How Can the Banks of Tomorrow Become the Pseudo-Owners of Their Customers’ Identity?
SunTec Business Solutions
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Where do you use your Google account? There probably are innumerable websites that use the Google account to authenticate users. In other words, Google has become the de-facto authenticator of a user’s authenticity.??
As Chad Bollard points out, ‘outside of perhaps a government agency, consumers are used to banks playing that role of secure, trusted advisor.’?
If a bank becomes a more integral part of the customers’ life, then the bank of tomorrow can also become the pseudo-owner of the customer’s identity.??
Why is the owner termed pseudo? Because the ownership of the identity will still rest with the customer and the bank will act on behalf of its customer.??
Imagine if you can access a host of services through your bank account and your bank stands as the guarantee of your actions and transactions. This was the basic principle with which the Diners Card was also initially launched. Imagine if a person going to a bar didn't have to show the bartender a document containing his home address, but instead took out a mobile phone and displayed a one-time numerical or QR code? When scanned, this code, known as a cryptographic token, would confirm that the person was over the legal drinking age, perhaps even sending a photo of the person on the bartender's device. What if a consumer could log on to any website with a username and password or by answering personal questions, but by granting that site limited access to some data? This data could be stored in a personal cloud or with a trusted provider that securely holds the consumer's digital identity. What if the bank could play the role of being the pseudo-identity owner??
Proof of identity can be a problem for rich and poor alike. For the rich, regulations around anti-money laundering, know-your-customer, and ultimate beneficial ownership increase legal and regulatory costs and hassles. For the poor, Hernando de Soto, the Peruvian economist famous for his work on the informal economy, observes: “Without an integrated formal property system, a modern market economy is inconceivable.” Thus, a modern market economy is inconceivable without proper identification, because there are no proven holders of property rights.
Identity management is probably the next frontier for banks. It is a business model that can make banks truly invisible, intuitive, immersive, and integrated – which is the only way that customers will trust banks with their identity.??
In fact, banks have already taken a step forward in this direction. According to Accenture, ‘banks are the biggest spenders on identity management solutions. With rapid growth in digitalization, modern technologies, and new user behaviors are revolutionizing the ways in which banks interact with their customers and employees and, in the process, changing identity management obligations forever. As a result, banks are starting to re-evaluate their role in the identity supply chain’. But as Accenture also points out, ‘irrespective of wider developments, security remains a vital concern. Digital banking is on the increase—and so are the vulnerabilities that it creates’.
The rise of blockchain will help accelerate this move towards becoming the pseudo-owners of identity. In fact, Estonia has already taken the plunge and created a national digital identity scheme. In Estonia, as Economist notes, ‘before a new-born even arrives home, the hospital will have issued a digital birth certificate, and his/her health insurance will have been started automatically. All residents of the small Baltic state aged 15 or over have electronic ID cards, which are used in health care, electronic banking, and shopping, to sign contracts and encrypt e-mail, as tram tickets, and much more besides—even to vote’.?
To become the pseudo-owners of the customers identity, the transformation curve is very steep, and banks have just started to begin the ascent. Identity will be critical in the future online world and banks will be preferred contenders in this race. This will also force the world to look differently at banks and will help create a society where life is more efficient.??
How do you envision the future role of banks in identity management? Join the conversation in the comments section and let us know your thoughts on the evolving business models shaping the future of banking.?
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