EXCLUSIVE: Identity Theft In A Decentralized World —'We've Aligned Our Model In A Federated Context'

The winning digital businesses will be not the ones that amass the most data and run AI and machine learning to guess at what consumers want, but the ones which earn trusted access to the actual data consumers hold.

Panelists speaking at Benzinga’s Fintech Deal Day & Awards on Monday agreed that trust was the main problem in creating digital identity models and that concerns over identity theft and scams were the greatest hurdles to overcome.

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Overcoming Mountain Of Paperwork

Proving identity still requires, in the main, the use of many physical documents: passports, driving licenses, utility bills and more. Wouldn’t it be simpler to have your whole identity profile in one place – one single digital wallet that can tell Amazon who you are, and inform FedEx where to deliver your goods?

Not if that digital architecture is insecure and can be hacked for your details: address, age, bank account details, etc. And while digital identity models are becoming far more sophisticated in using technologies such as blockchain to ensure absolute privacy, consumers remain wary of keeping all their details in one place.

“We need to structure these changes in the right way, so we can hit these usability needs but also protect privacy, protect the rights of data subjects,” said Cameron D’Ambrosi, senior principal at Liminal.

Choosing The Right Model

Blake Hall, co-founder and CEO at ID.me, suggests a decentralized model built around blockchain offers little of the trust needed to convince consumers to adopt a fully digital identity.

“When dealing with potential client loss the real problem is identity theft and scams and so if you have a decentralized model, there’s no central authority to give recourse to victims,” Hall said. “We’ve aligned our model in a federated context and for transactions that deal with financial loss we have an architecture that provides recourse.”

As these models start to build trust among consumers, is there a possibility that providing a digital identity will become a mandatory requirement?

Not according to D’Ambrosi: “The right for individuals to opt out of digital identity schemes is going to be a fundamental concept in most Western democracies because we all have memories around points in time where identity has been abused for violating people’s civil rights.”

“So an opt-in paradigm is going to be a key part of these systems and our goal as an industry is to design these systems in such a way that people feel as comfortable as possible to opt in,” he added.

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Photo: Piboon Thongtanyong