# Major myths and questions holding banking and financial services back from full digital ID adoption
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-23
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Digital ID Adoption in Banking & Finance: Myths Debunked
Meta Description: Discover how digital ID adoption is crucial for the growth of the banking and finance sector, debunking common misconceptions about data safety and
URL: https://financedigest.com/major-myths-and-questions-holding-banking-and-financial-services-back-from-full-digital-id-adoptionhtml

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![Nick Mothershaw, Chief Identity Strategist at the Open Identity Exchange](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/nick-mothershaw-450x524-1736814683802-compressed.jpg)

_By_ **_Nick Mothershaw,_** _Chief Identity Strategist at the_ [_Open Identity Exchange_](https://openidentityexchange.org/members/anon/new.html?destination=%2Findex.html) _,_

Full digital ID adoption will be critical to the growth of the banking and finance sector. The government is finalising its digital ID trust framework and there is a growing market of ID providers who are ready to go. Despite this recognition and all the activity around digital ID, there is still a notable lack of understanding among [banking and finance companies that will come to accept digital](https://www.financedigest.com/how-will-the-introduction-of-digital-banking-impact-customer-perception-and-overall-loyalty.html "HOW WILL THE INTRODUCTION OF DIGITAL BANKING IMPACT CUSTOMER PERCEPTION AND OVERALL LOYALTY?") IDs – what it is, why it is good for them and how it will work. And this is slowing the progress on [digital ID adoption](https://www.financedigest.com/matching-digital-adoption-with-cybersecurity-in-the-financial-services-industry.html "Matching digital adoption with cybersecurity in the financial services industry").

The Open Identity Exchange has been working across this sector, and very closely with [trade bodies](https://www.financedigest.com/britains-digital-banks-need-support-amid-banking-turmoil-trade-body.html "Britain’s digital banks need support amid banking turmoil – trade body") including the UK Finance, FLA and TISA, to address both barriers and concerns, as well as offer clarity. Below are the [key myths and questions about digital](https://www.financedigest.com/5-key-takeaways-from-the-finance-sectors-digital-transformation-revolution.html "5 Key Takeaways From the Finance Sector’s Digital Transformation Revolution") ID that are coming up time and time again.

**Myth: The [data within a digital](https://www.financedigest.com/why-data-is-the-best-weapon-in-the-war-for-digital-talent.html "Why data is the best weapon in the war for digital talent") ID is not safe.**

A digital ID trust framework ensures that identity providers are certified to global [security standards](https://www.financedigest.com/why-preparation-for-new-swift-cyber-security-standards-needs-to-start-now.html "‘Why preparation for new SWIFT cyber security standards needs to start now’") for data management. This includes ensuring data is encrypted in transit and, where appropriate, at rest. It also includes robust data access and management procedures commensurate with those used in [financial services](https://www.financedigest.com/trends-in-the-financial-service-landscape-and-the-impact-on-fraud.html "Trends in the financial service landscape and the impact on fraud"). Data in a [digital ID is as safe as data in a bank](https://www.financedigest.com/digital-experience-and-security-the-crucial-combination-for-banks.html "Digital experience and security – the crucial combination for banks").

**Myth: If a person loses their device, they also lose their digital ID.**

In the majority of cases, the user’s digital ID is securely [backed up in the cloud in a distributed way](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back"), so if a device is misplaced or stolen, the user will be able to easily recover their ID to a new device. [Banking and financial services that will come to accept digital](https://www.financedigest.com/how-to-enhance-banking-services-with-digital-performance-intelligence.html "HOW TO ENHANCE BANKING SERVICES WITH DIGITAL PERFORMANCE INTELLIGENCE") IDs should focus on those where the user’s digital ID is securely backed up in the cloud, rather than those reliant on a single device.

**Myth: Anyone can access the data in a Digital ID.**

A user’s data can only be released to other parties with the user’s specific consent to do so. Only the person who owns the digital ID will be able to access and manage the data held within it.

**Myth:** **Digital ID is not inclusive of all customers.**

OIX has been leading a significant amount of work on the subject of digital ID inclusion with the objective of [ensuring](https://www.financedigest.com/42-of-retailers-say-payment-over-time-solutions-are-very-important-to-ensuring-future-digital-innovation.html "42% of retailers say payment-over-time solutions are ‘very important’ to ensuring future digital innovation") all users who want one can get a digital ID. Its work has revealed that a key priority for all the parties involved in driving the growth of digital ID ecosystems, whether they are public, [private or third sectors](https://www.financedigest.com/dollar-slides-on-contraction-in-private-sector-activity.html "Dollar slides on contraction in private sector activity"), is the desire to be inclusive. This work is global, and is looking at [ways to ensure that people](https://www.financedigest.com/5-common-ways-people-end-up-in-debt-without-realising.html "5 Common Ways People End Up In Debt Without Realising") who cannot establish a digital ID because they do not have digitally presentable evidence or need assistance presenting it, have secondary options available to them.

**What if a** [digital ID has been taken over by a fraudster?](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!")

Under the rules of any good trust framework, there are specific details around [protection from fraud](https://www.financedigest.com/protect-your-organisation-from-fraud.html "Protect your organisation from fraud"). If the ID provider fails to following those rules and this has allowed a fraudster to gain control of a digital ID, the liability position will depend on the rules of the specific trust framework, trust scheme or contractual arrangements between the ID provider and the [financial services](https://www.financedigest.com/can-financial-services-brands-ever-be-credible-on-social.html "Can financial services brands ever be credible on social? ") firm. The ID provider will be responsible for notifying the genuine users of the stolen ID, as well as all the organisations where the ID may have been used fraudulently.

**What if a user wants to move, delete or [update their data in the Digital](https://www.financedigest.com/you-cant-get-faster-than-that-spring-statement-update-delivered-digitally-as-it-happens-with-app-driven-technology.html "‘You Can’t Get Faster Than That’ – Spring Statement Update Delivered Digitally As It Happens with App-driven technology") ID?**

Ultimately, users own their data, consent to its release and can ask for it to be deleted at any time. Digital IDs operate within [data protection](https://www.financedigest.com/4-steps-you-should-be-taking-to-protect-data.html "4 Steps You Should Be Taking To Protect Data") legislation, so data protection regulations apply to digital ID ecosystems. They must allow users deletion of their data, and ideally should allow users to [move their data](https://www.financedigest.com/exclusive-binance-moved-346-million-for-seized-crypto-exchange-bitzlato-data-show.html "Exclusive-Binance moved 6 million for seized crypto exchange Bitzlato, data show") from one ID provider to another.

If users update their data, the new [data will firstly be validated and verified, so that there is trust present when that data is shared](https://www.financedigest.com/shares-slip-yields-rise-as-u-s-data-sparks-rate-hike-concerns.html "Shares slip, yields rise as U.S. data sparks rate hike concerns"). The user should have access to a list of organisations that have previously received their data and can choose who should receive an update. Organisations could also choose to subscribe to update services.

**Can a digital ID be incorrect?**

A [key feature](https://www.financedigest.com/exploring-the-key-features-of-bnpl-solutions.html "Exploring the key features of BNPL solutions") of a digital ID is that the information it provides you has been validated as being correct and belonging to the user. In the few cases, where attributes cannot be validated, they should have an un-validated status attached so that the organisations using them are aware. If information is found to be incorrect, it can be raised with the ID provider who will liaise with the end user.

**Will passwords still exist with digital ID?**

Password will still exist for some time. However, authenticators, such as biometrics or tokens, are proven to be far more robust than passwords. It’s evitable, therefore, that the use of passwords will decline over [time as more digital ID providers are move](https://www.financedigest.com/30-years-of-excel-lence-time-to-move-on.html "30 YEARS OF EXCEL-LENCE: TIME TO MOVE ON?") to more secure ways to access IDs.

**What if there are issues with a particular ID provider?**

There is an escalation procedure within the trust framework to [deal with any issues that arise with a digital](https://www.financedigest.com/italys-nexi-signs-digital-payments-deal-with-tims-olivetti.html "Italy’s Nexi signs digital payments deal with TIM’s Olivetti") ID provider and cannot be resolved with them directly. This should initially be to the operator of the trust scheme then to the trust framework governance body itself. The OIX _Guide to Trust Framework Issues and Complaint Services_ can help banks and [financial](https://www.financedigest.com/how-crowdsourcing-can-help-drive-the-benefits-of-advanced-analytics-in-financial-services.html "HOW CROWDSOURCING CAN HELP DRIVE THE BENEFITS OF ADVANCED ANALYTICS IN FINANCIAL SERVICES") services understand more about what to expect.

**Conclusion: The adoption of digital ID will soon start to move at speed**

The benefits for banking and [financial services that embrace digital](https://www.financedigest.com/the-future-for-financial-services-is-digital-engagement.html "The future for financial services is digital engagement") ID will be significant. They’ll see greater [user success rates at the point of onboarding](https://www.financedigest.com/getting-started-with-user-onboarding-tools-in-2022.html "Getting Started with User Onboarding Tools in 2022"), enabling positive engagement both first time and on return and reducing risk of loss. Compliance will be more achievable, fraud [levels will be reduced and they should see](https://www.financedigest.com/fraport-sees-2023-passenger-traffic-at-80-90-of-pre-pandemic-levels.html "Fraport sees 2023 passenger traffic at 80-90% of pre-pandemic levels") cost efficiencies overall.

[Banking and finance providers](https://www.financedigest.com/why-finance-professionals-must-bank-on-a-journey-to-the-cloud.html "Why finance professionals must bank on a journey to the cloud") will be among those that will come to rely on digital ID, so it is vital that misunderstandings around digital ID are clarified and their questions are answered. Or they will find themselves left behind as digital ID is [adopted by other sectors](https://www.financedigest.com/guess-what-public-sector-adoption-of-e-invoicing-on-the-rise.html "GUESS WHAT? PUBLIC SECTOR ADOPTION OF E-INVOICING ON THE RISE!") at a faster pace.


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