Digital identity: the good, the bad, and the – so far – unknown

The Covid-19 pandemic was undoubtedly one of the main causes for the accelerated digitalization of economic sectors in the past couple of years. The need to adapt to the pandemic scenario that restricted physical movement migrated activities that were carried out in person to the digital world. Everything – or almost everything – abruptly migrated to screens, providing an opportunity for companies and countries to take major steps toward greater economic development based on the digital world.

With everyone’s attention to the digital, the spotlights – and capital – were aimed at several technologies that allowed these interactions to be possible and safe. One of them is the digital ID. The topic, which has been debated in various settings worldwide as an essential innovation, has the potential to revolutionize the way we identify ourselves in the physical and digital world.

Like any new technology, various questions arise about its functioning and benefits and how it will be applied to the current model of society in which we live.

  • What do we in fact know about its benefits and disadvantages?
  • How does it affect our lives?
  • What changes will be required for the model to work?

These are some of the most common questions that may arise when faced with this subject.

In this article, I present what we know – so far – about digital ID. I will briefly explore its advantages and disadvantages, as well as raise some of the several questions that remain unanswered.

The good

Over the past few years – and with the first large-scale initiatives – digital identity has proven to be a technology that can positively revolutionize citizen-company-government relationships. In places where an ecosystem of digital interactions has been implemented, several gains were observed for all the agents involved, in addition to an increase in the frequency and maturity of the discussion around the subject. The gains associated with digital identity place it among one of the most promising technologies for this new era of hyperconnectivity and advances toward a digital world.

Some of the proven benefits associated with digital identification systems are:

  • Ease of access to services: digital identification systems enable a more efficient digitalization of all the services that require personal identification. As individuals face fewer hurdles to prove their identity, and as the sectors – public and private – engage in more effective communication,  accessible and effective centralization of services becomes possible.
  • Efficiency and cost reduction: by using a digital identification system, it is possible to reduce operational costs and response times, resulting in increased delivery speed, less bureaucracy, and the availability of more responsive and faster services. The speed and trust in the data that is informed allow the process to be cheaper and more efficient for all those involved in it.
  • Fraud reduction: digital identity verification systems can offer several benefits for digital security, including high levels of identity management and client data protection, thus reducing the incidence of cyber threats and fraud attempts. Cases of digital identity use in Uganda and Thailand show a significant reduction in fraud, which saved US$ 6.9 million and US$ 29.7 million in the countries, respectively.

The bad

Although there are many potential benefits in using digital identity, it is not all blue skies. Among the many advantages, there are some latent concerns. Digital identity needs to be an ally in discussions about cyber-security, data privacy and protection, diversity, and technology. These discussions need to help us achieve sustainable development and search for incremental solutions that bring real progress to these issues.

Some of the challenges observed with digital identification systems are:

  • Biases and exclusion: we know that the technologies that make up a digital identity system, like every other technology, are built by humans. These algorithms can carry structural biases from our society that are responsible – in the digital world – for maximizing social problems. Difficulty in identifying – especially through facial recognition – black, transsexual, and Asian people, among others, have been reported in several studies around the world and may lead to the exclusion of population groups.
  • Errors: errors such as duplicate records, inability to add essential information, or the incorrect validation of an individual may prevent access to basic services made available through digital identity. In African countries such as Kenya and Uganda, as well as in India, several cases of errors were found associated with validation, which presented citizens with challenges.
  • Privacy: user privacy is part of the principles for building an efficient and secure ecosystem, so this is a recurring debate. The centralization of information, cyber risks, undue sharing of personal data with agents without the proper permission, inability to control personal information, and – at the extreme end of this discussion – surveillance by governments and companies are all topics that show the issue in a negative light.
  • Implementation problems: there are three main difficulties here, investment in infrastructure for building and maintaining secure cyber systems as well as the validation systems used in transactions; unequal access to mobile Internet and smartphones – the technology with the biggest potential for rapid adherence and diffusion of the identity; and the difficulty of deployment in remote areas.

The – so far – unknown

There are many aspects of digital identity that can be addressed and categorized as positive or negative. Some even generate debates and raise questions that constantly make them navigate between the two extremes.

Some questions, however, have yet to be answered. The ones that stand out to me are:

  • How will the framework for the collaboration between the public and private sectors be designed, and what will the most efficient design look like?
  • Will digital identity be one of the drivers in building a more comprehensive digital inclusion policy?
  • Will digital identity be responsible for increasing financial inclusion?
  • What is the best economic model for building a wide and complex ecosystem that is financially sustainable for all parties?
  • Will we still have paper documents – in a hybrid model – to encompass the entire population? What will they be?

We seek the answers to many of these questions. We raise hypotheses and perspectives that make us see more clearly the possibilities that lie ahead of us. However, many of these questions will only be answered as we work hard on developing new technologies, as well as on improving and enhancing current ones.

Thus, questions about digital identity will not become more cloudy; we will be able to deploy and test more models in different regions and contexts around the world, enabling greater data generation, research, and studies that will guide us towards the best route to enjoy the benefits of its deployment as much as possible.

Igor Moraes Gonçalves

Igor Moraes has been working in the digital identity and onboarding sector since 2018. He is currently a Partner at idwall and works as Business Developer Coordinator of MeuID, the first digital identity in Brazil. He holds a degree in Mechanical Engineering from UNICAMP, with an extension in innovation and technology from the Universidad de Granada (Spain). Learn more about it in the newsletter.