID setting up Diia, an app which can be used anywhere in the country – the first to achieve this feat. The app has proved significantly beneficial during the current conflict, providing a resilient digital infrastructure which has not only allowed proof of documentation for fleeing refugees but has also helped support the country’s banking sector.

In November 2022 the UK agreed a Digital Trade Agreement (DTA) with Ukraine - collaboration on Digital ID being one of its key features. The UK government has also split the Department for Digital, Culture, Media and Sport (DCMS) moving Digital into a new department for Digital, Science, Innovation and Technology (DSIT) to push digital innovation to the forefront of government strategy. Digital ID has been subsumed into the DSIT’s remit to swiftly progress the ‘Digital identity and attributes trust framework alpha v2’, similar to the framework rolled out in Australia.

Digital ID equal to physical ID
As the Data Protection and Digital Information Bill continues its passage through Parliament, one of its key pillars will be to enshrine digital identification in law as equivalent to physical documentation. This would create opportunity and value added for the financial services industry, for example, if industry and regulators look at how digital identity could streamline Know Your Customer (KYC), tackle fraud and open up access to financial services for consumers.

While the government is moving in the right direction on Digital ID, progress is not inevitable. Harnessing the expertise of industry to deliver innovation at scale will be required if Digital ID is to live up to its potential. Blair and Hague discussed the UK’s place in the world, having been at the forefront of the Industrial Revolution - now the financial services industry must place itself at the forefront of the Digital Revolution.