Deep Dive: Digital ID Systems Wrestle With Ethics

Digital identities are flexibly changing forms as they gain ubiquity. Consumers around the world log in to eBay with their Facebook profiles, purchase lunches with Apple Pay and in some cases pay their taxes or register to vote with government-provided digital identities.

Many expanding technologies raise ethical implementation concerns, and digital ID’s extraordinary potential means coordinating clear and internationally accepted guidelines is increasingly necessary.

Ethical problems facing digital ID

The ethical questions digital ID systems generate are numerous and largely without simple answers or solutions. First inquiries revolve around personal privacy. Anonymity is desirable for anyone online, as personal information like addresses, financial details, names and Social Security numbers can devastate in the hands of a fraudster, but tasks like conducting online banking and making purchases require identity verification as a prerequisite. Balancing the needs for privacy and verification is difficult for any online business lacking a clear-cut solution.

The second-largest question involves access and exclusion. Online banking and taxpaying are undoubtedly convenient and efficient, but the people they benefit most — namely, the approximately 2 billion unbanked or underbanked individuals around the world — are also the most likely to lack the digital IDs necessary to access them. Exclusion can be caused by the absence of a valid birth certificate, proof of residency or any number of identity documents that fulfill know-your-customer (KYC) requirements.

Myriad other ethical quandaries extend beyond these two concerns, including those involving civil rights, government surveillance and unwanted overlap between digital and offline lives, but the good news is that many organizations are working overtime to tackle these.

Proposed ethical guidelines

Many industry participants and watchdogs have suggested ethical codes for digital ID systems’ implementation and use. Philanthropic investment firm Omidyar Network put forward a “Good ID” framework using UN Sustainable Development Goal 16.9 as a guideline. Its thrust is to enable systems that allow individuals to control and restrict their information’s use and to limit the situations where data is mandatory. The framework also states that startups should be able to add to such systems, building over existing ones to add value to their goods and services and also establish public and private models that support security practices like audit trails and defined responsibilities.

This proposal must be the result of both ethical practices as well as supportive governmental policy and technology designs, according to Omidyar. Consistent global ID systems and protocols will require opening up standards and technology, allowing developers, providers and world governments to explore possible evolutions. These future transformations should be subject to rigorous testing, feedback and oversight to confirm ethical standards before public introduction.

A similar approach to digital ID ethics comes from United Nations Children’s Fund (UNICEF), which has been monitoring the implementation of national initiatives in Egypt, Namibia, South Africa and several other African countries. UNICEF’s associate director and global chief of child protection Cornelius Williams stated that digital ID systems must be linked to civil registries and preceded by legal identity.

“If you leapfrog into digital identity without getting civil registration infrastructure online, you’re going to have a problem,” he said in a recent interview. 

Identity programs are doomed to fail unless stakeholders finalize best implementation practices before enacting them. Operating such programs alongside civil registries rather than supplanting the registries nullifies many benefits of national implementation, including leveling the financial playing field.

Ethical digital ID success stories

One of the leaders in national digital ID systems is Estonia, which provides digital IDs to all 1.3 million of its citizens. Its implementation has been successful by many standards, with the Estonian government estimating that each citizen saves an average of five business days each year due to efficiency and productivity gains through the system. This, in turn, has resulted in a 2 percent increase in the country’s GDP.

The Estonian enactment is also notable for its ethical considerations. Strict governmental regulations decreed that all digital signatures are as legally binding as print signatures, and citizens have been entitled since 2018 to inspect their personal data and correct, delete or restrict any filed information.

Argentina’s national ID implementation, Sistema de Identidad Digital (SID), takes a similar approach. SID is completely opt-out, allowing Argentinians with privacy concerns to decline using the program. The system also allows citizens to access, amend or delete any personal information about them in both public and private sources, a right specifically guaranteed by the Argentine Constitution. Digital ID ethics organizations have shared concerns about the country’s lack of a national strategy for data infrastructure, however, as the government relies on individual agencies’ discretion to protect data.

Digital ID ethics remain complicated, but organizations and governments are not letting perfect be the enemy of good. The conversation surrounding digital identity continues to evolve, and more comprehensive solutions are hopefully around the corner.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.