Governments should center utility, trust and inclusion in digital ID to support fintech: panel

by James · September 15, 2022

Digital ID can significantly expand the potential of digital identity infrastructure for fintechs in relation to government applications, was the message behind a recent webinar hosted by Global Government Fintech.

‘Public fintech adoption: what role for digital ID?’ was organized together with sister company Global Government Forum. The international panel saw the participation of Pirthipal Singh from Canada’s Treasury Board, Kendrick Lee from Singapore’s GovTech and Keyzom Ngodup Massally from the United Nations Development Program (UNDP).

The digital ID experts discussed a number of topics related to the technology, including how digital ID can facilitate public social payments and tackle money laundering attempts and how it can benefit from international cooperation.

“The model we’re looking at increasingly is the concept of digital credentials, which reflects how things work today,” says Singh, executive director of digital ID at the Treasury Board of Canada Secretariat.

At the same time, management acknowledged that some individuals and businesses in Canada may not want to use digital ID, and therefore the government must retain its paper-based systems.

Singh also highlighted the secretariat’s cooperation with several countries, including the UK and Singapore, as well as the European Commission.

Lee, director of the national digital ID program at Singapore’s GovTech, described the structural differences between Canada and Singapore’s governance models.

“In Singapore, we only have one level of governance,” Lee explained. “We are also lucky that we have a basic legal identity, which we have in a sense digitized to create a digital identity.”

Lee is referring to Singpass, originally created as a government account with identification in 2003 and now transformed into a digital ID with a whopping 97 percent usage by eligible users.

The GovTech chief also analyzed how Singpass supports the fintech industry in Singapore by helping individuals open bank accounts with auto-fill features and, more generally, with SGFinDex integration.

“Ultimately, we are working to provide a platform in our digital infrastructure that enables the flow of data across systems, organizations and potentially across borders,” explains Lee.

The digital ID experts added that there are three considerations for each country when planning the development of a broader digital ID infrastructure compatible with fintechs.

The first would be utility, meaning the benefits of digital ID from a practical perspective, such as ease of user onboarding in banking services. The second is trust, which, according to Lee, can be placed by individuals in government or in the private sector.

“For each country it would be different; for some it may be more viable, plays the most important role, and [in those cases] The government can focus on defining a framework, for example.”

The third consideration, according to Lee, is inclusion. The digital ID expert said that inclusion is essential to ensure that everyone can access the digital ID infrastructure or have alternatives to it if they choose not to use these tools.

Keyzom Ngodup Massally, Head of Digital Programs in UNDP’s Digital Chief Office, highlighted the importance of digital ID and fintech innovation for the UN.

“It is important because it is estimated that there are millions of people who do not have proof of legal identity,” she says, “and thus cannot prove who they are to receive social cash transfer benefits or to improve their livelihoods or use services that are available . or could be made more accessible to them.”

According to Massally, UNDP is working to tackle these issues by helping countries develop digital public infrastructure for identities that rely on open source technology, which she said can greatly accelerate collaborative development efforts.

At the same time, Massally believes that digital sovereignty is also important, as it allows countries to have ownership of their source code and thus reduces the risk of supplier lock-in.

In an attempt to answer the main question behind the webinar, the UNDP expert said that digital public infrastructure has a special role to play in fintech innovation.

“[This] is because the public rails of the infrastructure really enable the private sector, social enterprises and other stakeholders to innovate on top of the common rails supporting greater interoperability, greater protection of people and their rights to data,” she explains.

Lee, on the other hand, said the role of digital ID in public fintech adoption should focus on AML and countering the financing of terrorism (CFT).

“I think digital ID primarily solves KYC [know-your-customer] problem – make it more efficient, make it faster. And then, if it’s a reusable digital ID, then ongoing authentication of the user,” he said.

Lee also highlighted the importance of digital credentials to speed up interactions, especially for smaller companies.

“It’s about prioritizing sectors or use cases so that we build trust and there is widespread use,” he explains. “With Singpass, we started with the government; we moved to FIs [financial institutions]people argued that this is a better way of doing things and they are willing to try it in other sectors of the economy.”

The panelists discussed different models for public fintech adoption and how they can be secured and scaled, and each explored the one adopted by their organizations. For details on each, a recording of the entire event is available here.

“There are many solutions,” Singh concludes, “but I think there is a purpose here, and maybe there are other technologies that will come and play that role.”