Photo: EyeEm / Robert Kneschke

The Role of the Public Sector in Exploiting Digital Identification Systems for a Sustainable Economy

  • Viewpoint
  • By Cynthia Eze (Seamfix)
  • 14 May 2021

In this community article, Seamfix - a global provider of identity management systems - explore the role digital identity can play in achieving reliable and stable economic systems

A standard identification system is an essential part of any developed society. Without it, how else can citizens’ rights and duties be guaranteed - likewise a reliable and stable economic system?

There is a growing awareness of the importance of good identity for sustainable development by governments around the world, and increased awareness that having a recognized identity is crucial for achieving outcomes like:

  • Actualizing political and social rights to participate in economic or political activities
  • Strengthening the state’s scope to provide services, and reducing corruption by making activities more efficient and transparent
  • Reducing costs and creating greater economic opportunities

Government, businesses, and even individuals share an interest in having authentic and trustworthy systems that enable end-user identity verification.

Public sector agencies need comprehensive and secure identity systems to administer government programs and delivery of services, including elections, tax collection, citizen security schemes, and more.

Similarly, private organizations often rely on government-issued identification (e.g. international passports, national IDs, Tax Identification Numbers, National Identification Numbers etc.) to verify the identity of their users and thus build their own identity systems to support client services.

Meanwhile, for individual end-users, it is all about security of personal data, along with timely and efficient access to services and benefits.

Amidst growing demand for secure online and mobile transactions, digital identity verification systems must be recognized as essential tools for countries to eliminate the inefficiencies and insecurities of paper-based identity systems

This digital identification era can be taken advantage of in many transformative ways, both in government and beyond. It is evident that in combination with other technologies, identity verification can help the government achieve its goals in a number of areas – from national security to revolutionizing public services and information security.

Considering that discussions have inclined towards questions of privacy and surveillance, now it is time to take a more holistic view. Using verification technology fairly and responsibly is common sense, as is the need to govern the handling of data more generally. Let us not lose sight of the power and strength of technology to effect positive change.

Identity verification is a key facilitator for improving public services such as those related to healthcare, welfare payments, certifications, and licenses. It boosts convenience for users, cuts possible costs, and reduces waiting times by allowing remote online authentication.

Considering this from a government perspective, the technology enhances administrative efficiency - reducing paperwork, speeding up processing, and reducing the danger of identity fraud. Beyond public services, identity verification can support citizen participation, for example through electronic voting.

Identity verification can also support relations between governments and the private sector in areas like corporate registrations, permits, economic support, taxes, and authorizations. By implementing online interactions, the technology can lead to significant cost savings. Furthermore, it supports regulatory compliance, providing fraud-secure paths for activities such as age and background checks.

These verification systems collect and validate attributes to establish a person’s identity and provide proof of that identity in the form of a credential - mostly a physical ID card, passport, NIN, driver’s license etc.

Identity-holders can make use of this to prove their identity, for example to employers, financial institutions, or government agencies. The unique numbers or information are thus the digital counterpart to physical identification. Identity verification provides the credentials necessary to show that a person is who he or she claims to be online - and so this model has the ability to clarify and simplify interactions between governments, businesses, and individuals, which could result in significant benefits.

Given the technology’s sensitivity, governments should be at the forefront on digital identity. Instead of outsourcing identity systems entirely - for instance to large tech companies - governments should consider retaining control over the structure of digital identity and involve the private sector within this framework.

Below are some benefits of taking advantage of identity verification in building a stable economy system:

Seamless Onboarding

Identity verification helps with growing business. When you use a dynamic identity verification solution to validate your users, you naturally improve the efficiency and speed of a digital onboarding.

KYC and AML Compliance

Identity verification is an essential part of AML and KYC compliance. All online businesses involved in financial transactions need to comply with KYC (Know Your Customer) and AML (Anti-money Laundering) directives. Identity verification ensures you comply with these regulations.

Fraud Detection

With an appropriate identity verification system in place, you can secure financial information and reduce the risk of frauds to a large extent. Using an advanced identity verification solution, you are sure that all the people joining your services are genuine and not involved in any fraudulent activities.

Confidence Building

Identity verification helps you verify the identities of your customers and give people the confidence to know who they are dealing with. With a proper identity verification, both service recipient and service provider can trust each other easily.

A functional identity verification system is a big step toward a digital society, and an important tool to generating trust between individuals and organizations online. Secure identity verification is now a crucial part of online security - identity verification is more than an approach to avoid online fraud, it is a regulatory requirement to ensure customers' data protection and privacy.

Our community articles represent the opinions of the author, and not Good ID. If you have a perspective you would like to share, please contact us here.