Government bodies were hardly immune to the digitization push brought on by the global health crisis, and agencies around the world took steps to improve internal processes to meet the world’s new needs.
One study found that 74% of government officials said the pandemic accelerated the execution of digital transformation initiatives, for example, and 67% stated their agencies’ financial commitment to digitization is increasing. Government entities’ adjustment process to this digitization push has faced a few stumbling blocks, however, notably regarding verifying the identities of their constituents or other key groups.
Reconfiguring traditional forms of identification such as paper passports or plastic driver’s licenses to a digital format has proved exceedingly difficult and opened a gateway for fraudsters and cybercriminals to slip through. A January report found that the U.S. government lost over $36 billion in unemployment benefits to “improper payments,” for example, including bad actors taking advantage of weak or overwhelmed identification barriers to skim funds. Persistent fraud also has contributed to the lack of trust among consumers regarding digital security, with almost three-quarters of U.S. consumers stating that they are in favor of the creation of national standards for the collection and sharing of online personal data.
These and other trends have prompted government entities around the world to reexamine the way in which they think about and verify identities online, with many considering government-issued identities as a potential way to address such cybersecurity vulnerabilities.
Such identities would allow government agencies to draw from multiple sources of information to confirm individuals’ identities, creating more robust profiles of digital consumers. The creation of these digital identities is not without hurdles, however. The following Deep Dive takes a close look at how government-issued digital identities are developing worldwide and the unique factors that are shaping them across global markets. It also analyzes the potential benefits of government-issued digital identities as they become more widespread and details the possible challenges associated with their use.
Creating Transparent Online Identities
Establishing national digital identities has become a higher priority for governments worldwide as consumers, businesses and other entities continue to conduct more of their lives online. Data showed that an estimated 4.6 billion consumers around the world connected to the internet as of January, compared to 4.5 billion internet users in 2020. More and more businesses — as well as banks and other payment service providers — also are offering their solutions and tools online, making it crucial to be able to quickly and accurately verify the identities of the billions of users sending and receiving funds virtually.
Verifying online identities using static methods such as with a driver’s license or Social Security number can be tricky, however, especially as online fraud becomes an increasingly dangerous threat. Large-scale data breaches — such as the 2017 Equifax breach that compromised the personal data of 147 million individuals — have left large caches of sensitive personal data freely available to fraudsters, making the use of standard identity documents for online verification less secure.
The rising demand for identification tailored for a virtual world has prompted government bodies worldwide to take a closer look at national digital identities. Several countries already have taken steps to create such identities, including Singapore, which launched a virtual version of its identity cards (ICs) known as SingPass for its citizens and permanent residents. The digital IC now is an accepted form of identification for interactions with government agencies, clinics or public libraries, according to announcements by Singapore’s Smart Nation and Digital Government Office. The office also stated that 97% of the country’s citizens and permanent residents over age 15 have SingPass accounts. Government bodies in the Philippines, Thailand and the U.K. are following suit with their own digital identity initiatives, indicating that the idea is rapidly taking root on a global scale.
The potential benefits of standard, nationwide digital identities are becoming clear to governments as the IDs are being implemented in a rising number of markets. Such IDs can promote inclusion of individuals lacking traditional forms of identification, allowing them to access government or financial services, for example. An estimated 1 billion consumers globally do not have legally recognized IDs, according to data, while 1.7 billion do not have access to bank accounts. Government-supported digital identities would open a doorway for such individuals to the wider online world, granting many unbanked or underbanked consumers the documentation required to open bank accounts and to participate in the global economy. Developing these interconnected digital identities still comes with several challenges, however.
Addressing the Trust Problem
Governments and businesses can make use of these identities to help build out detailed online profiles of citizens and residents, providing key economic insights. Yet, before these government-supported digital identities can be used at scale, consumers’ trust and support must be gained — which may prove difficult as more individuals report growing concerns about online data privacy and security. In a poll, nearly 71% of Americans agreed that data privacy should be considered a national security issue, for example, yet only 23% said they were satisfied with the way the federal government was tackling the issue. U.K. consumers noted similar opinions in other research, with 61% of British millennials reporting they had little to no trust in the security of their public bodies, for example.
Addressing the issue of trust and providing the level of security consumers now expect when they interact with online entities is a key challenge for the development of government-supported digital identities. Government bodies must take steps to generate trust among their citizens and residents accordingly. Integrating emerging technologies and tools such as biometrics or partnering with identity verification providers that rely on alternative forms of data could help government entities ease consumers’ concerns, opening the path toward digital identities’ adoption.
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