As governments across the world upgrade their digital infrastructure, how they approach digital identity will determine how their digital relationships with their citizenry will evolve.

A multitude of studies have shown that even basic internet connectivity can ‘unlock economic opportunities, create jobs, and generate growth’. We can add economic resiliency to this list of benefits, which was illustrated in a very real way during the COVID-19 pandemic as the more digitised industries experienced lower revenue losses, and areas with superior broadband showed better labour market resilience.

Higher levels of internet adoption can also help “expand the tax base and strengthen revenue collection”, an attractive proposition for any government, and especially those in developing or emerging economies.

It’s no surprise then, that national digital public infrastructure (DPI) is a high priority for most governments today, featuring prominently in national development and economic modernisation road maps.

Benefits of digital public infrastructure

More than just economic development, DPI also contributes to social welfare, improving the overall quality of life of citizens in a range of areas, for example via improved educational outcomes, enhanced healthcare, and a stronger social safety net. This is why for Sub-Saharan Africa and Emerging and Developing Asia, investing in universal digital infrastructure ‘is a key part of the United Nations Sustainable Development Goals via Target 9.1’.

From a government perspective, DPI upgrades can better equip their institutions to address strategic objectives related to public financial management, implement efficiency and cost savings measures, or deal with the next iteration of cyber security threats.

The allure of modernisation via DPI has led to an uptick in government digital transformation initiatives over the past decade, most under the GovTech banner. According to the World Bank Group in 2020, “within the last five years, client countries are more frequently requesting support on how to design more advanced digital transformation programs to increase government efficiency and quality of service delivery, improve government-citizen communication, improve governance and oversight and modernise core government operations.”

While many of the GovTech initiatives help governments function better internally, that’s only half the equation. An equally important aspect of GovTech is outward facing, aiming to improve public service delivery and enable governments to establish better connections with their citizenry online. In many countries, this is referred to as Citizen Services.

But for governments to be able to provide trustworthy and efficient Citizen Services online today, they must first implement a robust digital identity system.

Establishing a digital ID system

Indeed, most governments start their DPI projects with “identity”. This is because to actually deliver the citizen services online, governments must first authenticate and authorise individuals before providing access to the service. And government services, just like healthcare, financial services, and e-commerce, depend on knowing who is on the other side of a transaction. The most efficient and secure way to do this is with digital identity, and that which is linked to legal identity.

The United Nations SDG 16.9 recognises the value and utility of national identity, and urges countries around the world to provide legal identity for all by 2030, since it “effectively provides the foundation upon which governments deliver many enshrined civic, economic, political, and other rights, including education, healthcare, voting, marriage, and travel”.

So implementing a digital ID system is a logical place to start with regards to DPI upgrades.

The good news, according to a recent report by the African Centre of Statistics (ACS) of the United Nations Economic Commission for Africa (ECA), is that “countries with well-functioning digital ID systems can also boost their economic potential by between 3 and 13 percent by 2030.”

The US’s Congressionally Chartered Wilson Center concurs, highlighting digital identity as a lever “to increase national economic competitiveness — in addition to helping to mitigate cybersecurity risks”. Their article “(Digital) Identity Crisis “ reports that “every peer country in the world has either created robust digital identity infrastructure or has launched a national initiative to do so. Most are in response to a global explosion in identity-related cybercrime, making it an imperative for every country to secure its identity systems.”

The challenge then, is how to implement digital identity, and what digital identity model to adopt.

Challenges in the adoption of digital ID models

This is not a minor detail, because “investing in digital infrastructure, by itself, does not guarantee digital adoption.” And while research by the McKinsey Global Institute finds that basic digital ID alone could unlock 50 to 70 percent of the full economic potential, that is assuming adoption rates of about 70 percent.

Ensuring adoption is not easy, especially in economies where many citizens are “new to the internet” and may not have the skills or means to access online services. Or citizens may have trust issues — in the technology or the government’s ability to secure their data, and keep their interactions private. In the same report issued by the African Centre of Statistics (ACS) of the United Nations Economic Commission for Africa (ECA), we find that “the successful implementation of digital ID systems requires a comprehensive and collaborative approach, considering the specific needs and challenges of each African country.”

And an OpenID Foundation report on Human-Centric Digital Identity refers to a multidisciplinary body of literature which finds that “Identity Systems that are steeped in history and designed and built to meet the needs of real people — with their relationships and social contexts in mind — stand to be more sustainable and deliver greater benefits to society, i.e. better ‘serving’ their citizens.”

Putting users at the front and centre of digital identity solutions

Because so much of the potential of digital-identity powered DPI is contingent on a growing online population, .i.e. adoption, the whole formula falls apart if adoption fails.

The challenge of adoption is not confined to onboarding a new generation of ‘netizens’ — there are also challenges in onboarding digital-savvy citizens, and meeting their expectations in terms of convenience, user-friendly experience, and overall value of the services offered, expectations which have been primed by the modern social media and e-commerce apps that have had years of design, user experience testing, and big budgets to support their development.

Perhaps the worst outcome that could emerge is that the government’s online Citizen Services replicate the physical world versions which conjure up visions of a tedious process, long lines, and long waits.

So this is a rare opportunity for governments, via online Citizen Services, to build trust and confidence with their citizens, and deliver true value. In the process of modernising their services around a privacy-protecting, consumer-centric model and prioritising digital identity infrastructure, governments can keep pace with the demands of a digitally-driven society, prevent costly cybercrime, improve inclusion, and foster growth and innovation across their economy. And in the process, revolutionise their digital relationships with their citizenry.

BY ERIC DRURY, Digital Identity & Trust Advisor

Links

1. Briglauer et. al. 2021; Prado and Bauer 2021; Simione and Li 2021; Strover et. al. 2021

2. Falk and Hagsten 2021

3. Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband

4. OIDF: Human-Centric Digital Identity

5. Digital identification: A key to inclusive growth

6.(Digital) Identity Crisis: The US Needs a National Strategy for Digital Identity to Enhance Economic Competitiveness and Mitigate Cybersecurity Risks

7. Manlove and Whitacre 2019; Rosston and Wallsten 2020

8. Digital identification: A key to inclusive growth

Originally published at https://totmtechnologies.com on March 15, 2024.

by Eric Drury, Digital Identity & Trust Advisor

Digital identity begets digital trust, and so is poised to play an increasingly significant role in shaping digital trade.

Just a few decades ago the internet ushered in an age of global connectivity, making it possible for all corners of the globe to connect and conduct business online. Today, a quarter of global trade, and more than half of all services trade worldwide can be considered digital trade.

But while the global economy has greatly benefited from this ultra-connected world, it has also brought enormous, and increasing risks to businesses and their customers in the form of data breaches, ransomware, phishing, identity theft and a whole assortment of scams, swindles and schemes.

Indeed, if we were to talk about all of the costs and opportunities brought by digital trade, we’d have to include the trillion-dollar cybercrime industry, where 43% of attacks target small and medium businesses at a cost of approximately USD 7 billion per year in the U.S. alone (2021).

It is widely accepted that digital identity, or rather, the lack of it, is at the “very root of most cybercrime.”

A powerful way to help mitigate the escalating risks associated with doing business online and ensure the continued positive trajectory of digital trade is to adopt digital identity.

From a digital trade perspective, digital identity starts with the organization.

In a broad sense this means establishing a verified — and verifiable — identifier for an organization, with which it holds itself publicly accountable as a ‘good actor’ in the digital markets, and legally accountable via its binding digital signatures. With digital organizational identity in place, we set the stage for more trustworthy integration in the digital economy, allowing parties to transact with greater confidence.

Organizations like GLEIF are leading the way in laying the foundation for global, digital, verifiable organizational identity, adding a layer of governance, trust, and security to online digital trade transactions between legal entities. And the World Economic Forum imagines digital organizational identity as GTID — Global Trade Identity — whereby supply chain partners can ‘dynamically validate the trustworthiness of a legal entity with which it is about to engage in a business interaction’.

Of course, organizations are created and run by people, and representatives of those organizations can also have digital identities, with delegated authority to act on behalf of the organization. This is a valuable tool for online user verification, which helps maintain the integrity of online marketplaces and can stymie bad actors looking to create fake or multi-accounts, post fake listings, scam buyers, hawk counterfeit products or phish for personal information.

For an illustration of the potential damage of online marketplace fraud, see the recent Bloomberg investigation that revealed faked certification documents and bogus parts for jet engine repairs that made their way into Airbus and Boeing Co. planes. Fake business and employee profiles on LinkedIn were key to skirting one of the most highly regulated industries in the world.

This story of bogus airplane parts highlights the importance of digital identifiers for things.

When things — from airplane parts, to weather sensors, gemstones, images, cameras and devices of all kinds — have unique, verifiable identifiers, we are able to piece together a clearer picture of supply chains, thereby powering traceability, sustainability and compliance initiatives.

As goods, services and finance flow through the supply chain, so too does information. And when that information is packaged as a verifiable credential — a digital certificate cryptographically signed by a trusted issuer (person, organization, or thing) — we bind accountability to the information that is shared between transacting parties.

Verifiable credentials are a great example of the transitive trust that digital identity fosters, as they enable verifiable information to flow from supplier to financier, buyers to sellers, and sellers to auditors, regulators and end consumers.

Initiatives such as the EU Digital Product Passport, and the Product Circularity Datasheet are using unique and persistent digital identifiers for products in order to collect information about those products and their supply chain, with the objective of helping customers better assess the environmental impact of the products they use.

The United Nations Centre for Trade Facilitation and Electronic Business White Paper, ‘eDATA Verifiable Credentials for Cross Border Trade’, highlights how verifiable credentials can be used to increase identity confidence and document integrity, thereby enabling algorithmic due-diligence for improved profitability of low value transactions.

The expectation is that these emerging digital identity and digital trust technologies will power solutions to facilitate cross-border digital trade by providing a standardized and recognized way to verify identities and data across different countries and jurisdictions, while helping businesses comply more easily with the regulatory requirements (AML, KYB, KYC) essential for financial and e-commerce platforms engaging in digital trade.

ASEAN has recognised the magnitude of the opportunities afforded by seamless cross-border digital trade, launching negotiations on the Asean Digital Economy Framework Agreement (Defa) and hoping to double the regional digital economy from US$1 trillion to US$2 trillion by 2030.

And of course the European Union has made a commitment to increasing the efficiency and security of digital trade with eIDAS, the electronic identification and trust services regulation, which enables cross-border recognition of electronic identification methods, allowing holders of national eID to access digital services and sign contracts in any EU country.

And various initiatives, including Trade Trust, are looking to facilitate trade, finance, and logistics flows using verifiable digital identity and credentials standards.

Perhaps the most exciting aspect of these digital identity and digital trust technologies is that they are being built with open standards and protocols, prioritizing interoperability without compromising security or competitiveness.

As these technologies are easily accessible to all parties in the digital trade ecosystems — businesses, regulators, governments, individuals, and organizations of all types — the market has begun to swell with innovation, adoption and new business and public-private partnership models.

It is truly exciting to see increased implementation of digital identity and digital trust protocols that are enabling businesses to connect digitally and build more intelligently, sustainably, and efficiently, and in a verifiable, i.e. more trustworthy, manner.

As we increase adoption of strong digital identity solutions and governance frameworks, we pave the way for the next iteration of trusted digital trade to evolve, unlocking the value currently hidden in the creases of disparate business systems and networks around the world.

Join us as we embark on a mission to build a more inclusive world with Digital ID. Visit totmtechnologies.com