Banks and Mortgage lenders are obliged to check their customers’ identities. This applies to existing customers as well as onboarding customers. But what does ‘identity’ mean in this context? What is a ‘digital identity’? And, how do you check your customers’ digital ID easily and securely? Ockto product specialist Ilyan Tonneman explains.
Digital identity
Many of us take our official identity documents for granted but, in some parts of the world, the notion of ‘identity’ is a luxury. Identity is the fundamental key that paves the way to opening a bank account, voting, driving, starting a job, accessing medical and government services, flying, and even selling products and services. A digital identity is an easy way for around a billion people, who don’t have an official ID, to acquire valid and usable proof of identity. So, for many, a digital identity is the first step to obtaining basic financial services.
But what is a ‘digital identity’? Technically, the ISO/IEC 24760-1 standard defines identity as a “set of attributes that are associated with an entity”. In short, a digital identity determines which set of digital attributes must be associated with an entity. At Ockto, we define a digital identity as a set of verified attributes originating from multiple data sources for the purpose of uniquely proving a person’s identity, whether it’s done online, offline, now, or later via a mobile device.
Digital identity solutions
The world is becoming increasingly digital and there is a growing need for digital identity solutions that are just as safe, secure, and reliable as face-to-face customer identification. In the world of mortgage lending and banking this topic is especially relevant because these institutions are obliged to know who their customers are. AML-legislation dictates that financial service providers must check that onboarding customers are who they say they are – a procedure that must be repeated every 5 years. To this end, financial service providers have developed Know Your Customer programs: performing checks by which fraud – and in the worst case terrorism – can be prevented and traced.
Although Know Your Customer tops the list of priorities, the ‘customer identification’ subject shifts to a larger arena that focuses on the enrichment of trusted or verifiable data about a customer. After all, the more you know about your customers, the better you can tailor your products and services to suit their needs. One way to enrich data is to learn more about someone’s living situation: does the individual still have a partner and if not, what can you as a bank or mortgage lender do to lower that client’s monthly costs? This proactive attitude increases the confidence customers have in your organization – an increasingly important cornerstone for successful financial service providers.
How do you check someone’s digital identity?
The financial sector has a growing need for digital identity solutions and customer data enrichment. The logical question here is: how can this be done securely and effectively? When it comes to establishing a digital identity, there is no single use-case and therefore no single answer. In this age of big data, a lot of information about people and their digital and non-digital activities is being collected. That means information can be obtained from the Employee Insurance Agency, Tax Authority, Pensions and other governmental websites. Which data set is most effective for increasing customer trust? Which data set offers the most security and protects personal identification information (PII)? And, which offers effective levels of risk mitigation as well as a seamless onboarding experience? To provide the right levels of confidence and assurance for doing business safely, a digital identity solution must be able to answer many different questions.
The future of digital identity solutions
Think of digital identity as a marketplace of hundreds of data attributes, verification processes, and tools that should work together to identify ‘who’ a person really is, regardless of his or her unique set of identity characteristics and risk profile. When you link those data sources together, you create something unique. The promise of digital identity is that it is easy for both customers and businesses to use. It’s secure and only allows legitimate users to access specific services. It ensures compliance. It builds trust online across the globe. The good news is that this ideal state of affairs for digital identity is closer than you might think. Smart companies such as Ockto are building it now. Soon, citizens around the world will have access to digital identities, and we will all be able to benefit from the opportunities that the future offers.
