In 2021, the UK government published its prototype of the UK digital Identity and Attributes Trust Framework, a result of consultation with more than 250 organizations. There are benefits and challenges for UK businesses who would use it to manage and control risk.
In 2021, the UK government published its prototype of the UK digital Identity and Attributes Trust Framework, a set of rules and standards designed to establish trust in the UK’s digital identity products. The framework is a result of consultation with more than 250 organizations, including standards bodies, academia, and industry bodies.
There are, of course, myriad benefits to digital identities. Currently people buying or selling houses for example must prove their identity several times before the transaction can conclude. This process of identification is time-consuming, costly, and often inefficient as it can require in-person or face-to-face verification.
In order to prove an identity, people in the UK generally need to have an up-to-date passport, a proof of address (usually from a current utility bill), and/or a birth certificate or driving license. There are many people who don’t possess some or all these items - young people for example may not have applied for their first passport yet; there are many people who are not be able to drive; utility bills may have gone paperless or be in the name of another member of the household. And there are other people who are simply reluctant to go down the route of obtaining ID documents for various reasons of their own.
A common digital identity can deliver enormous benefits to regulated businesses and consumers. Take the house buying example, identity data could be shared quickly and simply with multiple parties, multiple times. Compliance checks will be easier and onboarding smoother. And the increased availability of data will make ongoing compliance more straightforward.
In the case of ecommerce or online transactions, a digital identity framework is also likely to result in fewer cart abandonments.
However, 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 there needs to be complete buy-in and trust from the general public. This is because, while there are clear benefits, there are risks too.
We know that during the pandemic, with more people online, fraud increased significantly. In fact, cases of reported fraud rose by a third and there were reported consumer losses of around £2.3 billion. 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 framework. Open communication and collaboration are also essential, including between the private and public sectors.
A common digital identity will make the regulatory process easier for consumers and organizations. It 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 regulatory technology will make it easier for companies to demonstrate due diligence in the KYC process.
The challenge now is around persuading consumers of the safety of the framework and the necessity for a digital ID.
Moody’s Analytics KYC is transforming risk and compliance. Enabling organizations to understand risks and make decisions with confidence about whom to work with.
Talk to us about automation of your customer onboarding and KYC processes, we would love to hear from you.