Digital ID in the UK: Real-world implications in a commercial world

Last week's announcement of a UK government-backed digital identity system, with Prime Minister Keir Starmer suggesting mandatory use for certain services, has ignited debate on privacy and surveillance. This blog explores how this digital ID could function commercially, outlining benefits for businesses and consumers, while emphasizing that fraud prevention will remain a continuous challenge.

Why Digital ID, and why now?
The government's initiative for verifying the right to work in the UK underscores the need for modern, robust verification. While current checks often depend on physical documents, a comprehensive digital ID system could in theory streamline processes, support the reduction of identity fraud, and boost security.

Persistent fraud challenges are likely to remain
Equifax, with decades of experience in identity verification and fraud prevention, recognises the potential of a well-implemented digital ID. It could help to standardise and strengthen identity verification, significantly aiding Know Your Customer (KYC) processes and reducing identity-related fraud. 

However, fraud is constantly evolving, demanding continuous vigilance and investment in advanced detection. This could include sophisticated counterfeiting of ID cards, social engineering tactics to obtain legitimate ID card details, or the exploitation of weaknesses in the ID card system's digital infrastructure. 

Organisations will still need to remain vigilant and invest in advanced fraud detection technologies.

How identity verification works today
Every day, many organisations need to verify customers’ identities. This can include:

• Document checks: Passports and driving licences are verified to ensure they are genuine.

• Biometric matching: Sophisticated tools confirm that the person providing a document is the same person pictured, not just a photograph of someone else.

• Fraud prevention & AML checks: Verification solutions are integrated with databases to spot potential fraud, stolen identities, or politically exposed persons (PEPs).

Equifax clients are already benefiting from similarly advanced technologies that combine document verification, biometric matching, and cross-referencing of trusted data sources. Protecting businesses from fraud while enabling legitimate customers to onboard quickly and confidently.

How digital ID could integrate into commercial services
Digital ID could help to streamline these processes in several ways:

• Instant authentication: Customers could prove their identity online using a secure app, eliminating the need to upload multiple documents.

• Reduced errors & fraud: Digital ID could include built-in verification of identity against official government records, reducing the risk of forged documents or impersonation. However, this will never eliminate all fraud risks, as fraudsters will adapt to new systems.

• Seamless customer experience: Customers could verify themselves in seconds when opening a bank account, applying for a mortgage, or renting a property, instead of waiting for manual document checks.
   

Benefits in the commercial world
This digital identity approach offers multiple commercial benefits: enhanced efficiency through reduced paperwork, accelerated processes, and improved customer satisfaction. It can also decrease certain types of fraud by making impersonation and stolen identity tactics harder. Additionally, it could help to simplify regulatory compliance, assisting firms with AML and KYC obligations, and ultimately builds trust for both businesses and consumers.

Considerations
Important considerations include accessibility, ensuring alternatives exist for those not using smartphone-based digital IDs. Privacy is paramount, demanding robust protections, consent controls, and encryption. Furthermore, seamless integration is vital, requiring businesses to update systems for secure digital ID acceptance.

The digital ID is intended for all citizens and legal residents to prove their right to work, but it won't be mandatory to carry or present on demand. This could mean large sections of the UK may never have a digital ID card. For those not working (retired, non-workers, students), it will be a matter of choice.  Although the UK government hopes that it will be used voluntarily by citizens for "countless benefits" such as accessing public services.

Integrating a digital ID system into existing verification processes will necessitate significant operational adjustments and financial investments for organisations. For example, banks adopting this innovation must consider the costs and timeframes for system upgrades and staff training to effectively leverage the capabilities while mitigating new fraud risks.

Equifax's identity verification solutions inherently balance security, compliance, and customer convenience. This digital framework could extend these benefits across the UK, offering speed and trust, but continuous vigilance against evolving fraud is essential.

The global precedent
The shift towards digital identity is not unique to the UK. Globally, there's a growing recognition of the benefits of digital ID, with many countries already implementing or exploring similar schemes.

For example, the European Union has passed regulations for a trusted European e-identity, with the Digital Identity Regulation entering into force on May 20, 2024. Member States are required to provide EU Digital Identity Wallets to citizens by the end of 2026, allowing them to use a single set of credentials for various online services. This global momentum underscores the importance of the UK's current considerations.

Countries like France and Australia demonstrate that digital ID can be privacy-focused with legal safeguards, and gradually rolled out alongside physical IDs. Even where adoption is high, there is no evidence that digital ID automatically leads to ‘Big Brother’ surveillance.

Collaboration will be key to a successful future
Robust collaboration among key industries -banking, government, and law enforcement -during the design phase is crucial for this identity system to deliver its potential benefits. It's equally vital to anticipate fraud risks, ensure system effectiveness, and share intelligence on evolving tactics. 

A well-implemented digital ID could complement existing verification, making processes faster, safer, and more reliable - mirroring the solutions Equifax has provided for years, with a continuous focus on mitigating evolving fraud. As plans progress, we'll explore integrating this framework into our fraud solutions. However, it's critical to understand that it won't eliminate all fraud; new attack methods will emerge.

Why this matters
While the notion of a digital ID sparks concerns, global experience demonstrates its potential for security, privacy, and user-friendliness. It can benefit businesses and complement existing verification processes, not replace them, and will not eliminate all fraud.

In an era of rising identity fraud, digital ID, if correctly implemented, can be a tool for identity, trust, and convenience, reducing fraud, protecting customers, and streamlining services, all while emphasising the ongoing need for robust detection and prevention strategies.