The Calm before the Trust Storm
2015 was quite a year for fintech and identity - with both receiving a huge amount of attention and coming together in a very exciting way. Looking back on this convergence, a discussion at Ctrl-Shift's Personal Information Economy event last month described it as "the perfect storm" in the wider digital economy. I think that it’s an even more appropriate statement in a Financial Services context. But why does Identity and trust feature so highly on the fintech agenda these days?
It’s obvious to say there is much unrest throughout the world these days as we battle against fear and confidence in many forms. I'm not suggesting that this has a direct correlation with digital identity, but it does force us to think about whom we can trust. The more I talk to people, the more I see an appreciation for the need for greater trust in our world today. We are constantly forced to extend trust online based on little documentation, and almost everyone now has (or knows someone that has) been affected by some form of mistrust, fraud, identity theft or risk.
Increased Data Risk
While it has been building for some time now, 2015 saw a significant shift in cyber risk. I took the opportunity to highlight this in talks for FinTech Week London and FinTech Connect Live. A couple of years ago we saw data breaches like those at Sony and eBay that cost tens of millions of dollars. Last year these costs went up dramatically to hundreds of millions of dollars with a major escalation in breaches at companies like Target and Anthem Blue Cross. Last year, in one breach alone at Ashely Madison, there was a record-breaking $600m lawsuit. As these situations become more frequent and continue to expand in reach, so too does the conversation about how to manage this risk.
While I'm not sure there is a clear solution yet, what is clear is that we cannot continue to keep doing more of the same things when it comes to risk mitigation. In the 'Reinventing Financial Services' track for Ctrl-Shift we explored the idea of leveraging consumer owned and managed identity, empowering individuals to help manage the risk. While we’ve been talking about this approach for some time now, it is now more widely received in the industry, as the value of consumer-centric solutions for ID and risk becomes clearer.
I believe that as we continue to do more online and disrupt more traditional industries, the risk will build to a point where it is unmanageable or even uninsurable if we do not find a reasonable solution.
Disruption in Financial Services
Much of this disruption is coming from the fintech space. Whether you view it as a bubble or not, last year saw an insurgence of resource, innovation and funding in the fintech space. A very broad term (and one I find is often misused), fintech covers a huge range of trends from crypto currencies and blockchain, remittances and payments, disruptive digital only banks, and other consumer finance services like P2P lending and expenses management. It is a very exciting space to be in.
The continued pressure on financial services to become more efficient, reinvent itself and be competitive continues to grow. Blockchain technology as an example has a fantastic opportunity to support and accelerate disruption through efficiency, security and by its sheer speed - and is something we at miiCard are looking to incorporate in our services in the year ahead. But we know this has to be more than just using a new technology, it has to result in new and valuable propositions.
Many of our customers and partners are doing just that - eMoney Union provides secured P2P marketplace loans, Fair Finance helps low income families, Starling Bank is a digital bank disrupting the traditional banking model, and we're working with a leading US billion dollar marketplace lender and a global wealth managment platform to help them transform their customer experiences and reduce manual processing. Much of this disruption is being powered by taking new approaches to old problems. One of these (and where miiCard and DirectID come in) is the ability for individuals to leverage the identity and the data they have, typically with their existing bank, to access new services and do new things quickly and easily.
The Perfect Storm
This is where identity and fintech come together, where the perfect storm is starting to brew. Okay, so we are a bit biased because this is the world our team lives in, but it is happening and it's happening quickly. Empowering consumers with their own data, letting them prove their real identity and share their trusted bank transactions, is opening up new markets and allowing them to do new things. It's creating a layer of trust in the internet that will continue to support and disrupt the digital economy as we move forward in 2016.
The need for this trust, as we have covered in recent years through government programmes such as Verify.gov in the UK or NSTIC in the US, is now maturing. Supported through the Payment Services Directive (PSD2) and the Open Bank Working Group (OBWG) in the UK, this empowering of consumers to open up new markets, increase competition and do more online is now a reality. It was recently described by the City Minister to me as building a perimeter within the UK retail banks. That is, if I already have a bank account, I should be able to easily switch, open up new accounts, access services and do new things quickly and easily. We couldn’t agree more.
So where does that leave us as we launch into the new year? I truly believe, with everything that we saw in 2015, it was the calm before the storm. This year the need for trust online will only accelerate. This is a view also shared by our partners like ID Analytics and Deloitte, to name a few. To help create a faster, easier and stronger user experience that is consumer centric and creates a layer of trust in the internet that we all need.
My question is, what are you doing for trust online? I believe we can all play a part, as consumers ourselves, and in our companies, enterprise and with our governments. We should think about a world where we are empowered to do more online with greater trust, and make a stand for ownership and control of our digital identities.
Online trust and identity is arguably one of the biggest challenges we face today - a challenge that we will only face by being prepared. As a Canadian I can confidently say there is no such thing as bad weather, just inappropriate clothing!
"Having a Digital Passport will let us travel the Internet with the trust, confidence and convenience that we need today. In many ways, it's the last frontier in Cyberspace."