Digital identity may be the defining factor driving fintech adoption in 2024. It is also central to efforts aimed at reducing fraud and improving national security.
Arguably, these efforts are long overdue. The earliest known recorded name of a person occurred during the early bronze age (4000 to 3100 BC). Using the most modern technique of the day – clay tablets – an ancient Sumerian by the name of Kushim recorded transactions related to the exchange of barley. We can debate which came first – the act of a transaction between counterparties or the understanding between the counterparties that they needed to record that transaction. Regardless of this chicken or egg question, some 3,000 years later a 2023 University of Maryland study found that almost one out of every 10 Americans lack a government issued photo identification card.
Undeniably, this is one reason financial inclusion efforts are difficult and fraud is prevalent. The U.S. Government is making significant dollar investments and innovative companies and regions are rising to the challenge. The Department of Labor for one is using $1.6 billion from the American Rescue Plan Act to address digital identity verification at the state level, including $600 million to modernize vulnerable state IT systems and $380 million for fraud prevention.
Separately, the Inflation Reduction Act included $500 million to establish Regional Technology Innovation Hubs. Out of this program, the state of West Virginia in collaboration with a consortium of Fortune 500 companies, academic institutions, extraordinary entrepreneurs and venture investors were awarded a planning grant to align existing and new capabilities for identity and authentication efforts. This follows the European Union, India and other nations’ introduction of national digital identity programs. There is much to learn from these efforts.
On a global basis, the World Bank estimates that “1 billion people worldwide do not have basic identity…
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