Why Business Leaders Need to Learn About about Digital IDs

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

This shift promises many benefits, like positively transforming efficiency, security and fraud prevention. Yet, here is the challenge: the transition isn’t an overnight overhaul. It’s a gradual, evolutionary process.

Physical documents aren’t going anywhere – yet

Consider the reliability of a physical document – tangible, verifiable and trusted across various industries. Despite the charm of digital transformation, a 2024 Forrester Consulting study commissioned by Regula reveals that 46% of organizations still manually verify documents, including in remote setups. This reliance is even higher in sectors with stringent security demands, such as Aviation (63%) and Finance (44%).

Why the attachment to paper? It’s simple. Physical documents are trusted and familiar, and they provide unmatched authenticity. They work. For business leaders, this means a gradual transition to digital identity systems is not just sensible – it’s essential. The current systems can coexist with emerging technologies, ensuring operations remain smooth while new methods are integrated.

The barriers to a digital dream

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

According to the study, 74% of respondents highlight the need for unified global standards to ensure seamless integration and acceptance worldwide. This lack of alignment means businesses are navigating a fragmented landscape, where interoperability across borders is a complex challenge.

Furthermore, technological disparities create uneven progress. While some regions, like the UAE, are racing ahead with advanced digital infrastructures, others, including the US and Europe, are taking a more cautious approach due to stringent regulations. This disparity underscores the importance of tailored strategies considering regional readiness and capabilities.

Related: Your Face is Data — and Scammers Are Using it for Fraud. Here are 5 Tips When Using Identity Verification

Concerns and realities

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

• 50% worry about increased data breaches and cybersecurity threats.
• 46% are concerned about the necessity of robust security frameworks to mitigate the risks of data breaches.
• 44% fear the implications for privacy due to surveillance and data tracking.
• 35% highlight dependence on technology potentially leading to system failures.
• 35% see the risk of identity theft and fraud with digital credentials.

These concerns are not trivial. They reflect the real and present challenges of a digital transition. But they also point to the need for robust, secure, and reliable systems that can build trust over time.

Related: Deepfakes Are on the Rise — Will They Change How Businesses Verify Their Users?

The hybrid solution

In this complex landscape, a hybrid approach to Digital IDs emerges as the most pragmatic path forward. This strategy embraces both digital and physical verification methods, allowing businesses to transition at a manageable pace. By maintaining physical documents alongside Digital IDs, organizations can leverage the strengths of both systems, ensuring reliability while gradually adopting new technologies.

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

At the same time, to adopt digital IDs into the current IDV (Identity Verification) process, a business must undertake several steps. First, it should assess the compatibility of its existing infrastructure with digital ID technologies, ensuring it can seamlessly integrate the new system. This involves upgrading or adapting current software and hardware to support digital ID functionalities. Next, the business must select a reliable digital ID provider, prioritizing those with strong security measures and compliance with regulatory standards. Implementing digital IDs requires employee training to effectively manage and operate the new system. Additionally, the business should develop a clear strategy for data privacy and protection, addressing potential cyber threats and ensuring compliance with data protection laws. Finally, a thorough testing phase is essential to identify and resolve any issues before fully deploying the digital ID system, ensuring a smooth transition and maintaining the integrity of the IDV process.

Standard issue

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

However, even if all standards are prepared and fully verified, the next stage involves implementing software according to these standards. This is not just a single module but a comprehensive suite of systems 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 necessity of having process standards as well as testing and certification standards. However, even if vendors pass certification, questions about the completeness and reliability of the software will remain, especially when used by end-users. For example, an SDK might be fully functional, but during integration, developers might cut corners and not utilize all necessary components.

Who will handle the certification? Laboratories will be needed to prepare testing software, and these labs will charge significant fees for conducting time-consuming tests. Not all vendors will be eager to invest in certification. Given that each country might have multiple vendors, the scale of the problem is immense.

Currently, passports function without any online infrastructure, but digital IDs will need online services capable of handling massive volumes of requests, potentially from around the world. Imagine 300 million simultaneous requests in the USA alone. This feels like the scale of Facebook, Instagram or Google, with dedicated data centers and more. The cost could be astronomical. Poorer countries might decide they don’t need such systems or opt for minimal implementations.

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

Related: U.S. State Will Now Accept Digital Driver’s License on iPhone

A marathon, not a sprint

The journey to widespread Digital ID adoption is indeed 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 ongoing relevance of traditional identification methods. Moreover, the implementation costs and the need for robust infrastructure further slow the transition.

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