# An ID-eal position: Banks and trusted digital identity
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2019-02-20
Category: TECHNOLOGY
Category URL: https://financedigest.com/category/technology
Meta Title: Banks as Trusted Providers of Digital Identity
Meta Description: Discover why banks are best positioned to offer secure digital identity solutions, built on trust and regulatory compliance, while big tech struggles with
URL: https://financedigest.com/id-eal-position-banks-trusted-digital-identityhtml

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_**Jukka Yliuntinen**, Vice President at Giesecke+Devrient Mobile Security and Co-Chair of Mobey Forum’s Digital ID Expert Group_

The rapid pace of digital transformation has left many industries scrambling to find secure, convenient ways of establishing identity for digital services. The identity ecosystem has become fragmented and complex, with too many stop-gap solutions creating and propagating vulnerabilities and friction.

Yet the incentives to get [digital identity](https://www.financedigest.com/transparency-and-decentralisation-the-remedy-to-our-digital-identity-fears.html "Transparency and decentralisation, the remedy to our digital identity fears") right are staggering. In the UK, an effective [digital identity](https://www.financedigest.com/why-an-orchestrated-digital-identity-strategy-is-vital-for-financial-organisations-in-fighting-fraud.html "Why an orchestrated digital identity strategy is vital for financial organisations in fighting fraud") solution could contribute 2.5% to GDP. [\[i\]](#_edn1) Consequently, there are many players looking to capitalise on the digital identity opportunity, spanning government, technology giants, social media platforms, and specialist start-ups.

It is banks, however, that are in the ideal position to evolve into trusted providers of digital identity.

**You gotta have faith**

![Jukka Yliuntinen](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/jukka-1736839153231-compressed.jpg)

Jukka Yliuntinen

[Effective digital](https://www.financedigest.com/cost-effective-digitized-innovation-to-drive-the-immune-thrombocytopenia-treatment-market.html "Cost-effective Digitized Innovation to drive the Immune Thrombocytopenia Treatment Market") identity is built on trust. The more trust you have in an identity, the more it can be used for. [Consumers trust](https://www.financedigest.com/trusting-in-trust-marks-enhancing-consumer-trust-in-your-ecommerce-business.html "Trusting in trust marks: enhancing consumer trust in your ecommerce business ") banks to secure their data and privacy. Why? Because protecting assets _[is what banks](https://www.financedigest.com/u-s-to-move-3-5-billion-in-afghan-central-bank-assets-to-swiss-based-trust.html "U.S. to move .5 billion in Afghan central bank assets to Swiss-based trust") do._ Whether it be money, or identity.

A 2018 survey found that in Germany, over 60% of [consumers would prefer banks to provide their digital identity](https://www.financedigest.com/behavioral-biometrics-simple-and-secure-way-to-authenticate-consumers-digital-identities.html "Behavioral Biometrics: Simple and Secure way to Authenticate Consumers’ Digital Identities"), compared to the 5% who would prefer a social media platform.

Importantly, this survey was conducted priorto the various privacy scandals that have rocked [big tech](https://www.financedigest.com/exclusive-with-eye-on-big-tech-energy-crisis-eu-telcos-call-for-shared-network-costs.html "Exclusive-With eye on Big Tech, energy crisis, EU telcos call for shared network costs") over the past year. [\[ii\]](#_edn2) It is fair to assume that the position of banks has only strengthened.

**Regulation breeds innovation?**

Regulation plays an [important role](https://www.financedigest.com/the-importance-of-role-models-and-policy-in-encouraging-more-women-to-pursue-careers-in-the-finance-sector.html "The importance of role models and policy in encouraging more women to pursue careers in the finance sector") in cementing this trust. [Banking is a highly-regulated industry](https://www.financedigest.com/enabling-decision-making-success-in-the-banking-industry-3-considerations.html "Enabling decision-making success in the banking industry – 3 considerations") with rigorous compliance procedures. This promotes [consumer confidence](https://www.financedigest.com/asian-shares-rise-after-consumer-confidence-boosts-nasdaq-to-record-high.html "Asian shares rise after consumer confidence boosts Nasdaq to record high"). It also means banks are well-equipped to address complex regulatory requirements. In comparison, the big tech giants have always operated with relative freedom. But this is changing. The €50 [million fine recently imposed on Google by French](https://www.financedigest.com/google-appeals-french-500-million-eur-copyright-fine.html "Google appeals French 500 million eur copyright fine") authorities for breaching GDPR shows that, even with vast legal and compliance resources available, it still takes time to adapt to tighter constraints. [\[iii\]](#_edn3)

[Regulation also creates](https://www.financedigest.com/strict-regulations-regarding-hygiene-at-industrial-workplaces-to-create-high-demand-for-industrial-dispensers-persistence-market-research.html "Strict Regulations Regarding Hygiene at Industrial Workplaces to Create High Demand for Industrial Dispensers: Persistence Market Research") consumer frustration. Rigorous [anti-money laundering](https://www.financedigest.com/are-compliance-and-anti-money-laundering-aml-regulations-hurting-your-sales.html "Are compliance and anti-money laundering (AML) regulations hurting your sales?") (AML) and know-your-customer (KYC) procedures, for example, can create difficult to use and complex bank applications. 40% of [consumers have abandoned an application](https://www.financedigest.com/phosphate-conversion-coatings-market-to-surpass-us-2-35-bn-as-applications-in-consumer-electronic-grows-fmi.html "Phosphate Conversion Coatings Market to Surpass US$ 2.35 Bn as Applications in Consumer Electronic Grows: FMI"), with the amount of information required and the time taken the main causes of drop-outs. [\[iv\]](#_edn4)

Forward-looking banks, therefore, are effectively using [digital ID to improve the consumer experience](https://www.financedigest.com/choosing-the-best-digital-experience-platform-dxp-in-financial-services.html "Choosing the best Digital Experience Platform (DXP) in financial services") by streamlining previously arduous processes. This, in combination with regulation such as PSD2, is a potential catalyst for innovation. If banks can already [provide strong identities to their consumers for their own services](https://www.financedigest.com/unprecedented-constructive-disruption-to-drive-the-sleep-service-providers-market.html "Unprecedented, constructive disruption to drive the Sleep Service Providers Market"), why can’t they do it for others? By leveraging the trusted identity to enable access to other services, through a network of third-party providers, banks can deliver effective identity solutions across an array of use-cases. For banks, this is a significant strategic [revenue opportunity](https://www.financedigest.com/the-potential-impact-of-coronavirus-covid-19-for-riveting-tools-market-revenue-opportunity-forecast-and-value-chain-2021-2028.html "The Potential Impact Of Coronavirus (Covid-19) For Riveting Tools Market Revenue, Opportunity, Forecast And Value Chain 2021-2028"), as well as an important element to stay relevant with consumers. For third-party providers, the vexing and expensive challenge of establishing identity is solved. Win-win.

**Collaboration. Collaboration. Collaboration**

Yet, a single bank working alone does little to solve the challenges of the broader identity ecosystem. Namely, lots of different solutions with limited applicability.

Indeed, the Emerging Payments Association has recently called on the financial [services industry](https://www.financedigest.com/financial-services-industry-blazes-the-trail-for-cloud-migration-post-pandemic.html "Financial services industry blazes the trail for cloud migration post-pandemic") to ‘work collaboratively \[…\] to create a world-leading digital identity solution.’ [\[v\]](#_edn5) We are already seeing such collaborative efforts. BankID in Norway and Sweden, Verified.Me in Canada, TUPAS in Finland and NemID in Denmark, to name just a few, are all schemes that [see multiple banks](https://www.financedigest.com/europes-banks-brace-for-russia-fallout-while-u-s-banks-see-limited-pain.html "Europe’s banks brace for Russia fallout while U.S. banks see limited pain") band together. Also, initiatives like itsme in Belgium demonstrate cross-industry collaboration, bringing banks into partnership with [mobile network operators](https://www.financedigest.com/russian-regulator-says-mobile-operator-mts-breached-anti-monopoly-laws.html "Russian regulator says mobile operator MTS breached anti-monopoly laws").

But there is more work to be done. [Developing strategies](https://www.financedigest.com/yves-mirabaud-says-we-are-on-track-with-our-development-strategy.html "Yves Mirabaud Says “We are on track with our development strategy”") to deliver seamless, interoperable digital identity solutions across borders is the billion-dollar question for the global financial industry. The eIDAS regulation, which makes the identity checks carried out in one EU country valid in another, came into force in late 2018 and could [set the wheels in motion for frictionless digital](https://www.financedigest.com/azerion-set-to-become-european-digital-powerhouse-following-strategic-acquisition-of-inskin-media.html "Azerion set to become European digital powerhouse following strategic acquisition of Inskin Media") identification. Are we [moving towards a universal model for digital](https://www.financedigest.com/the-dark-chocolate-market-to-move-towards-digital-health.html "The Dark Chocolate Market To Move Towards Digital Health") identity? Only time will tell.

What we do know, is that banks have the consumer buy-in, data, [regulatory know-how and established expertise to establish a dominant position](https://www.financedigest.com/esg-investing-what-is-the-regulatory-position-in-2022.html "ESG investing – what is the regulatory position in 2022?") within the digital identity ecosystem. It is apparent, however, that collaboration will be essential to quickly expand their [service offering to new sectors](https://www.financedigest.com/the-state-of-cybersecurity-in-todays-financial-services-sector.html "The state of cybersecurity in today’s financial services sector"). By exchanging ideas, mapping the technologies and exploring the [potential business](https://www.financedigest.com/the-real-potential-of-web-3-0-and-blockchain-for-business.html "The Real Potential of Web 3.0 and Blockchain for Business") models, banks can both address the challenges and seize the opportunities.

[\[i\]](#_ednref1) Open Identity Exchange, ‘ _Digital Identity in the UK: The cost of doing nothing_’, https://oixuk.org/wp-content/uploads/2018/04/Cost-of-Doing-Nothing-FINAL3v3b.pdf

[\[ii\]](#_ednref2) Signicat, _‘The Battle to On-board II’_, [https://www.signicat.com/wp-content/whitepapers/signicat-battle-to-onboard-II-v6.pdf](https://www.signicat.com/wp-content/whitepapers/signicat-battle-to-onboard-II-v6.pdf)

[\[iii\]](#_ednref3) ZDNet, ‘ _GDPR: Google hit with €50 million fine by French data protection watchdog’_, [https://www.zdnet.com/article/gdpr-google-hit-with-eur50-million-fine-by-french-data-protection-watchdog/](https://www.zdnet.com/article/gdpr-google-hit-with-eur50-million-fine-by-french-data-protection-watchdog/)

[\[iv\]](#_ednref4) Signicat, ‘ _The Battle to On-board II’_, [https://www.signicat.com/wp-content/whitepapers/signicat-battle-to-onboard-II-v6.pdf](https://www.signicat.com/wp-content/whitepapers/signicat-battle-to-onboard-II-v6.pdf)

[\[v\]](#_ednref5) Emerging Payments Association, _‘Facing up to Financial Crime’_, [https://www.emergingpayments.org/assets/uploads/2019/01/EPA-Facing-Up-to-Financial-Crime-Whitepaper-Full-Version-v2.0-1.pdf](https://www.emergingpayments.org/assets/uploads/2019/01/EPA-Facing-Up-to-Financial-Crime-Whitepaper-Full-Version-v2.0-1.pdf)


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