History of Identity Verification
📜Identification Tools Through The Years
Identification tools exist in modern society in many forms. Identification cards, driving licenses, passports, insurance cards, and the like all exist to serve the same fundamental goal – to verify the identity of a user. In most countries, these identification methods are part and parcel of daily life, with photo IDs dating back to the mid-19th century and passports stretching back as far back as the 16th century. Unfortunately, while many aspects of daily life have undergone rapid improvement in the digital age, identification has more or less remained the same—with a dependence on physical ID documents to verify identity.
🌱Identity and Developing Countries
Developing countries face even more severe issues when it comes to identification. Large populations in the developing world lack basic identification, with an estimated 850 million people globally lacking the legal identification necessary to access basic infrastructure. This ‘lost’ demographic poses a considerable cost to governments as they could potentially provide tremendous value once they are integrated into the larger economy and society.
📊Identity and The Economy
Shifting away from the governmental perspective, businesses and consumers also stand to benefit massively from the positive changes in a digital identity revolution. Tedious application processes for everything from financial loans to higher education requiring hours of manual checks on both the applicant’s and institution’s end are extremely costly. The verifying institution must finance the labour needed to conduct these verification procedures, while applicants are forced to waste precious time awaiting the outcome of these mandatory compliance procedures.
Within certain industries, the verification process is extremely lengthy due to the potential cost of abuse. Anti-money laundering (AML) risks represent huge resources financial institutions as they are forced to finance compliance processes that typically take days or weeks. Even outside the financial industry, compliance activities represent an extremely wasteful use of resources that could otherwise be diverted elsewhere.
💡The Real Problem
The core of these problems is that identity needs to be more easily forged and issued. To overcome these issues, credentials need to be more traceable, which can only happen if they are digitised. Although it is a drastic step, digitising traditional identity is the only solution to facilitate the reinvention of wasteful traditional pen-and-paper e-KYC verification.
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