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7 Benefits Of Using Digital Identities
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7 Benefits Of Using Digital Identities

May 27, 2021

There was a time, not so long ago, when someone would have looked perplexed if you’d asked about their digital identity. Many still would today, perhaps but in the tumultuous world of 2021, digital identity is one of the hottest trends in technology, particularly across decentralized ledgers, or blockchains.

We have explained digital identities before, so we won’t delve too much into definitions this time around. Instead, this piece goes the more practical route of listing the actual benefits of implementing and using digital identity frameworks, both in the public and private domains.

Mobile-first solution

A primitive (but working) handheld mobile phone was unveiled by the now defunct American company Motorola back in 1973. (The Motorola DynaTAC 8000X would become the world’s very first commercially available handheld mobile phone just a year later.) It was a rather bulky and ungainly device that would take around 10 hours to fully charge. Nevertheless, the Motorola device heralded an inevitable shift towards mobile technology that continues today. (Current projections say that, by 2024, there will be around 17.7 billion mobile devices operating in the world.)

Society is going mobile, and as such, today’s society seeks more and more mobile-first solutions.

Digital identity enables this approach by using a digital wallet that enables users to take their credentials anywhere they go, and share them at any time, with whomever they want, and get authenticated by any entity, private or public, to easily access services.

Establishment of a framework of trust

Currently, identity networks and authentication methods are heavily fragmented. Every organization, every agency, every institution has its own set of rules and guidelines that determine how people receive their credentials, and how they authenticate in their network. Because of this individualized disparity, a set of credentials accepted by one organization might not necessarily be accepted by another. This issue is exacerbated when dealing with organizations from different countries. (Driving licenses and educational credentials perfectly illustrate this problem).

Establishing a trust framework between all participating organizations means that someone’s credentials can be instantly verified, regardless of geographical location or cross-border limitations.

Smart city access

Current urban enclaves, while modern and relatively safe, are far from smart. There still are many deficiencies and areas of improvement in terms of traffic and waste management, infrastructure, wireless access, etc. The Internet of Things (IoT) will enable several technological advancements that will improve these aspects, but it is a very different story for the individual.

As of today, 54% of the world’s population lives in cities, and the current projection is that this figure will reach 66% in about three decades. Because of this likely rise in urban dwellings, enhanced services and a positive and rewarding citizen experience are key factors for the success of smart cities. Citizens currently engage with urban’s infrastructures in different ways. Paying for parking or at the shop’s till with a smartphone, for example. Or using electronic tickets to speed up access to trains, buses, or other methods of transportation. But each of these services requires its own identification method, and an entire network and technical backend to manage access, permissions, and upkeep. 

A truly smart city begins with digital identity to drive engagement and efficiency. Individuals need to engage with government, public and private bodies, and other agencies digitally and expeditiously, so the experience is seamless and positive, which will lead to further engagement.

Digital economy

Digital identity truly is at the heart of a paradigm shift in digital engagement. Too much friction in the interaction with governments and service providers holds people back from engaging further, which in turn leads to economic stagnation. In the world of 2021, people expect fast and immediate digital service, whether it’s from their internet provider or the WiFi service at the airport.

The digital economy is the background for the digital identity scene. Digital identification drives inclusive growth, particularly when considering that around 1.7bn people worldwide are financially excluded because of lack of provable identity. If all those people were to own digital identities, a great economic value would be unlocked.

Financial and social inclusivity

Banks and other financial institutions would not risk lending to those people who could not effectively prove who they are. If credit or finance is denied, the individual might not be able to access proper education, or housing, or services. Progressively, someone would be left further and further behind. They would be excluded.

The provision of identity is the gateway for both financial and social inclusivity. Digital identity enables frictionless interactions with public and private institutions, including banks, of course. By enabling someone to have equal chances to access financial devices, people become included in society, or education.

Enhanced portability

Traditional means of identification (driver licenses, passports, ID cards, etc.) are portable in the sense that people can carry them around. But some of these forms of ID might not be officially recognized in different countries, or even in different states within the same country. Academic credentials have the same issue. And in both cases, the individual depends on third parties to amend, share, or verify some of these documents.

The concept of portability in the context of digital identity applies differently. A digital ID is portable because it can be migrated and used elsewhere without friction, and in a way that is completely up to the individual to make the choices and decisions regarding his personal data.

Better understanding of the individual

People are complex entities with changing needs, attitudes, desires, and interests. In today’s always-connected world, commercial enterprises spend a lot of money researching the market to better streamline their product lines and target the right customer segments and demographics.

A digital identity that maps more accurately to an individual’s real-life identity will enable companies to achieve more personalized promotion and more seamless omnichannel marketing.

Conclusion

When you think about it, identity is in everything we do. From greeting friends or family, to getting a loan from the bank, or purchasing insurance. We take all this for granted. Yet for many millions of people, things aren’t as easy or straightforward when it comes to accessing finance or services. The lack of identity hampers thriving.

A digital identity solution like Europechain’s My.D empowers the individual and restores all that fairness and equality of opportunities that are beyond reach for so many people out there.


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