Article by Wolf Kunisch
published in Business @ EBAday 2016
Wolf Kunisch is the Managing Director for the Financial Processing & Software Licensing Global Business Unit and for Germany & CEE.
Identity: Becoming a differential and competitive asset for banks
When it comes to identity, banks definitely need to consider the bigger picture. Of course Payment Services Directive 2 (PSD2), Money Laundering Directive 4 (MLD4) but also the EU Global Data Protection – will create both additional compliance burden for banks and huge opportunities that banks should consider seriously. In a context where digital security is crucial, banks hold a unique combination of customer knowledge, trust and ability to secure and protect identities. Beyond security, banks realize how much identity and privacy are becoming differential and competitive assets.
What do customers really expect?
With the increasing importance of digital identity and the rise of new millennials behavior, customers want to be able to use their bank identity to initiate payments, but they expect more. They want to rely on their already registered personal data to initiate and feed new digital relationships to get access to digital services. For example, they could prove their age to be able to make purchases in liquor stores. Many other uses cases can be made possible by giving or proving attributes to third parties about themselves such as civil identity, phone number, mailing address, solvency or simply prove that they own a bank account by querying their bank. All these use cases will be done with Open APIs delivered by banks to all kind of third parties.
But, how to answer these expectations in an easy and convenient way without compromising customers’ digital experience?
Customers expect to let services query their bank identity on their own – not only in a one off interactive way, but automatically by setting authorizations to give access to their personal information. Obviously, they expect these features to be operated with both security and ease of use. Clever authentication mechanisms relying on behavioral and continuous authentication and advanced authorization protocols enable this.
Customers also expect to keep control of their data, by being able to manage information flows between banks and third parties. Innovative Personal Identity Managers will let customers manage their digital connections with the bank at the center of interactions.
Finally, customers expect privacy. Bank data are sensitive; therefore customers want to be able to use pseudonyms and privacy-preserving mechanisms to not disclose information, but rather proofs of information about them. Privacy Enhancing Technologies (Zero Knowledge Proofs) can answer this need.
Consumer-oriented identity services will be, more than ever, user centric. Banks will succeed to answer these expectations by empowering their customers and letting them manage their Bank Identity by themselves. With identity being the key to digital life, banks need to grasp the opportunity to be the trusted host of a 360° vision of their customers’ digital life and start to act now.