The timing seems about right. As a brand-new decade looms – one that promises great strides for digital payments and commerce – digital ID, already on the ascent, is getting a big seal of approval from an influential global group. The approval serves as a signal that digital ID efforts are ready to grow up in the new decade, so to speak, and also to do more heavy lifting when it comes to financial inclusion.
Here’s the scoop: The Paris-based Financial Action Task Force (FATF), an organization that acts as the standard-setter for anti-money laundering (AML) standards around the globe, has issued a draft report that offers guidance on digital ID. PYMNTS recently talked with Zac Cohen, general manager of global identity verification service Trulioo, about why that document is so important, and what will happen next because of its release.
The motivation behind the group’s draft guidance is to provide some anchor points and other information related to the ongoing use of digital ID for financial transactions. As Cohen told Karen Webster during a PYMNTS interview, digital ID is quickly moving away from its traditional role inside government agencies (for border security) and into daily consumer life.
As digital ID technology becomes more sophisticated, user-friendly and efficient – including via the application of biometric authentication – it will gain even more mainstream appeal. The draft guidance is meant to help regulated entities such as financial institutions have a firmer grip on the issues involved as this trend continues.
The FATF report does not speak to enforcement, Cohen noted, but the group has a significant position in steering the world of payments and financial services. “It’s the largest intergovernmental group that people look to,” he noted. And the release of the report sends a few clear signals, not the least of which is that digital ID is at a stage where the deeper considerations of its expansion into newer areas of life – technical, logistical, regulatory – need to be firmly addressed so that progress is not hampered.
The time has come, the paper would seem to indicate, for more use of digital ID for Know Your Customer (KYC) and anti-fraud efforts, among other tasks. “This is all-around good news for the payments industry and regulated entities overall,” Cohen said.
That’s a message that will resonate well into the 2020s.
Digital ID Assurance
More specifically, the FATF paper, which is meant to attract feedback from various players interested in digital ID, addresses the concept of the credibility of digital ID programs going forward. “Assurance levels are key, and by providing structure and flexibility into how we can manage assurance levels (and still be in compliance), it opens the doors for greater financial inclusion everywhere,” Cohen said.
Indeed, it’s from those assurance levels – and the ability to layer on digital ID approaches – that could increase financial inclusion in those parts of the world where many consumers lack traditional authentication documentation, he told Webster.
The draft guidance also sets the stage for further collaboration when it comes to the growing and global digital ID ecosystem. Right now, as can be expected, so many countries are playing by their own digital ID rules. That will always be the case to some extent, given the deep differences between various countries. But the paper indicates a new push for collaboration. “It’s a holistic look at how can we collaborate to a standard that makes sense regardless of the use case or scenario,” is how Cohen put it to PYMNTS.
The paper also sends another strong signal on digital ID as it relates to payments and financial services. “We are seeing these digital ID systems spring up everywhere,” Cohen said. “Now we have a very clear signal that they can be used by regulated entities as well. That makes for an exciting new conduit and path to make digital ID systems available for purposes past the original government-focused design.”
And all that, of course, seems certain to spark significant innovation – especially when it comes to having at least general standards that various parties can set their compasses to when blazing those new digital ID paths.
New opportunities come from all corners – and in this case, it seems likely that this new draft guidance will fuel new digital ID ideas, efforts, tests and programs. The FATF paper seems likely to be a hot topic of conversation in the payments world for quite a while.