• Home
  • Who Attends?
  • Speakers
  • Key Themes
  • Agenda
  • Download Prospectus
  • Plan your visit
  • Register Now

Fintech Talents

Fintech Talents

Kallyas is an ultra-premium, responsive theme built for today websites.

T (212) 555 55 00
Email: sales@yourwebsite.com

Your Company LTD
Street nr 100, 4536534, Chicago, US

  • Home
  • Agenda
  • Who Attended
    • SPONSORS
    • SPEAKERS
    • ATTENDEE LIST
  • Register your interest
  • Image Gallery
    • Party Pictures

Content

STAY TUNED

The door to financial inclusion remains closed: Could Digital ID be the key?

by Laura Camplisson / Tuesday 31 August 2021 / Published in Community, Fintech, Identity, Inclusion
Financial Inclusion - Digital ID

The door to financial inclusion remains closed: Could Digital ID be the key? 

Despite decades of financial inclusion efforts, barriers preventing access to financial services continue to exist across the globe. One such critical barrier, is the lack of an official, foundational form of identification. 

An estimated one billion people worldwide remain unable to prove their identity, while millions more have forms of ID that cannot be reliably verified. The result is exclusion from social and political access, and from the economic opportunities that come with engagement in the digital economy. 

The World Bank observes that 26% of unbanked people in low-income countries, find a lack of identity to be a critical obstacle to financial access. In some areas this figure is much worse, with reportedly half the adult population of some countries in Sub-Saharan Africa unable to open a bank account, as they lack the necessary documentation. 

Disproportionately impacted are marginalized segments of society, including low-income minorities, immigrants, rural farmers, refugees and stateless persons. Elderly customers and young people with limited financial histories can also find themselves limited by insufficient identity data. These types of consumers often find their business opportunities, housing options and other socio-economic choices limited. 

 

Can digital identity open a door to financial inclusion? 

Digital ID has the potential to address systemic challenges, removing some of the barriers for those with limited access to the digital economy. A legally recognised, unique digital identity could be used in place of physical documents, employing technology to achieve regulatory objectives, such as verifying proof of address using GPS. This would allow an individual to meet the necessary KYC requirements for opening a bank account, opening the door to a wide range of financial opportunities. 

Also, the availability of digital identity data could provide financial institutions with reliable, unobscured insights into a customer’s financial activity. These insights could then allow an individual to be granted credit they might otherwise have been denied. 

Critically, enabling cost-effective customer onboarding that can be conducted remotely will greatly increase the number of financial providers able to extend their services to marginalized groups, furthering the inclusion agenda. 

 

Pakistan’s approach to mobile identity intelligence 

Several countries are utilising the support of the mobile networking industry to develop digital identity solutions. One such interesting case study is Pakistan, where the State Bank estimates that nearly 100 million people (almost half of the population) are unbanked. However, technology adoption, in particular smartphone penetration, is noticeably higher than expected, with reports in 2020 estimating 65% of the population own a mobile phone. 

Telenor, Pakistan’s second-largest mobile network operator, have leveraged state-issued national IDs and biometric verification to expand access to mobile financial services. The company petitioned the State Bank of Pakistan to allow for information collected during SIM registration to be used to satisfy the KYC requirements for opening a mobile bank account. If an already high uptake of branchless banking across the population can be expanded further through mobile digital identity, this could drastically improve financial inclusion levels within the country. 

Muhammad Hamayun Sajjad, Head of Innovation, at United Bank Limited explained “Pakistan has a high proportion of unbanked people and the State Bank’s goal is to have more than 50 million bank accounts by 2020.” In his view, achieving this target is only possible by expanding the scope of digital technology and mobile payments, both of which form the foundation of branchless banking. 

Managing security risks and ensuring privacy-by-design 

Digital identity does come with a number of risks which have to be managed in order to build trust. Financial providers will need to mitigate any risk of data-leakage, improper storage or misuse by ensuring data protection and privacy are fully incorporated into a system’s design. There will also be a keen eye kept on any vulnerability to financial fraud, money laundering or terrorist financing. 

However, the Financial Action Task Force, states that “customer identification/verification measures that utilise reliable, independent digital ID systems, with appropriate risk-mitigation measures in place, may be standard risk, and may even be lower risk.” 

The challenge facing any inclusion strategy, is to take into account the need for more stringent security measures when relaxing the documentation requirements for financial access. 

For example, banks can on-board low risk individuals with a lower identity assurance level, as long as sufficient authentication measures are in place to prevent unauthorised account usage and minimize the risk of fraud. The account will then be subject to stringent limits on the volume and value of transactions for anti-money laundering purposes. Over time as data strengthens the account holder’s identity, the restrictions can be removed, widening the path into financial inclusion. 

The ongoing impact of the global pandemic 

Many countries are beginning to emerge from the worst phase of the pandemic, but for developing nations around the globe the crisis is far from over. The need to provide accessible financial services to reach underserved and vulnerable populations remains critical. 

Many individuals who lack access to formal financial services, rely on informal alternatives such as savings groups, cooperatives and charities. These services often rely on face-to-face interaction which is likely to have been limited during the pandemic. 

Where relief/aid payments are able to be distributed through digital channels, underbanked individuals risk being excluded without access to a transaction account. As the financial sector adapts to circumstances imposed by COVID-19 it is clear remote identity proofing will be pivotal in shaping future interaction and maximizing reach. 

If implemented properly, Digital ID can act as the first step towards financial empowerment and a critical enabler for poverty reduction – opening the door to secure transactions, retrieval of aid and benefit payments, access to mortgages and the opportunity to invest for the future. 

Written by Laura Camplisson | Product & Content Manager, VC Innovations

Learn more at the Future Identity Festival on 15 & 16 November

 


Tagged under: Digital, digital id, Financial, financial inclusion, Splash

Recent Posts

  • open finance open identity

    Open finance, open data, open identity

    Open finance, open data, open identity. The ide...
  • very good security

    In conversation with Very Good Security at FTT Embedded Finance & Super Apps 2022

    ...
  • innovating data lending SMBs

    Innovating with data: Supporting SMBs at pace

    SMBs are the backbone of the economy and suppor...
  • financial inclusion embedded finance asia

    Narrowing Asia’s financial inclusion gap with embedded finance 

    Navigating a prosperous path beyond the COVID p...
  • In conversation with Tribe Payments at FTT Embedded Finance & Super Apps

    ...


  • Home
  • Events
    • FTT DeFi 2022
    • Fintech Talents Festival London 2022
    • Future Identity Festival 2022
    • FTT Building Societies 2022
    • FTT Embedded Finance North America
    • FTT Lending 3.0 2023
    • FTT Embedded Finance UK & Europe 2023
    • Future Identity Finance 2023
  • On-demand Content
    • Interviews
    • Opinion
    • Videos
    • Digital reports
  • VC INNOVATIONS – Accelerated Marketing
  • facebook
  • linkedin
  • youtube
  • twitter

GET IN TOUCH

T 0208 0045 517
Email: info@vcinnovations.co.uk

VC INNOVATIONS
1 Quality Court, London WC2A 1HR

Open in Google Maps

QUICK LINKS

  • Home
  • About VC INNOVATIONS

Connect with us

  • facebook
  • linkedin
  • youtube
  • twitter

RECENT POSTS

  • open finance open identity

    Open finance, open data, open identity

    Open finance, open data, open identity. The ide...
  • very good security

    In conversation with Very Good Security at FTT Embedded Finance & Super Apps 2022

    ...
  • innovating data lending SMBs

    Innovating with data: Supporting SMBs at pace

    SMBs are the backbone of the economy and suppor...
  • Privacy Policy
Fintech Talents

© FintechTalents 2022. All Rights Reserved.



TOP
Register your interest



Rockstar Paid 2022


Complimentary Pass


Apply now



Register your interest



Complimentary pass



Rockstar pass

Register your interest



Re-subscribe



Standard Pass(es)

Premium Pass(es)

Premium Pass(es)

Standard Pass(es)

Premium Pass



Building Societies & Credit Unions Free Pass



Standard Pass



Download the Report



This website uses cookies to give you the best experience. Agree by clicking the 'Accept' button. Read our Privacy Policy.