The next evolution of digital identity

What defines a person’s identity?

Where they were born. What they’ve studied. Who they work for. What they own. Where they live. How much they earn.

People need to verify these basic facts about themselves as a regular part of their daily lives. Whether they want to enter a new country, get a new job, or take out a loan, people must prove that they have the right credentials—and that they’re who they say they are.

Driver’s licenses, social security numbers, key fobs, employee badges, bank account logins, and personal identification numbers are all credentials that confirm a person’s identity. Today, most credentials live in a physical wallet, purse, backpack—or in someone’s head. But a better way to manage personal identity in a digital world is emerging.

Digital credentials, which can be securely stored and shared on a mobile device, offer a more efficient, fraud-resistant, and reliable alternative to traditional identity verification that also delivers a better user experience.

At least 80% of government services that require citizen authentication will support access through multiple digital identity providers by 2023.

Digital credentials are generated using secure technologies, such as distributed ledger technology, and protected by cryptographic key pairs—which facilitates data privacy while also enabling virtually instant authentication. However, industry knowledge, interoperability, and open standards are key to the successful scaling of digital credentials. 

Digital credentials enable connected ecosystems

When individuals carry their personal information with them, they have the power to share their private data as they see fit. That means many types of organizations could deliver products, services, and experiences that are tailored based on personal data.

With the mobility that digital credentials and digital IDs provide, consumers could enjoy the freedom of choice in many new areas—and businesses can provide customer experience tailored for specific individuals.

Putting people in control of their data: Digital credentials reduce dependency on issuing institutions for validation

In healthcare, for instance, digital credentials allow patients to quickly share their private health data with new providers, making it faster and easier to get multiple opinions before moving forward with a medical treatment plan. This promises to produce better patient outcomes through digital transformation—while also reducing the administrative burden on the healthcare organizations that are currently required to send printed medical records.

Governments can also use digital credentials to streamline the delivery of public services. According to Gartner, at least 80% of government services that require citizen authentication will support access through multiple digital identity providers by 2023.

However, transparency and integrity are needed to build a foundation of trust for digital identification to be accepted universally—which is why distributed ledger and similar technologies are at the core of the digital credential platforms of the future.

Building a trusted digital credential platform

By decentralizing an individual’s data—for example, storing it in a digital wallet they carry with them—digital credential ecosystems take the onus of proof off the issuer. Rather than contacting a specific institution to verify an individual’s identity, an organization can check a digital credential against the common trust registry as soon as it is shared.

Modern digital credentials also enhance cybersecurity and offer stronger data protection by allowing individuals to share all or only part of the information contained in the credential. This reduces unnecessary data exposure and removes opportunities for identity theft and for other sensitive information to be lost or stolen. Some digital credentials can also be issued with expiration dates or be revoked as needed, reducing the risk of fraud. 

But for a digital credential ecosystem to function, wallets and applications must be able to connect and securely exchange unique identifiers, such as decentralized identities (DIDs) and verifiable credentials. Yet, while at least a third of national governments and half of US states are expected to offer citizens mobile-based identity wallets in 2022, only a minority will be interoperable across sectors and jurisdictions. That means organizations need to invest in digital credential platforms that offer the right guard rails for open standards and interoperability.

With a secure infrastructure providing the trust anchor for using and exchanging any kind of credential data, entities can engage in new types of trusted, transparent transactions and services—and revolutionize traditional business models. Download the report to discover how your organization could leverage technology to build this foundation of trust.