The Retailer Summer Edition 2021

THE RE TA I L ER

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DIGITAL IDENTITY: WHATWILL IT MEAN FOR RETAILERS AND THEIR CUSTOMERS?

Tom Brewin Projects Manager Emerging Payments Association (EPA)

D espite slow policy developments in the U.K., the future of digital identity is bright. Will it transform payments for good? Is Digital Identity on its way to the U.K.? The prospect of a digital identity framework being implemented in the U.K. is not a recent phenomenon. In fact, the U.K. government launched its ‘Gov.uk Verify’ digital identity system back in 2013. Yet it has been largely cast aside due to its rather burdening cost of £175 million, as well as the fact that a key government department, HMRC, opted out to focus on their existing ‘Government Gateway’ system in 2017.* Yet, a national digital identity project never completely left the govern- ment’s agenda. And fast-forward toApril 2020, the U.K. commenced the first of several Covid-19 lockdown programes and the nation makes the switch to working from home. Suddenly, a catalyst for greater adoption of electronic ID services is born. Fast-forward again a year later to February 2021 and the UK Government published its policy paper for a UK digital identity and attributes trust framework, proposing the introduction of a trusted digital identity system. And most recently, an amended financial services bill now calls for HM Treasury to publish the Government’s plans for the deployment of a Digital ID for individuals and corporate entities in the financial services sector by the end of the year. Matt Warman MP, Minister for Digital Infrastructure commented: “Having a digital identity that can be used easily and universally will become a cornerstone of future economies”. ‘‘ Proving your identity face-to-face is typically done with a physical document, for example a passport or driving licence. Online it’s by providing personal identity details that are verified against data sources and sometimes uploading an image of an identity document and taking a ‘selfie’. A digital identity, once created, allows an individual to reuse that identity to prove who they are on subsequent occasions. This digital identity which contains similar proof of identity to a physical form of ID would be managed via an app on a device such as a mobile phone and used in person. In this context, users will have a secure ‘digital wallet’ on their mobile devices, in which will be stored a range of trusted pieces of personal information such as one’s name, address, date of birth, citizenship and so on. What is digital identity? So, digital identity is on the horizon but what is it?

Digital identity is a key tool in preventing FinCrime as it makes life tougher for the fraudster. It will be a crucial method for customers to use to prove who they are ”. GBG As well as having the potential to create a more financially inclusive society, Digital ID can provide trust through the value chain at a time when traditional forms of identity can longer support online security. The use of passwords to protect our personal and financial data is a weak form of authentication. Cyber-criminals have exploited our reli- ance on passwords for years, with identity theft and data breach attacks becoming regular occurrences. If there is one obstacle to the implementation of Digital ID in the U.K. it would be that there are general concerns over centralised state registries. It doesn’t take much digging through history to prove that central data stores are high-value hacking targets and data leaks can threaten millions of users.*** It also demands a level of trust in national governments not to misuse such mass data. However, if a digital identity framework can improve financial inclusion, make customer experiences more seamless and prevent fraud, then one would hope public trust in the U.K. would overcome these concerns. ‘‘ Why is it important? The lack of a national identification document often excludes many from accessing basic financial services. For example, opening a bank account or taking out a loan often requires a physical proof of address as well as a valid photo ID. This can often be tricky if you’ve just moved or you don’t have a place of residence. Whereas, a Digital ID can provide all this verification from a mobile phone, therefore offering tremendous opportunities for individuals to engagewith financial services. It could also unlock access to government benefits or even online medical portals.

Whatwill it all mean for consumers and retailers in the U.K.?

• More efficient online shopping experiences • Better data privacy • Reduction in cart abandonment rates • Seamless collection of customer information • Quicker age-verification

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