'Digital passport' in financial services and government's 'Verify' regime should 'run along the same track', says expert

Out-Law News | 30 Mar 2015 | 12:35 pm | 2 min. read

There is potential to link moves to build a 'digital passport' for users of financial services with the expansion of the government's identity (ID) assurance regime, an expert has said.

On Wednesday the government announced that it had signed contracts with five ID assurance providers as part of its 'Verify' initiative. Barclays, GB Group, Morpho, PayPal and Royal Mail will help authenticate the identity of individuals looking to engage with a range of online government services. The Post Office, Experian, Digidentity and Verizon are existing suppliers of ID assurance services under the Verify regime.

Under the Verify system, individuals using government online services choose a certified ID assurance provider with which to verify their identity. This involves answering security questions and entering a unique code sent to an individuals' mobile number, email address or issued in a call to their fixed-line telephone number.

When using government services online thereafter, government bodies are able to rely on the third party verifications of individuals' identities. The system is still at the stage of public testing, but it is aimed at streamlining the identity verification process for both government bodies and the public.

An initiative with similar aims is in the development stage in the financial services sector. The Savings and Investments Policy project (TSIP), a coalition of 50 entities from across the financial services industry established by the Tax Incentivised Savings Association (TISA), is in the process of developing a new 'digital passport' for financial services customers.

Financial services and technology law expert John Salmon of Pinsent Masons, the law firm behind Out-Law.com, a member of TSIP's executive committee, said it would be in consumers' interest for the Verify scheme and 'digital passport' initiative to "follow along the same track" as one another.

David Dalton-Brown, director general of TISA has said: "A 'digital passport' … is a secure store of validated client information, with that information being used to support the identification of the client. The government's digital initiative already provides for the development of these types of secure store. The data in the store can be shared with providers through a secure messaging service."

Dalton-Brown said that a digital passport can help remove the need for consumers to have to continually submit authentication documents, such as utility bills and passport details, when wishing to open new accounts or purchase a financial product, and also help cut the "real costs" associated with the processing of that information. Validating the identity of customers is a necessary part of financial services companies' operations as a result of their 'know your customer' (KYC) and anti-money laundering obligations.

"The digital passport will make opening a new savings account or switching to a new provider as simple as swiping your debit card at a coffee shop to pay for a coffee,” Dalton-Brown said. "The passport could also be used to support the communication of changes in a client's address, for example, and that information can then be passed to all of the providers who use the digital passport."

"If the client information required to open a new account or transfer monies between accounts was secured and stored in a digital passport it would make the process and the experience better for all involved – both the customer and the provider," he said.