Digital identity by bank: a new revenue stream?

Fighting fraud is about more than money and that digital identity is an ongoing missed opportunity for banks, write David Birch in Forbes.

(Merchants reported last year that Ecommerce fraud rates across all countries average at around 3 per cent.) In an interview between Mastercard CEO Michael Mieback and Nicolai Tangen of Norway’s Sovereign Wealth Fund, Miebach observed that “once you’ve been defrauded, you lose trust in digital solutions”.

Mastercard is piloting a type of digital identity service in Europe. Birch suggests that provision of digital identity could provide new revenue streams for banks. “In fact, it could be that digital identity is not simply an additional revenue stream in the future but that identity is bigger than payments to banks.

So much of what we do in the fraud world is continual band aids, probabilistic assessment and inference that will simply have no role in an economy with a functioning digital identity infrastructure,” writes Birch in Forbes, “and I have long argued that this would be vital national infrastructure that is desperately needed to supports our transition to a new economy, not one that stutters along digitizing the relics of the post-industrial revolution bureaucratic response to urban anonymity.”

The irony is that banks are often saddled with piecemeal solutions including KYC that are sometimes evaded by competitors.