The Business Disruption when Physical and Digital Identities Converge

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“It is presently undeniable that the Digital domain has fully immersed itself into the Physical realm.” So states thephygital.com. Our world is daily being transformed by a convergence of physical and digital products, services, and environments. Existing businesses are being disrupted and new markets are being created by this convergence. It has been estimated by industry experts estimate that within a couple of short years (2020) more than 50 billion physical objects will be connected to the internet, consuming, generating, and communicating data and this represents just a portion of the convergence underway. Identity, security and trust are just some of the many issues impacted by this mashup.

Nearly 20 years ago, only one country (Malaysia) had developed the technology to issue a biometric passport to its citizens. These were the very early days of digital identification, but the push toward digital is rapidly gaining momentum. Today, 120 countries rely on the use of ePassports at their borders, and we’re going to see increased reliance on innovative, new digital technologies in the years ahead.

At the border, the U.S. Department of Homeland Security is currently testing out a pilot program to use facial scans to track people who are overstaying their visas, according to a recent article in The New York Times.

As part of this program, a customs officer will scan a passenger’s travel documents at a kiosk, also equipped with a camera. The photograph taken is immediately matched against a facial scan already submitted to Customs and Border Protection when the passenger arrived. Simultaneously, the passenger’s identification is also checked against law enforcement and intelligence databases.

The pilot effort is part of a decades-long push to more accurately identify people who overstay their visas. More importantly, the program is indicative of a much larger trend, characterized by the steady convergence of physical and digital identification. This trend has significant, ongoing implications on ID verification and authentication as it continues to evolve.

Establishing trust in transacting and providing for security are fundamental to the human experience. We have long provided for physical security such as walls around our castle and secure entry into a facility. With the advent of computers, we have also provided for logical or digital security such as tokens or passwords. Today with geofencing, predictive analytics and beacon technology we can better secure the perimeter. With the adoption of Intelligent lockers, a locker, which securely stores letters, parcels, or packages until their intended recipient can come and get them, we can see the retail economy transform. At the heart of all of these lies security, trust and identity; they have never been more important in commerce than they are today.

We highlight just two trends to demonstrate the need for better identity security. According to a new Cifas’ (UK’s leading fraud prevention service) report, identity fraud reached record levels in 2016, with 88% of fraud committed online and the major target being young people under the age of thirty (30).

Couple this with the fact that by 2030, the United Nations and World Bank both have called for digital IDs for every person in the world. In Europe, many private and public-sector organizations like HSBC, Barclays, and the UK Government Digital Service are developing uniform Electronic Identity and Signature standards for the European Single Market. Interestingly, the personal ID market as a whole is expected to reach $9.7 billion by 2021. As the world becomes more interconnected and interdependent, the argument for increased security including digital features to reduce fraud and protect identities is warranted.

However, although digital ID technology is advancing quickly, physical IDs and documents will continue to be a part of our daily lives, and they will continue to evolve in their own way. Case in point, U.S. states were recently compelled to comply with the Real ID Act, legislation designed to reduce identity fraud by establishing minimum standards in government issued IDs. Through these new regulations, IDs issued by state governments must include a common barcode aimed at strengthening security. The IDs also must have a star in the upper right corner to indicate that the ID has been approved and verified. By establishing minimum standards in state issued IDs, the Real ID Act works to ensure that identity fraud will be reduced on a national level.

These efforts aim to make physical documents more secure, and more difficult to replicate. However, counterfeiting is inevitable, even in the most complex of physical documents. This further underscores the need for machine-based ID authentication solution as a key component to fraud detection.

The fact is that modern identity requires a layered approach or a continuum that supports multiple use cases and requirements. Physical and digital identities are no longer distinct but rather conjoined. Identity management systems must enable both physical and digital identities and allow for BYOI (bring your own identity). Also known as the consumerization of identity or the blending of personal and business use of technology devices and applications.

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