In an age where more people are adopting a digital identity, the need to manage and contain risk is becoming more key than ever, claims PassFort.
In a recent post by PassFort, the company provided a detailed explanation of digital identities as well as the many risks that come with them.
PassFort said, “There are, of course, myriad benefits to digital identities. Currently people buying or selling houses, for example, must prove their identity several times. This is costly and time-consuming and often requires face-to-face verification.
“In order to prove your identity, people in the UK generally need to have an up-to-date passport (and we all know how hard this is at the moment), a proof of address (usually from a current utility bill), and/or a birth certificate or driving licence. There are still people who don’t possess some or all of these items or are reluctant to go down the route of obtaining them for various reasons.”
In the opinion of the firm, a common digital identity will deliver ‘enormous benefits’ to financial services providers. Compliance checks will be easier for many companies and it will make onboarding smoother. Furthermore, its likely to result in less cart abandonment and the increased availability of data that will make ongoing compliance easier.
Research by PassFort, however, has shown that there is still a lack of understanding among the general population about the framework and what it could mean for them. For a common digital identity to work, the company claims, there needs to be complete buy-in and trust from the general public.
Why is this? PassFort said, “While the benefits are various, there are still risks too. We know that during the pandemic, with more and more people online, fraud went up too. In fact, cases of reported fraud rose by a third and there were reported consumer losses of £2.3bn. This increase in identity-related fraud is contributing to the growth of the digital ID market but this increase only serves to make consumers more distrustful. Trust must be the foundation of any common digital identity. Open communication and collaboration is also essential, including between the private and public sectors.”
The company believes that a common digital identity will make the regulatory process much easier for consumers and organisations and should provide easier access to goods and services, greater efficiency for citizens and reassurance for users who are on board with the idea of a digital ID. Linking a common digital ID with RegTech solutions will make it much easier for companies to demonstrate due diligence in the KYC process.
PassFort concluded, “The challenge now is around persuading consumers of the safety of the framework and the necessity for a digital ID.”
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