Throughout history, society has depended mainly on physical records and in-person interactions to facilitate strong and efficient identification systems.
However, much like everything else, technology is changing—and the rise of a digital economy necessitates new methods of identification.
Across the globe, digital transactions have become more and more common. As such, appropriate methods for managing, securing, and protecting the privacy of digital identities become increasingly important. Yet, our current methods for managing digital identities are proving inadequate as digital transactions and data dominate the environment.
Additionally, in emerging markets, if there are no foundations of digital identity, many products and services will be unavailable. But, it is important to surpass these barriers as digital ID provides several benefits for both businesses and consumers alike.
To put it simply, digital ID is a collection of verified digital attributes and credentials used in the digital world. These are similar to an individual’s identity in the physical world. Commonly, a national ID scheme will regulate digital IDs, which identify people online or in person.
Some of the attributes it may include are ID numbers, social security numbers, date of birth, name, and location. According to the McKinsey Global Institute, a strong digital ID should be verified and authenticated. It should be unique to the individual and should be established with consent from individuals. Digital IDs protect the privacy of users and give them control over their data.
McKinsey reports that about 1 billion people across the world do not have legally recognized identification. The remaining 6.6 billion have identification, but more than 50% of them cannot use it in the digital economy. This results in a large scale exclusion from services and products.
Digital IDs can increase value in the economy for all. In particular, it benefits those who do not have access to any sort of legally recognized identification. For this group, a digital ID could bridge the gap between them and inclusion in the digital economy. It would give them access to financial services, labor markets, and governmental services and benefits.
The McKinsey report states that there are more than 1.7 billion people who are financially excluded at present. Through the use of a digital ID, these individuals could gain access to financial services.
Some of the other ways digital ID can increase inclusive growth is by improving formalization and digitization to above current levels.
Digital IDs provide a multitude of economic benefits like lower costs, better customer experience, and improved welfare. Yet, a digital ID can also provide benefits unrelated to the economy. For example, it facilitates better inclusion in social life and politics. It also provides increased protection of rights and transparency.
Digital ID provides massive benefits to individuals. But, it also comes with several benefits and opportunities for emerging businesses to take advantage of.
For example, businesses can implement a digital payment system as registration and authentication will be easier with digital IDs. A system like this will have the assurance of being safe and secure, thus increasing profits.
Furthermore, businesses can benefit from digital opportunities, including finding employees through talent matching and automated background checks. They can also increase the efficiency of their payroll. For those businesses just getting started, using a digital ID makes the registration of the business much more efficient.
There are, therefore, many opportunities for emerging businesses to save on both time and money. Digital identity reduces instances of fraud, increases sales and thus profits, and increases productivity and employment.
Organizations can benefit from digital ID in many of the same ways as emerging businesses. However, there are some benefits specific to organizations as well.
For example, political organizations can benefit from quick and easy verification of donations and facilitate online voting.
Another example is streamlined enrollment in institutions of learning like schools or universities.
Digital ID is becoming a topic of importance as consumers, in general, expect more from digital systems. They want quick and easy access to everything they require with an easy login system. In addition, they are increasingly aware of issues surrounding privacy. Because of this, they prefer to give as little personal information as possible to each site they log on to.
Customers need to get what they want regarding personalization, ease, and flexibility while avoiding data breaches, fraud, and identity theft. For this to happen, digital IDs are the best solution and are therefore crucial in today’s environment.
If emerging markets and businesses want to compete with existing markets, they need to provide outstanding services inclusive of this.
Digital IDs are also crucial to implement as they provide the opportunity to grow economies. They do this by increasing inclusion in digital economies significantly.
With all the benefits, it is difficult to dispute that digital ID has a significant role in the future of business. For those who lack any legally-recognized identification, a digital ID will facilitate rapid inclusion into the digital economy. It also provides increased security and seamless digital interactions.
Therefore, organizations implementing digital identity strategies can generate significant economic value and profit - especially in emerging markets.
Rakesh Soni is CEO of LoginRadius, a leading provider of cloud-based digital identity solutions. The LoginRadius Identity Platform serves over 3,000 businesses and secures one billion digital identities worldwide. LoginRadius has been named as an industry leader in the customer identity and access management space by Gartner, Forrester, KuppingerCole, and Computer Weekly. Connect with Soni on LinkedIn or Twitter.