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Digital identities - how and why we are where we are, what it's proposed we do about it and whether it will work.

The fintech world is at last waking up to the biggest problem facing real-world businesses: how to perform KYC on customers you will never physically meet and who live lives which do not intersect with your own except for one specific purpose - the provision of a service. Of course, being tech-driven, fintechs are looking for a tech solution and they've even got a name for it - Digital Identities. The world is full of "White Papers" but there are no practical applications nearing real-world testing, so far as we can ascertain. It appears that, as in so many cases, people are starting with the tech and trying to make the problem fit it, rather than looking at the problem and trying to build tech around reality, says Nigel Morris-Cotterill.

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**This article has been updated for spelling, grammar and one or two additions or amendments performed to improve clarity.** 11 November 2019.

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The scale of research into the subject is already enormous - the prize for the first effective working model is, potentially, huge. But no one is yet at the stage beyond rudimentary development.

The Big Bertha in this area is Basel Institute on Governance . Recently, it published proposals which nail the obvious: a global centralised database of certified digital identities. But it did not nail the essential problems. It's a pie in the sky, a solution without connection to reality, a mushroom cloud without a stalk. To read more, see "Can one whitelist potential customers on a central register?" in our sister publication ChiefOfficers.net

I was discussing their proposed solution with a fintech company only last week. Their idea isn't rubbish but the core problem remains: who makes the original certification, at what cost and to whom? Moreover, like many people working on this problem, their primary focus is how to secure certified identities for their own products - in their particular narrow focus, they will be looking for the same people that are currently considered qualified investors or equivalent. Will cherry-picking in this way facilitate the development of a more egalitarian, global, system or will it re-emphasise divisions between those who can make a rich-list and the bottom of the pyramid.

I'm not saying they are wrong - they have to solve their own commercial problems, not the problems of the world. I merely ask whether a plethora of self-selected certification schemes will, ultimately, have credibility or, more likely in my view, will it result in the creation of multiple verified identities by those that have the means to create them. Far from creating security, surely they will create a sense of false security and in doing so provide opportunities for exploitation by criminals. Do they care if their supposed verified identities are John Smith, Peter Jones or Stella Beer or ltc1qhdf3kr0pk7mkc569gcac0l8wp9l6mrk34ard2q or 1N6dubqFmnyQ2qDWvi32ppVbc3kKMTYcGW? No: all they care about is that companies feel secure dealing with them.

That is not the only problem.


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