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Exploring the science and magic of Identity and Access Management
Wednesday, June 19, 2024

Banks as Identity Service Providers?

Author: Mark Dixon
Wednesday, August 2, 2017
4:53 pm


Yesterday, I blogged about the inherent conflicts of interest that exist with most current or potential Identity Providers.  Is it just coincidence that today I would read a post on LinkedIn by Gary Rowe, CEO/Principal Consulting Analyst at TechVision Research, highlighting the TechVision Research report, “Banking on Identity?”

The report offers a compelling case: “The opportunities for banks to become identity service providers.” I was impressed when I read the downloaded report.  Here are a few excerpts:

Identity data in all its forms is going to power the global economy of the future and will become increasingly highly prized and sought after. Services that help manage the safekeeping and distribution of identity data could dominate that future.

This is certainly in harmony with the statements in my recent blog, “The Future of Digital Identity,” in which I quoted David Birch  author of “Identity is the new Money.”

For banks to proactively create a new set of identity services would not be that far removed from what they are required to provide today to comply with KYC (know your customer) and other regulations, both in Europe and the rest of the world. It would also offer a welcome opportunity to strengthen customer relationships and encourage customer loyalty at a time when other aspects of the banking business are being disrupted.

Yes, Identity is about relationships, and banks do seek to strengthen relationships with their customers. I place trust in the banks with which I do business.  Can I also trust them to safeguard my identity information, the “new money” of the global economy?

From a consumer perspective, the major initial attraction [in banks as identity service providers] will be convenience. Not having to repeatedly undergo the tiresome process of producing hard copy documentation verifying identity, as well as proof of residence, will be very attractive and remove an irritating barrier to getting business started as quickly as possible. Being able to use the trusted services of a bank will, in the majority of cases, likely be far more attractive than using the services of a social media or any other company.

As a consumer, I would definitely prefer my bank as identity provider over Facebook or Twitter!

For the banks, the principal advantage of becoming identity providers is about cost mitigation. Banks are already spending large amounts on KYC and other identity-related issues. Any opportunity to begin to monetize that sunk cost would provide a welcome additional income stream.

The report lays out a compelling case for benefits to banks in providing identity services.  The new ability to “monetize that sunk cost” is a benefit I hadn’t considered before.

Until recently the requirement for a customer-centric identity service was the stuff of long-term visions, and the idea that a bank would provide such a service would have been considered outlandish. But the demands of today’s heavy dependence on the Internet for every aspect of daily life has made the absence of safe, secure and reliable personal credentials one of the barriers to the growth of the digital economy.

I admit that I was one with long term dreams, if not visions, of a good identity service provider.  BofA, Chase, Wells Fargo — which of you will have the vision and courage to make it happen?




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The Future of Digital Identity

Author: Mark Dixon
Monday, July 31, 2017
4:59 pm


Following a blog post recommendation by Emma Firth, Communications Director of Digi.me, I just read an insightful article, “Transforming the Digital Identity Landscape,” in the June 2017 issue of Leo, an e-magazine published by Luxembourg for Finance.

It was particularly interesting to read the viewpoints of four Digital Identity thought leaders who spoke at the Fintech Stage Luxemourg conference:

A few excerpts:

David Birch, Director of Research at Consult Hyperion and author of “Identity is the new Money.”

To me, digital identity is the bridge between the world of virtual identities that only exist on-line and the things that exist in the real world.

You can think of the problem as being that there are two sides to that bridge: we need to connect the bridge to the real world, and that´s complicated and time-consuming and expensive. Nobody wants to have to manage personal data. Especially because you have new data protection laws coming, and the costs of having to manage this ‘toxic waste’ and deal with it when it is tangential to your business are not what you want to do.

Connecting the bridge to the virtual world, in contrast, is easy. We should have many virtual identities, one for each of our online relationships.

I like the concepts of Identity being a bridge (or set of bridges) between the virtual world of online identities and reality.

His comment about the difficulty of managing the “toxic” waste of personal data which is only tangential to real business is particularly relevant in the GDPR countdown to May 25, 2018.

Julian Ranger, Chairman and Founder of digi.me

We have always been multi-dimensional. The question is, are our financial services able to support that multi-dimensionality and work for me across all of those dimensions?”

If you consider identity not to be just identification of data, but all the things that I do, then it’s a holistic through-life process, and you should be using digital identity by engaging directly with me and looking at me across all aspects of my life.

I liked how Mr. Ranger described Digital Identity as a “holistic through-life process,” challenging financial services companies to embrace the inherent multi-dimensional reality of the customers they serve.

David Brear, Founder and CEO of 11:FS, a FinTech consultancy

When you look at digital identity there is no de facto listing globally. 

This is so critical to identity that if you don’t trust the system that the identities are being captured and contained within, it makes it tough for that system to be very useful within the realms of what you are trying to do. This is why people have started to look at irrefutable databases. Things like distributive ledgers and blockchain-like identity schemes are very interesting for this.

Yes, Digital Identity begs for a global “irrefutable database,” perhaps using “distributive ledgers and blockchain-like identity schemes.”  I believe this type of mechanism is essential to really solve the current conflict of interest nature of Identity providers.

Sam Maule, Director, Director, Senior Practice Lead, Digital & FInTech at NTT DATA Americas

I believe we overuse and overhype the term blockchain. I believe that distributive ledger technology does serve as an excellent tool, but in the future, we are going to have components of Artificial Intelligence that we haven’t looked at before, with which we will be able to fine-tune this concept of digital identity.

Startups and FinTech can streamline and simplify the process around identity, and I believe the banks themselves can secure it and make sure it’s compliant, and the two work hand in hand together.

I agree that “blockchain” is an overhyped term, but it is interesting that Mr. Maule turned to another over-hyped term, “Artificial Intelligence,” in the quest to fine tune and simplify the problems of Digital Identity.  I expect that we will see a number of technologies converge to meet the global requirements of Digital Identity.

In all, fascinating concepts:

  • Digital identity is the “bridge” between our many online virtual identities and our real-world selves.
  • Digital Identity must be a “holistic through-life process,” accommodating the inherent multi-dimensional aspect of our lives.
  • Technologies like blockchain and distributed ledgers will be essential to enable global, irrefutable databases for Digital Identity.
  • Blockchain alone won’t solve all the problems.  Leveraging other emerging technologies such as artificial intelligence will be essential to meet real world Digital Identity demands.

I love these discussions about Identity.  We have a great future ahead.

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