The Castaway Society: Identity for Inclusion Isn’t Charity
When it comes to financial inclusion, the truth is that most people think about some Corporate Social Responsibility (CSR) program or full-on charity for developing countries.
This is straight up wrong!
Identity for Financial Inclusion (IFI) isn’t about charity—it’s about business. It’s been calculated that a 1% increase in inclusion would result in a 3.6% increase in GDP.1 It’s not surprising, then, that it’s a Sustainable Development Goal (SDG2) to provide everyone with a legal identity by 2030. Or that the IDaaS market is growing at the multiple billion dollar range.3
McKinsey reported that some 2.5 billion people worldwide don’t use banks or other formal financial institutions. In the same vein, we can add the figure of over one billion people who don’t have an identity. So, how has this massive human market become a charity case?
Traditionally, the disputed roles of (and inherently tense relationship between) governments and civil society organizations in promoting the inclusion of marginalized groups make this difficult to discuss, let alone address. Often, when we hear about inclusion, we hear about government projects like the famous Aadhaar, the Indian national biometric identity system. Or we can talk about the Nordics, and their advanced identity systems, such as NemID in Denmark. The latter is an electronic ID, digital signature and secure email solution that provides individuals access to government services and serves as key identification for private services. The government outsourced this program to the private sector. Danish citizens use a common NemID login and password, with things like one–time passcodes to authenticate themselves to all services, and this identification system is stored in a central registry.
The interesting thing about most of these identity solutions is that they’re all relying on providing a human the ability to have a “formal identity” as the one enabler for social and economic inclusion. But interestingly, our socioeconomic and “banking“ interactions are based on a non-standardized notion of identity, changing from country-to-country with its unique things, yet static in nature. Even something as ‘straightforward’ as a legal passport has different standards for issuance country-by-country.
Is that what we really need to deliver IFI? Clearly not, when identity in day-to-day use is really a game of permissions: not “who are you?” but “what are you allowed to do?” Allowing people permissions and then using them to establish reputations gives us a different way to solve inclusion problems.
So can governments achieve this perfect state of identity? How can we include a billion humans in an effective way, when every country has a different way of doing it? Well, the challenge when you redefine identity, becomes bigger and broader than any one sovereignty. To truly enable inclusion, we need to globally address the strength of the underlying attribute collection, authorization structures and processes within systems. There’s a massive mismatch between collection, exchange and entitlement when it comes to what attributes an organization collects—or calls “identity”.
And I ask, what attributes are really necessary to include someone in any system? Should we rely on, as David Birch puts it, the “silly song and dance” that most security systems use for identification today? Most eGovernment solutions are designed to make government service delivery more efficient and less costly. But are they really built to include humans for financial services? Enabling true inclusion would mean refactoring identity to be truly user–centric: human first, risk–relevant data would compose the attributes we’re collecting to determine access and enable permissioning.
Rethink identity and rethink the education that’s needed around it. Because maybe even I don’t understand what a bank account is good for, let alone what this piece of identification the bank or whomever is asking me for, really does for me.
The other myth and the other conversation that I often get into, is the discussion about the Digital Connected SmartPhone Gods. Those who shall solve everyone’s problem! Let’s just hand them phones right? Let’s “connect” them. Hand poor people a phone and they shall be included, because hey, now they can open a bank account online, using instant KYC. Or do peer-to-peer payments. Wrong again, as a blanket answer. Just look at the data. How many of the one billion people not even identified have bigger problems than a device?
The notion that personal identity or access will become associated with a device, although part of the solution, is far from being the savior. The identity industry needs to take a minute and think of the consequences of such an obsession with this as a solution. Let’s start with the fact that regulation is far from clear in that space, especially when it comes to privacy or data. And it’s often one of the easiest things to hack in so many ways, offering an array of device authentication/man-in-the-middle/hardware concerns. I believe that talking about phones as a solution to identity is like me hearing “omnichannel” as an answer to poor bank products. Not only does it not address the core of the issue, but it also presents our entire industry a whole new array of issues and new challenges.
The solution to inclusion is not just technology and smart devices.
Then we have the people who are claiming that systems based on anonymity might in fact be the most equitable and inclusive, in the sense of ensuring equal participation by all, by systematically stripping out social status. Do they really? Sure, it’s harder to dispute that disparities in connections, education, geography, and wealth aren’t easily overcome. And interestingly enough, these are identity attributes, and they’re often overlooked when it comes to identity as a tool to include humans in the “system”. But can anonymity be the key to anything that’s really fair and equitable in the long run? Making the powerful and unaccountable anonymous, so none of their actions can have consequences?
There are so many other factors that come into inclusion, which is why we, as an industry, need to differentiate between what is basic financial health and education. If this is what we’re talking about, our numbers just became much larger. Inclusion is access to information, understanding and health. And it certainly isn’t a charity project. Because most of us simple humans, don’t know how to balance our own check books. Because the decisions you make, or don’t, might exclude you from potential opportunities, or a wealthier, healthier financial path in life.
To me, redefining identity is part of the foundation work we have ahead. Our world’s definition and landscape is far from inclusive, even in how we talk about the topic, let alone how we build standards and frameworks. Let’s build a new kind of identity that can deliver IFI. Permissions are the key, and to enable them, we must understand and educate. So, I hope that we, as an industry, stop either rolling our eyes internally when we hear the word inclusion, or stop holding it up as a proud flag of charity. Remember, we are humans, building tech for humans. So let’s put humans first.
By Bianca Lopes
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