Digital identity takes off as governments realize benefits, says GlobalData

Driven by vaccination certificates, the need for identity checks in financial services, and the potential of the metaverse, governments across the world realize the benefits and the importance of digital identity, enabling the technology to take off, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, ’Digital Identity’, reveals that the theme had previously been slow to take off, hampered by countries driving in different gears. Digital identity is a collection of online information about a person, an organization, or a machine, which, when grouped together, can provide a digital representation of that entity.

David Bicknell, Principal Analyst, Thematic Intelligence team at GlobalData, comments: “Digital identity’s time is now. There are many possible use cases, from financial services to tracking and managing identities in the metaverse. COVID-19 has been an important driver. It took a global pandemic for governments to recognize that vaccination certificates on smartphones enabling foreign travel was the killer app that digital identity could deliver, and people could use, even if they might not recognize it as digital identity.”

China, which has the world’s most advanced social credit and surveillance systems, is a clear leader in digital identity. The Nordic countries and Estonia are well aware of the benefits of digital identities, as is India, with its Aadhaar ID system. The EU wants to give its citizens digital identity credentials accessible from digital wallets, and Australia and New Zealand are moving towards legislation.

The UK is implementing a ‘One Login’ program for citizens to access government services online, but the US lags behind, hampered by a patchwork of state initiatives but no federal conformity on digital identity.

Bicknell continues: “Implementation of anti-money laundering (AML) and know your customer (KYC) identity checks by financial services regulators has catalyzed the adoption of digital identity. The EU’s plans to give all its citizens digital identity credentials accessible from digital wallets by 2024 will be a key driver in Europe.”

Meanwhile, Big Tech is staking its claim. For example, Apple now supports mobile US driving licenses, and Microsoft has embraced decentralized digital IDs. Digital identity is finding uses cases in making online purchases, accessing government services, posting on social media, and collaboration instances, such as temporary workers and contractors needing urgent access to mission critical applications. In the future, digital ID verification processes will cover users’ journey through the metaverse.

Bicknell adds: “It is clear that decentralized identities will help deliver an identity revolution. The potential of decentralized identities ensures privacy protection and promises frictionless onboarding experiences, efficient know your customer (KYC) compliance, and drastic reductions in identity theft rates.”

It is also important to consider that digital identity systems apply to both human and machine identities. A person’s identity is what most people recognize. But it is not the only one. A corporation also has an identity, as does a device or machine.

Bicknell concludes: “The next few years will see extensive development around workload identities, which include applications and services, and device identities, which include mobile devices, Internet of Things (IoT) and operational technology (OT) devices, and desktop computers.”

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