Digital IDs and the Digital Economy: the (still) missing link?

Sponsored content in association with GSMA By Peter Lovelock and Laura Winwood, TRPC Pte. Ltd, a Singapore-based boutique consulting and research firm specialising in the telecommunications and ICT industries in the Asia Pacific. One thumbprint, a couple of swipes and a few taps. That’s all it takes to reserve a restaurant, take advantage of an online sale or update friends on the day’s events. We take for granted our ability to interact and transact in the digital realm, especially that we are able to do so because we can seamlessly prove that we are who we say we are; in other words, we have a digital identity that can be authenticated which grants us access to online services, securely. However, while many of us enjoy benefiting from the convenience of mobile apps, are we overlooking the role and importance of a digital ID as the precursor to participating in a digital economy? “Digital ID”, and indeed “the Digital Economy” are phrases so ubiquitous that most of us assume participation is readily possible for all. This, of course, is not yet the case. Instead of thinking of digital IDs as a ‘nice to have’, we need to reconsider what can happen in economies and societies where there is no easily prevalent means of acquiring an ID – let alone a digital ID – and where the vast majority are constrained by paper or more traditional means. The potential for accelerating financial inclusion is one obvious example. Individuals cannot receive or send funds, or even start to save, without a bank account; and even in cases where individuals do have a non-digitalID, they often live too far from a physical bank to open an account. A digital ID permits the use of mobile payments on 2G phones, empowering individuals to take control of their finances, engage in e-commerce or take their businesses online and across borders. Beyond financial inclusion the economic case for a digital ID is strong; if we consider that in a developed market such as Australia, the “economic value of an accepted digital identity” has been estimated to be US$8 billion per year¹, the transformational potential of digital IDs in less well-developed economies could be staggering. Papua New Guinea provides a striking example of such potential. 80% of the country’s population of 8 million live in rural areas, which are often remote and inaccessible by road. The majority do not have access to electricity and, as of 2016, less than 12% of the population were internet users². However, mobile phone penetration has significantly increased, from 1% in 2005 to 25% in 2011 and around 40% in 2016³. Mobile phones present a powerful platform for digital inclusion, including access to online educational services, e-healthcare and e-government services to name a few. Put simply, with the technology already largely in place throughout the Asia Pacific region digital IDs are arguably the missing link, and not an enhancement. By 2025, 73% of the regional population will be mobile subscribers⁴. Digital IDs can connect individuals, often inhabiting remote areas, with access to online services and platforms. Perhaps more importantly they enable civic engagement in an era of digital citizenry. Without digital-IDs, huge proportions of populations will remain cut off from the digital economy, likely leading to a further gap in wealth, education and health. The challenge ahead To enable such advances in the expansion of digital ID frameworks, properly designed privacy and security safeguards are necessary to gain citizens’ trust, while at the same time ensuring that the flow of data is sustained, both at the national level and across borders. Privacy When Cambridge Analytica allegedly accessed personal data from millions of Facebook users to target them for political campaigns, the need to act to protect data privacy became front-page news. The personal attributes collected in identity registration processes or used in identity authentication processes, represent the type of information that data protection and privacy policies, laws, and regulatory agencies need to protect – and which citizens expect them to defend. It is important that privacy and data protection rules strike the right balance between protecting consumers and encouraging the emergence of a digital society. Cross-border data flows Cross-border data flows have grown 45 times in volume since 2005, benefitting consumers, the economy, and society as a whole. However, some countries such as Indonesia and Vietnam have set cross-border restrictions on data delivery, storage, and processing. Countries often impose these rules believing that supervisory authorities can more easily scrutinise data that is stored locally, or that the privacy and security standards of a country can only be enforced if the data stays within that country. A way forward is for privacy and data protection frameworks to be based on internationally recognised principles, as this can mitigate risks without restricting data flows and the benefits they bring. Such high-level alignment increases trust between countries and allows a coordinated approach. Cybersecurity In light of high-profile cybersecurity incidents (such as the recent hack of more than 1.5 million Singaporeans’ personal health data), a cybersecurity framework is required to instil trust among users and deter cyber criminals. While governments have a legitimate interest in ensuring cybersecurity, it is important that cybersecurity does not become an impediment to the development of a digital society. Conclusion There are, it needs to be recognized, many laudable initiatives into financial inclusion and social development live throughout the region. However, too often there remains an underappreciation for the potential of digital IDs, via mobile platforms, to provide a tangible and integrated solution. A further step will be for policymakers to curate digital ID frameworks that are compatible with existing regulations – or perhaps it is time to update relevant policies and implement regulations so that no one will be left behind. For more information on the progress of digital identity in Asia, download the GSMA/TRPC publication here.

1. A frictionless future for identity management: A practical solution for Australia’s digital identity challenge
2. http://www.internetlivestats.com/internet-users/papua-new-guinea/
3. https://oxfordbusinessgroup.com/overview/competitive-bet-new-operators-and-government-reforms-are-set-transform-telecoms-industry
4. https://www.gsma.com/mobileeconomy/asiapacific/

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