How digital identity and e-ID will improve the global economy

Last updated: 02 September 2016


Businessman using mobile smart phone with magnifying glass

The digital revolution is impacting all sectors of society. The most visible change is the growing multi-channel access to online services, whether via the internet or mobile applications. As our lives shift towards the digital space, most countries are finding it important to maintain continuity in the way society is organized, improve economic circuits and mechanisms and develop services for citizens.

For all citizens, managing health, organizing children’s education, taking out a loan (or investing savings), signing a rental contract or exercising civil rights are important acts which can be managed in the digital space, as long as this can be done with confidence and peace of mind with regard to their validity. Over 1.5 billion people in the world lack any form of officially recognized identification, either paper or electronic-based. This identity gap is a serious obstacle for participation in political, economic, and social life—without a secure way to assert and verify their  identity, a person may be unable to open bank account, vote in an election, access education or healthcare, receive a pension payment, or file official petitions in court. This is a critical stumbling block to economic growth and sustainable development, as the ability to prove one’s identity is the basis for participation in modern life. In order to address this gap, the 2030 Agenda for Sustainable Development has declared provision of official identity as a proposed target and a key enabler necessary to achieve many other Sustainable Development Goals.

For companies, whether large or small, their role as economic stakeholders, together with their corresponding legal liability for the scope of their business, means they need to make sure their new digitally-acquired agility remains securely rooted, so they can improve customer service while safeguarding contractual commitments. Identity theft is costing the economy $5 billion and in the UK alone it has risen by almost a third. The use of a national identity card or digital identity gives people a secure means of protecting their identity. In the business world, e-ID cards play a key role in enabling companies to fulfil Know your Customer (KYC) requirements and carry out Know Your Employee (KYE) checks. Employees and employers can also use their e-ID card to legally validate a document using their electronic signature – or even a signature provided by a private company.

And, for public administrations, the challenge of greater flexibility in public services thanks to the “all-digital” transition and the need to better understand user needs are combined together. Here too, the task is for government services to be reliable, all the more so as governments must act as guarantors in their sovereign task of preserving public interests and the safety of people and property. They deploy national digital identity trust systems not only to rationalize services and processes in areas such as social services, taxes, local voting and administration, but also to promote private services by stimulating the digital economy, all while reducing costs. This view has the advantage of promoting the conditions for digital development centered on people and their changing usage habits. It is based on two pillars: trust services and, above all, digital identity.

More globally, the World Development Report issued by the World Bank in May 2016 provides extensive information on the digital dividends and answers two main questions: Why should authorities focus on promoting digital identities, and how to achieve the digital dividends.

In conclusion, there are numerous economic benefits of national Digital Identities, Mobile ID or e-ID cards both for the private and public sector, as well as benefits for citizens. Improving travel encourages business and tourism; companies that have tighter security are less likely to suffer losses; governments that encourage e-ID and e-government processes will better interact with citizens; and finally (and arguably most importantly), citizens will have a more secure identification document and suffer less identity theft.

For more, read our web dossier on Reaping more digital dividends: eGov services and eID schemes.

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