How Digital Identity Is Revolutionizing Inclusion

Across the world, governments and companies are looking for vehicles for financial inclusion. From banking the unbanked to assisting the vulnerable in accessing digital banking, there is an urgent priority to use the technology and tools at our disposal to provide equitable access to finance and essential services in an increasingly digitised global landscape.

There can’t be financial inclusion without digital identity inclusion. Yet, the World Bank estimates, approximately 850 million people across the world do not have an official ID, let alone a digital one. Despite some progress, women living in low-income countries are still 8 percentage points less likely to have an ID than men.

The same report estimates that 3.3 billion people globally (nearly a third of the entire global population) don’t have access to an official identity for online transactions. The majority of those without formal identity live in the Global South – across countries in Africa, Latin America, and developing parts of Asia and the Middle East.

Digital identity provides these countries with the rare opportunity to leapfrog traditional forms of identification and authentication, driving inclusion at scale, and at a rapid rate. This level of inclusion is possible, as seen in several success stories in Africa, Latin America and East Asia.

However, if digital identity is to be used as a successful and sustainable tool for inclusion, it needs to be underpinned by sound ethics, trust and the support from government and industry.

A new era for digital identity in the global South 

While citizens in the Global South have historically been impacted by a lack of formal identity, many countries are making great strides in changing this narrative. In a recent conversation with strategic innovator, market visionary and founding Principal of Acuity Market Intelligence, Maxine Most, she spoke to the strengths she has witnessed in how these countries are applying digital identity.

“The advent of the mobile phone was ground-breaking in that it provided accessible infrastructure at a low cost to markets that lacked traditional solutions. Biometric identity has added a deeper layer of security to this mobile infrastructure. Simply put, the ability for a person to confirm who they are using their mobile phone encourages them to claim and own their identity,” Maxine said.

Identity is a right, an instrument of protection and a gateway to access services. The World Bank report states that globally, around 1 in 3 adults without an ID reported difficulties in having access to financial services, receiving financial support from the government, applying for a job, or voting in elections.  Nearly 40 percent of adults without an ID reported difficulties obtaining a SIM card or mobile phone service, while around 25 percent had problems receiving medical care. Digital identity reduces the cost and the need to travel. People simply need connectivity on their mobile phone.

Maxine echoed this, saying, “Whether you are in Africa, Latin America or East Asia, everyone has a mobile phone. In fact, in many mobile-first economies, more people have access to phones than they do to a laptop.”

Mobile first identification solutions, therefore, catalyse greater inclusion when accessing government and financial services.

Digital identity success stories

For example, in Morocco, 18.5 million social protection beneficiaries have registered in the new National Population Register, which will improve access and convenience to social assistance programmes.

Similarly, Nigeria has put identity verification measures in place to reduce government grant fraud, reducing corruption and ensuring that grants are received by those who need them most.

The West Africa Unique Identification for Regional Integration and Inclusion (WURI) programme has supported the registration of 1.3 million people in Benin, most of whom are women.

In some countries, citizens are recognising the contribution of digital identity in facilitating greater access to government services. In East Asia for example, the Philippines Identification System (PhilSys) has achieved one of the world’s fastest rollouts of a new identity system, with more that 80 million registrations, comprising 90 per cent of the target population.

This goes beyond governmental services. It promotes financial inclusion too. The success of M-Pesa in Kenya has proven that it is possible for 50 million people to receive and pay funds without a formal bank account.

In Morocco, offering choice to beneficiaries of the Tayssir cash transfer programme translated into over half of recipients opting into digital payments shortly after implementation.

Identifying the right biometric modality for the Global South

Out of all the biometrics available, face biometrics is the most pervasive across the African continent, because of its simplicity and the fact that consumers are familiar with it. Most people are comfortable with taking a selfie, and they can now use that verified selfie to access essential services. These selfies can be authenticated using 4D Liveness technology to confirm them against an authoritative or government database.

The process of remote face identification doesn’t exclude rural areas, because the process itself is simple, secure, trusted, and contains far less friction.

In fact, in many rural areas in South Africa, we have found that individuals don’t necessarily carry smartphones as a personal phone, because the battery life isn’t as long as that of older models. For this reason, a family will often share a smartphone.

Remote face biometrics can help different members of a family digitally authenticate themselves with no friction, in a secure and convenient manner. This helps prove that the right person is authenticating at the right time.

The challenge of digital identity

In speaking with Maxine, she emphasised that for digital identity to be successful in the Global South, governments, regulators and businesses need to be aware of its potential challenges.

“Digital identity deployments go awry based on two factors: the inability to create a safe, reliable, secure and private digital identity infrastructure and operational dynamics such as corruption or insufficient regulatory support. On a country-by-country basis we have witnessed differing levels of progress.”

While the biometric identity is not a panacea, it is a way to open up possibilities in developing nations, especially those with limited physical infrastructure.

Making the quantum leap 

This leapfrogging is not easy on any level. If countries want to truly embrace digital identity, they need to focus on sound policy around digital identity and data, as well as on citizen education.

Maxine explains, “In the past, when digital systems have been put in place, it has opened users up to function creep with data, meaning that corrupt actors use the data for purposes for which it was not intended. Regulatory compliance is therefore critical in building these systems in a way that this doesn’t happen. Systems need to be built with privacy first so that they can’t be abused.”

In Cameroon for example, a decree was recently issued which will allow non-banks to participate in government electronic payments. This will enable a safety net scale-up to incorporate mobile money payments.

In Nigeria too, multiple data protection laws have been passed – including a landmark law in Nigeria – that will not only provide additional safeguards for ID systems, but for data processing across the economy.

“In terms of education, we need to help citizens and lawmakers understand why owning their identity is so empowering. Governments and companies can do this by working with organisations that are approaching the task of biometric identity with integrity and purpose,” Maxine said.

Necessity is the mother of innovation. While citizens in the Global South may have suffered from a lack of formal and digital identification, this is changing rapidly.

Countries in Africa, Latin America and East Asia have had to embrace mobile technology because of poor fixed line infrastructure, which has opened up a world of opportunities for inclusion. If biometric identity providers can partner with governments and businesses to build solutions that prioritise the inclusion, comfort and security of consumers, then the future is bright.

Lance Fanaroff is the co-founder and Chief Strategy Officer of iiDENTIFii.