What digital ID really means for banks, lenders and fintechs
Jaye Hackett
The short version: start thinking now about how this affects your onboarding and KYC flows. Don’t wait to be overtaken by competitors with much simpler UX, or caught out by the rising tide of AI-powered fraud.
Digital ID will soon be mandatory for all UK adults. This is an unprecedented opportunity for KYC/AML practitioners to add security and improve the usability of their processes at the same time.
Details of the new scheme are not fully known, but we do know that it:
- will be compulsory for UK adults
- will be required for right to work checks
- will be live before the next general election
It’s a good bet that it will use the the GOV.UK Wallet mobile app under development, similar to schemes in Europe and the USA.
The opportunity for you is simple: digital ID can replace the need to accept paper evidence or scan photo IDs.
Scanning photo IDs always brings a high drop-off rate and always ranks as one of the most inconvenient things users remember about onboarding.
Digital ID, combined with other anti-fraud background checks and screening, is a massive improvement in convenience as well as reducing the risk of accepting fake documents to basically zero. That means fully automated account opening and lending will be more achievable than ever.
That second part will become more and more urgent over the next two years as AI-powered fraud saturates current KYC systems with plausible-looking images of government photo IDs.
Can digital ID be your entire KYC strategy? No, and it will be that way for a long time yet. 11 million people in the UK don’t currently have a passport or a driving licence. It will be many years before even a “universal” scheme can expand its reach far enough to enroll people affected by this kind of ID poverty. That means that offering sensible fallbacks will be important far into the future.
While there are forms of digital ID you can accept today (like eVisas and bank accounts), true international standards-based digital ID is not here yet. Many details aren’t yet known, though the intention and shape of the scheme is clear. We can learn from other countries that are further ahead of us.
But all signs point to a very rapid expansion once the scheme launches, and a corresponding explosion in use cases.
Now is the time to review your onboarding checks, quantify the potential advantage both in anti-fraud posture and the potential upside in conversion rates.
Digital ID is where onboarding is going. Be ready.
If you want to learn more about flexible KYC, including accepting digital ID, email me at jaye@vouchsafe.id.
