Opportunities and challenges for telecom operators, banks, industrial companies and government institutions
Digital disruption and technological advances are affecting the way people interact with companies and organizations. Many services, from accessing government benefits to signing into banking, are now being conducted digitally.
Given these developments, the growth of the digital identity market is inevitable. Digital identity (or digital ID) will continue to be adapted to serve as the identifier for accessing government services and benefits, as well as many other online services related to banking, the workplace, education and health. It is needed for creating accounts, making transactions and subscribing to services. It thus performs a vital function, enabling people to do their everyday work and save time, while at the same time maintaining their security.
Currently, there are three digital ID systems being actively used in the market:
All three systems still exist today, and are widely used. However, these systems are still evolving due to changing socio-cultural norms and regulatory frameworks. Each system has both benefits and limitations. While centralized models introduce greater security and trust, decentralized models allow more user control and lead to an enhanced customer experience. In terms of limitations, the centralized model is exposed to the risk of system failure, while the decentralized model involves complex governance and carries a higher risk of identity theft.
Telecom operators, banks, industrials and public institutions have all contributed to the development of digital ID solutions in various countries. There are various key success factors that are common to successful markets:
As they face many challenges and risks, very few markets and players have managed to achieve secure and transparent identification and authentication processes at scale. Today, the key issues for digital ID providers are:
Digital ID providers must take a step back and adopt a systematic approach. To succeed and expand in their field, they need to carefully assess the current market, learning from past successes and failures.
Digital ID providers should constantly adapt their strategic positioning within the value chain. By prioritizing customer segments with the highest potential and partnering with relevant solution providers, players can secure the right to win in this burgeoning market.