Digital Identity: Driving Growth and Innovation in Retail and Payments

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18 May 2021

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The month of April saw Digital Identity Net taking over day 3 of the RBI 2021 EU Payments Virtual Conference. Moderated by Dr Ruth Wandhöfer, and with a stellar panel of guests from Starling BankNatwest and UK Financethe discussion was lively and highlighted key areas in which digital identity will drive innovation and growth. 

A report by McKinsey showed that globally, digital identity could unlock economic value equivalent of 3-13% of GDP in 2030. In the UK, this figure stands at 3%. JohnPaul McKenna, Innovation Lead at Natwest shared that digital identity could help improve the level of trust and confidence from consumers to engage with third parties through digital means, whilst merchants and commercial organisations will benefit through improvements to their processes. Reduction in overheads, alongside enhanced checkout processes and the ability to onboard and understand their customers better, are amongst the many potential benefits.  

 Jason Maude, Chief Technology Advocate at Starling Bank highlighted the growth that digital identity will drive through cost and time savings in identifying individuals. The cost to organisations of identifying people, and doing so well enough to allow them to complete activities such as setting up direct debits or making payments, is extortionate. This cost provides a significant barrier to entry to many organisations, so having a digital identity infrastructure that allows people to quickly and securely identify themselves to any organisation online will drive innovation, and ultimately growth, as businesses have freed up time and resources to use elsewhere.  

 Becky Clements, Payments Director at UK Finance shared some insight as to the potential for digital identity to drive innovation in the payments space. She shared that digital identity could be a great solution to fraud in the payments industry, citing as an example APP scams. Last year, £479mn was lost to APP fraud in the UK. When making a payment to a new beneficiary for the first time, she explained, there are multiple identifiers that are used for confirmation of payee such as age, how long the individual has had the account, what the activity in that account usually looks like. If receiving banks of payments could use digital identity to identify and verify the account to the sender before payments are made this could prevent a huge proportion of APP fraud. UK Finance has initiated its own digital identity task force, having identified the potential of digital identity in the payments space.  

An interesting conversation between the panel came from an insight given by Nick Warden, CFO of Digital Identity Net. Talking about OneID, Digital Identity Net’s unique open banking digital identity solution, he explained the demand for solutions such as OneID is coming more so from organisations than individual consumers. Whilst consumers are absolutely key to the success of digital identity initiatives, Jason Maude agreed that organisations will be the drivers of innovation. However, digital identity is set to become a necessity, somewhat of an expectation from consumers to businesses. Using digital identity solutions rather than outdated methods of identification such as physical bank statements will become so normal, so part of the transactional infrastructure that consumers will start to notice when it’s not there. JohnPaul McKenna added that contactless cards are a great analogous example of this, saying that adoption from consumers was low at first until contactless technology was applied to underground transport in London and consumers couldn’t remember a time without it.  

 The conversation outlined truly the innovation imperative UK organisations are currently facing. The digital transformation is happening faster than ever predicted, with Covid-19 accelerating the changing patterns in consumer behaviours. Mobile phones will make up over 70% of online sales by the end of 2021. Schools and workplaces have migrated to online platforms, with many of them planning to now stay that way. More than 200 bank branches closed their doors for the final time in 2020. Technology must keep up, and digital identity has huge potential in driving growth and innovation going forward.  

For more information on OneID and digital identity’s role in driving growth and innovation, get in touch!

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