Identity is the Steam Engine of the Digital Economy
We are in the throes of identity chaos. Boarding a flight, shopping, banking, onboarding for a new job, or processing an insurance claim all require us to prove who we are before the transaction can be completed. It costs each of us in time, complexity and friction and despite that, the confidence level verifying our identity is frequently low. Worse yet, storage of the information used for identification is not consistently secure, putting our personal information at risk.
Yet, identity is at a historic juncture, just as the steam engine experienced three centuries ago. I am confident that we can move forward and now is the time.
The most significant enabler of the industrial revolution was the invention of the steam engine, but as with many inventions, early dreams outstripped our ability to realize them. Thomas Newcomen had a dream to harness a new form of power that would shape the Industrial Revolution, but not the pieces. His steam engine moved water out of mines, when it worked. Authenticating identity finds itself in the same place today. As we conduct more commerce online than ever before, it doesn’t quite work. We have a dream to obviate fraud, protect our identities and go about our lives in a digital, mobile era, but the right pieces are only just beginning to come together.
Many supporting technologies had to come together to enable the high-pressure steam engine created in 1712 to be viable. Without them, the technology had little practical use and was often quite dangerous. It wasn’t until 1775 that James Watt patented the first steam engine and the concept of horsepower was created. We waited 29 years for Richard Trevithick to introduce the steam locomotive and another 21 for a railway that could transport coal. It took a while, but the steam engine saw incremental improvements and new applicability. Once the pieces came together, the steam engine quickly replaced water, wind and horses as a source of power and spawned a global revolution that transcended train travel.
The steam engine enabled the industrial revolution; identity will enable the digital revolution.
Solving the identity crisis is a critical problem that threatens to undermine consumer confidence in both public and private institutions and we don’t have a century to resolve this. State sponsored data breaches, inconsistent data sharing policies, hacked accounts and fraud are prompting a whole new approach to identity authentication.
The way it works now involves consumers spending an inordinate amount of time typing in their information and interacting with a front end. On the back end, it seems there is a virtual hallway of private rooms where deals are done and third parties share consumer data without consistent, informed consent. Sadly, most of the technology developed over the last fifteen years has been directed at managing user accounts for enterprises rather than managing identities for individual people.
Fifteen years ago, thought leaders, organizations and consortia had a vision for developing a new approach to identity. One that would give people insight into where their information would be used and afford them control over who received it. It is time to resurrect that vision so the focus on identity for people, not “user accounts” can make a return.
We need to move into a world where consumers are in control of their information and can grant trusted institutions approval to exchange information with counterparties to complete a transaction. So you can board that flight, shop, bank, onboard for a new job or process an insurance claim with speed and efficiency.
Who might these trusted institutions be for helping you manage your identity online? Is it social media companies, technology providers, the Department of Motor Vehicles, the credit reporting agencies or the US State Department?
In the simplest terms, traditionally it was the highly regulated bank you relied on to store some of what is most precious to you — your money. It is therefore the opportunity, and perhaps the responsibility, for a bank to do for identity what it has always done to protect money.
By 1830, locomotives were used to transport passengers and the steam engine found an essential place in large scale manufacturing that introduced productivity the world had never experienced before. We are about to witness an evolutionary leap with respect to digital identity once the technology pieces are deployed, giving control and power back to the people.
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