2017 was a profoundly important year in digital identity. The tide turned decisively against usernames and passwords, with more than 86% of consumers expressing doubts over the security and convenience of the format, and mobile network operators around the world agreeing collaborations on alternative solutions. With 76% of mobile users in Q4 2017 indicating a desire to use a single sign-on identity service provided by their mobile operator, operators around the world met this challenge with great success. In Europe for instance, operators in Germany and Belgium launched identity solutions for use in transport and financial services; in Asia, Korean operator SKT produced a solution now adopted by 99% of Korean websites; and in the United States, the four largest operators announced their joint taskforce on mobile authentication with the GSMA’s Mobile Connect. This move by operators into the identity space is a prime example of the wider global trend: towards treating digital identity as a complex and sensitive matter, which can no longer be entrusted to simple tickboxes and memorable phrases. This being the case, then, what are some of the imminent developments in digital identity that we can expect over the coming year?
The digital identity market will certainly continue to be powered by the financial services industry. In a sector so reliant on consumer trust, the ongoing digitisation of transactions and account access is driving ever more investment in identity management. Banks now collectively spend more than $1 billion per year funding research and development of identity solutions, making them the world’s leading investors, over even national governments and police agencies. The focus of that investment in 2018 will be on ‘unique identity’ systems: methods which combine multiple factors as a matter of course, to verify a person’s identity with far greater certainty. Passwords and PINs, which can on their own be compromised, will increasingly be combined with aspects of what a consumer has (say, a specific mobile device), who they are (their biometric information), and where they are (using for instance their geolocation or IP address). Banks have obvious commercial incentives to ensure consumer confidence, at a time when identity theft has reached an all-time high; they also face an onslaught of tighter legal requirements over the coming year, as governmental bodies, in particular in Europe, try to respond to consumer anxieties over digital identity protection.
2018 will be a year of major regulatory change in Europe. In May of this year, for instance, the EU’s General Data Protection Regulation will come into effect, in a drive to harmonise data privacy laws across Europe. GDPR is the latest measure designed to give EU citizens greater rights over their personal data, granting them more control over how that data is collected, stored and passed on – the onus will soon be placed firmly on individual companies to guard against privacy breaches and cyberattacks on the consumer data they hold. GDPR is widely seen as highly stringent in its requirements, with fines of up 20 million euro to be levied against organisations failing to meet them, including those in the public sector.
Serious questions abound over readiness, however; research indicates for example that in Ireland more than a third of organisations processing personal data are yet to begin preparations for GDPR, with more than half still using insecure methods such as email to transmit sensitive data. Malcolm Harkins, Chief Security and Trust Officer at Cylance, has therefore described GDPR as “the Y2K of 2018” – that, while many companies may give outward assurances of their readiness for the new guidelines, behind closed doors there may be a good deal of apprehension over ability to comply in time for the first round of audits. We can expect to see the EU making an example of some high-profile multinational who fails to meet the requirements in the first years of adoption, as it seeks to emphasise its seriousness about the new regime.
The imminent adoption by EEA member states of the revised Payment Services Directive will also make 2018 a “game-changing” year for retail banking. In recognition of the rise of third-party fintech payment systems, the new PSD2 regime is designed to create a level playing field for all payment service providers. Essentially, by stripping banks of their monopoly on customer account information and payment infrastructure, while strengthening consumer protection through requirements on ‘strong customer authentication’, PSD2 aims to stimulate innovation in how everyday transactions are performed and authenticated – improving security, convenience and choice for the end-user. Accenture have warned financial institutions against treating PSD2 as just another compliance exercise: with 1 in 5 online transactions set to be made through mobile devices this year, remote payment practices are changing rapidly, and banks should regard next week’s adoption as a catalyst to accelerate improvements in their own digital payment systems.
Europe is thereby likely to become something of a legislative trendsetter in digital identity management, with the outcomes certainly watched with interest from Asia and the Americas. As 2018 unfolds, technological developments currently in their infancy will rapidly become the norm: as AI and chatbots are rolled out in more and more contexts, for example, they will provide a greater range of opportunities for hackers, and consumers will expect to see measures taken to allay these. As the Internet of Things grows, so too will the dangers associated with security breaches; where the hacking of an automobile factory may previously have resulted in loss of revenues or customer data, for instance, the cost may now be measured in human lives. And as the Cloud environment reaches maturity, ensuring its security will become of paramount importance to many players in the ecosystem. While the challenges are numerous, they are part and parcel of a maturing technological landscape which, over 2018, is set to prize the security of our digital identities like never before.