Investor, Founder and CEO of idwall. Improving trust through technology in LATAM.
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Everything we do in the online environment leaves traces. Names, addresses, preferences, consumption habits—it's a plethora of data that, together, says a great deal about who we are.
With the rapid growth of digital ecosystems, individuals are increasingly sharing large amounts of personal data through low-security digital interactions, sacrificing their privacy and security. Also, in the online world, the creation of an ID has become more flexible. One person can create different emails in their name, for example, without a great amount of bureaucracy—but which of those IDs can be trustworthy?
In this sense, when we develop digital identity solutions, we also have the opportunity to offer integrated mechanisms to guarantee privacy and security at the same time that can give users access to their personal data while also giving them the decision rights over who has access to this data along with transparency about who accessed it. Digital ID is a way of proving who we are and generating opportunities to carry out interactions in a simple and safe way in the digital world. Efficiency, cost reduction, fraud prevention and less bureaucracy are some of the benefits of using a secure digital identity.
In addition to the day-to-day facilities for users, a digital ID can also help create trust between the customer and the company while, at the same time, allowing companies to adapt the way they execute their processes. Knowing the customer is not only a security measure for organizations that helps to combat fraud, but it's also a way of orienting themselves to offer the best user experience and the best possible digital journey.
Furthermore, the digital ID is a part of a global trend related to the creation of a truly digital society. A digital society can make way for improvement and the creation of new products and services, making their clients' lives more efficient daily.
• Governments and digital IDs. The number of users joining digital ID is growing. According to a Juniper Research report, this number will increase by more than 50% over the next few years, from 4.2 billion in 2022 to 6.5 billion in 2026. In that way, accessing government services will likely be essential in this construction.
Faced with the digitization of society as a whole, digital identity is being increasingly recognized and included by several countries. Just this year, the European Commission announced a proposal for a digital identity for all European citizens, allowing all official documents to be stored and managed through a digital wallet.
An example of where this already happens in practice is Estonia, a small European country of about 1.3 million inhabitants that has been using this system for many years. In the country, 99% of services can be accessed electronically: voting, opening a company and even issuing a birth certificate. Behind this is a digital ID ecosystem that connects people to these facilities. However, this technology not only makes the life of citizens easier; the country has managed to save 2% of its GDP by going digital.
India implemented a national digital ID called the Aadhaar project. In addition to ensuring the reduction of costs and bureaucracy in the country, the digital ID also increased security by replacing physical documents—reducing fraud, inefficiencies and corruption. It became easier for citizens to hire private services, which attracted investment, increased competition, and led to better products and services at lower prices.
In 2020, the Australian government announced that the development of its digital ID system would be the focus of its tech budget package of $800 million.
With changes relating to open banking and data protection laws, companies and governments may no longer have domain over digital IDs within a few years. The power, instead, will belong to the individuals themselves. These people will define, manage, share and retrieve specific parts of their identities with the organizations, leading to the consideration of their needs.
• The future of digital IDs with the metaverse. Facebook's recent name change to Meta—with its bet on the "metaverse"—has sparked companies' interest in preparing for it and people's interest in knowing how this new virtual universe will be. In other words, like all new technologies, this news demands a higher preoccupation with the digital safety of the users. After all, what are its biggest dangers, and how do we protect ourselves within the metaverse's environment?
With the increasing investments in the metaverse, its universe has been expanding regularly. Despite the comfort of immersive experiences, digital avatars and the people behind them can be threatened by scammers and hackers with consequences and damage in both the virtual world and the real world. That's why the construction of a digital identity for this universe will be essential to guarantee the veracity of the avatars' identities.
At the same time, with real life represented in digital identities, data leakage acquires a bigger dimension, with the risk of avatar theft and frauds in sizes never seen before. Because of that, it is important to understand how each resource can help users protect themselves when they're using their digital identities and, at the same time, make building relationships of trust within and through the platforms easier.
In this way, while the powerful possibilities of the virtual world keep unfolding, it becomes clear that a tangible bond with the real world will be essential for safety reasons. For the multiverse to fulfill its great potential without threatening the security and control of its users, it needs to be built with digital IDs in mind.
As we said, the future of digital ID is getting closer, and it's moving toward a global adoption with enormous benefits for society, contributing decisively to reducing fraud and simplifying people's lives.
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