Weekly FinTech Tip: Putting Identity in the Hands of the Consumer is the Future of Banking
What is identity, really? Identity is defined in the Cambridge Dictionary as who a person is, or the qualities of a person or group that make them different from others. Your identity is specific to you. Currently, identity at your organization is a collection of documents and assurances that the person you’re speaking with or doing business with is actually the person that they claim to be. It’s the very first thing you must do before you can do any business with this person. If you have them on a call center call, you’ve got to prove who they are. If you’re talking to them digitally through the mobile application or home banking, you have to prove who they are before you can continue. Identity is an important aspect of every transaction that we do.
How and why is identity changing? Currently, when we are onboard something to join a bank or credit union, we run the mandatory regulatory checks that are needed, such as KYC, AML, and OLFAC, and then we check documents to confirm that that’s who they are. After that, we assign them a password, perhaps a user I.D., and some other tokens that allow us to identify them, but we store that identity and that identity is not transferable to anywhere else.
Well, the future is what’s called SSI, or Self-Sovereign Identity. Simply put, a self-sovereign identity on the block chain is a permanent identity that can only be accessed in full by the person or entity to whom it belongs, yet portions of that identity can be shown to any individual organization or agency whenever it becomes relevant. Since some self-sovereign identities are decentralized and encrypted, identity theft or incidents like last year’s Equifax hack become much less of a problem.
How will this new type of identity process change your organization? It will remove the friction from the onboarding process, it will increase security by removing passwords and including higher levels of encryption, and finally, it will increase your privacy. It will allow people to keep their data private.
If you would like to learn more about identity, there is a great book by a good friend of mine, Doc Searls. It’s called The Intention Economy: When Customers Take Charge, and you can find this book on Amazon. If you’re a programmer and you’re interested in learning more about identity in practice and how to deliver it as a digital technology, you can go to www.sovrin.org.
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Premiered on Mar 11, 2019