Why Business Leaders Need to Learn About Digital IDs

We have come a long way from the days when identity verification meant presenting a handwritten document or personal guarantee. The Digital ID movement represents a new era where your identity is a digital entity, stored and accessed online.

This change promises many benefits, such as improved efficiency, security and fraud prevention. Here’s the challenge, though: change doesn’t happen overnight. It is a slow, evolutionary process.

Physical documents aren’t going anywhere – yet

Consider the reliability of a physical document – portable, verifiable and reliable across various industries. Despite the popularity of digital transformation, Forrester Consulting’s 2024 study commissioned by Regula reveals that 46% of organizations still verify documents manually, including remotely. This trust is highest in sectors with strict security requirements, such as Aviation (63%) and Finance (44%).

Why is it attached to the paper? It’s easy. Physical documents are reliable and standard, and offer unparalleled authenticity. They are working. For business leaders, this means a gradual transition to digital identity systems is not only logical – it’s essential. Current systems can work with emerging technologies, ensuring that operations remain smooth while incorporating new methods.

Obstacles to the digital dream

The dream of a global Digital ID system faces major challenges. Chief among them is the lack of universal legal frameworks. It’s like trying to conduct a global orchestra without a shared sheet music.

According to the survey, 74% of the respondents highlighted the need for unified global standards to ensure seamless integration and global acceptance. This lack of organization means that businesses navigate a fragmented landscape, where cross-border collaboration is a complex challenge.

In addition, technological disparities create uneven progress. While some regions, such as the UAE, are racing ahead with advanced digital infrastructures, others, including the US and Europe, are taking a cautious approach due to strict regulations. This difference underscores the importance of strategies designed to take regional preparedness and capabilities into account.

Related: Your Face Is Data — and Fraudsters Are Using It to Fraud. Here are 5 tips when using identity verification

Concerns and facts

As businesses explore the digital leap, several Digital ID concerns weigh heavily:

• 50% are concerned about increasing data breaches and cybersecurity threats.
• 46% are concerned about the need for strong security frameworks to reduce the risk of data breaches.
• 44% fear privacy consequences from data surveillance and tracking.
• 35% highlight the dependence on technology that can lead to system failure.
• 35% recognize the risk of identity theft and digital identity fraud.

This concern is not trivial. They reflect the real and current challenges of the digital revolution. But they also point to the need for strong, secure, and reliable systems that can build trust over time.

Related: Deepfakes Are On The Rise – Will They Change The Way Businesses Authenticate Their Users?

A hybrid solution

In this complex world, a hybrid approach to Digital IDs is emerging as the most important way forward. This strategy combines both digital and physical authentication methods, allowing businesses to change at a manageable pace. By keeping physical documents alongside Digital IDs, organizations can leverage the power of both systems, ensuring reliability while gradually adopting new technologies.

For business managers, this hybrid model offers a convincing compromise. It minimizes disruption to existing processes and provides the flexibility needed to test and integrate digital solutions incrementally.

At the same time, in order to use digital IDs in the current IDV (Identity Verification) system, a business must take several steps. First, it must test the compatibility of its existing infrastructure with digital ID technology, ensuring that it can easily integrate the new system. This involves upgrading or modifying current software and hardware to support digital ID functionality. Next, the business should choose a reliable digital ID provider, prioritizing those with strong security measures and compliance with regulatory standards. Using digital IDs requires staff training to effectively manage and use the new system. Additionally, the business must develop a clear privacy and data protection strategy, address potential cyber threats and ensure compliance with data protection laws. Finally, a thorough testing phase is essential to identify and resolve any issues before fully implementing the digital ID system, to ensure a smooth transition and maintain the integrity of the IDV process.

Standard release

The development and adoption of Digital ID systems will require collaborative innovation from authorities, businesses and stakeholders in the IDV market. Key players such as the International Civil Aviation Organization (ICAO) and the International Organization for Standardization (ISO) are working to establish frameworks for the adoption of Digital ID. Their efforts promote interoperability, security and privacy across disparate systems. However, developing comprehensive standards is a careful, time-consuming process.

However, even if all the standards are prepared and fully verified, the next step involves using the software according to these standards. This is not just one module but a complete collection of programs for each vendor, and there will be many vendors. Each vendor may interpret the standards differently, leading to inevitable compatibility issues.

This brings us to the need for process standards and testing and certification standards. However, even if the vendors pass the certification, questions about the completeness and reliability of the software will remain, especially if it is used by end users. For example, the SDK may be fully functional, but during compilation, developers may cut corners and not use all the necessary components.

Who will carry the certificate? Laboratories will be required to prepare the testing software, and these labs will charge a lot of money for performing time-consuming tests. Not all retailers will be eager to invest in certification. Given that each country may have multiple vendors, the scale of the problem is enormous.

Currently, passports operate without any online infrastructure, but digital IDs will require online services that can handle multiple applications, possibly from around the world. Think of the 300 million simultaneous requests in the USA alone. This sounds like the scale of Facebook, Instagram or Google, with dedicated data centers and so on. The cost can be astronomical. Poorer countries may decide they don’t need such systems or choose to use less.

As a result, we will have a wide variety of documents: not only paper documents, paper documents with chips, and digital IDs but also many different types of digital identities.

Related: US State Will Now Accept Digital Driver’s License on iPhone

It’s a marathon, not a sprint

The journey to widespread Digital ID adoption is a marathon. Even after the development of comprehensive standards, global adoption will take time. The initial issuance of Digital IDs will still require physical passports or ID cards, underscoring the continued relevance of traditional identification methods. In addition, the cost of implementation and the need for a strong infrastructure slows down the transition.

For business owners and managers, introducing Digital ID is best viewed as a gradual evolution. After all, on this long road to digital transformation, patience and pragmatism will be your best allies.