Pitching the public on digital identity

There’s no doubt that fraud is on the rise. Recent statistics from the Federal Trade Commission suggest that consumers reported losing more than $8.7B to fraudulent activity in 2022—representing a 30% increase from the previous year. 

Digital-identity solutions are a promising countermeasure that may help mitigate fraud. But they come with their own risks that consumers have to be aware of, and potentially regulate with the help of lawmakers. Below are some of the variables affecting how digital-identity outfits are interfacing with the public, as well as how users interact with these solutions in turn: 

Data security

Digital-identity solutions label themselves as risk-mitigating products that can help minimize fraud risk through stringent KYC processes and (for some platforms) ongoing verification. But, by collecting (and then verifying) sensitive data—such as government documentation, social security numbers, and financial information—these ID solutions are attractive targets for fraudulent actors themselves. 

Getting the public—as well as businesses in need of digital-identity solutions—to agree to these innovative products requires highlighting the mechanisms in place to ensure data security. From compliance protocols to in-house security experts, these startups have the opportunity to set themselves apart from competitors—and from the status quo—through a suite of differentiators. 

Privacy

Privacy concerns come hand-in-hand with anxieties over data security. This especially applies to digital-identity networks that connect individuals to multiple businesses, such as the reusable IDs provided by Unum ID.

These kinds of solutions should be sure to provide clear descriptions of how identity-verifying data is stored and shared among business clients. Internationally focused products should also emphasize how they comply with multiple compliance frameworks and legal regimes. 

Name recognition

Finally, new digital ID solutions have to contend with a lack of brand recognition. Unum ID has built itself into ID-verification flows—with users putting in their phone number and email, and Unum ID then detecting whether a user has already verified their ID with them previously—rather than as a one-click checkout-type solution. The company avoids a button-driven solution because ID-verification companies don’t have brand visibility, since most users encounter KYC flows at most twice in a year. 

But other competitors, such as Mastercard, have opted to leverage established trust with consumers to maximize user engagement and growth. A Mastercard-branded ID-verification button during onboarding is designed to both showcase Mastercard’s presence in a nascent technological field, and also help the company quickly establish sizable market share.