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Digital identities - how and why we are where we are, what it's proposed we do about it and whether it will work.

The fintech world is at last waking up to the biggest problem facing real-world businesses: how to perform KYC on customers you will never physically meet and who live lives which do not intersect with your own except for one specific purpose - the provision of a service. Of course, being tech-driven, fintechs are looking for a tech solution and they've even got a name for it - Digital Identities. The world is full of "White Papers" but there are no practical applications nearing real-world testing, so far as we can ascertain. It appears that, as in so many cases, people are starting with the tech and trying to make the problem fit it, rather than looking at the problem and trying to build tech around reality, says Nigel Morris-Cotterill.

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**This article has been updated for spelling, grammar and one or two additions or amendments performed to improve clarity.** 11 November 2019.

My bank is a national UK bank. A couple of years ago, it was performing its periodic identity checks, I was required to go into a branch of the bank and produce identification: in my particular circumstances (I have lived overseas for almost 20 years and do not have a UK address) that was difficult. But I had reason to be in Herefordshire for a couple of days and so I walked into the branch of the bank a few doors from my hotel. Like many, it was a relic of glory days, a beautiful old building that was falling into redundancy and had little more than a skeleton staff, unused to someone like me walking in and saying "I want to prove my identity - can you please take these documents, copy and certify them and send them to my branch?" They talked to my branch, then they understood and then they did it. But I could not do that now - the Ledbury branch is one of those that has closed. The nearest branch is now in Hereford, a walkers' town with huge parking problems because ramblers arrive, park their car for two or three days so that spaces don't "turn over." But from Ledbury, it's half an hour away by bus, an hour (occasionally half-an hour) plus a hilly walk by train or fifteen minutes by car. It's not an easy car journey: I know, I've driven a Morgan and an AMG Mercedes around there and it's not a journey many people would take lightly, especially in the rain or in "tractor" season - although, if I was driving the Morgan, a car that is such a hoot to drive I would be, literally, laughing all the way to the bank. In this example, we are assuming that people are already in Ledbury but its history as a market town shows that most of its nominal population don't actually live in town and will have to travel even to get to the starting points mentioned.

The UK government has suggested that one solution for cash withdrawal is for shops to give cash-back. It works - it's the system I have with my local "corner shop" in Kuala Lumpur - the shop loves it because there's less cash to bank with the attendant costs and of course less cash on the premises and I love it because I make an internet banking transfer which means neither of us suffer card or transfer charges. But, of course, such systems militate against those that some governments wish to encourage, that of a non-cash society. Also, I've had my bag snatched after walking out of an ATM lobby - that's not likely when I'm walking out of a little shop with a bag of washing powder, potatoes and eggs. So it's not a terrible idea but withdrawing cash is a long way from providing effective banking services. But because I'm prone to leave my phone lying around and after my bag was snatched, I now refuse to allow any financial data, passwords, etc. to be stored on my phone. Losing credit cards is a hassle; losing the phone with a range of apps would be far more trouble and risk. Even so, in the past couple of days Grab, a car booking (and more) service has announced that from 2am to 6 am it will not accept cash payments - only payments via its own wallet or by credit card through the app will be accepted. I don't do that for my own security and always pay Grab by cash - and have done so since a few weeks after the company launched some years ago. The result is that service is now out of service for me during those hours (which annoyingly are often those I'm travelling to or from the airport when the trains and buses don't run). Grab has my name, it has my address, it has my photo, it has my mobile phone number. It knows where I was and where I went. It therefore has more identification data than one might expect. Ironically, the digital identity issue is only part of Grab's reason for its new policy: it's because its drivers have been attacked during those hours by people looking for money. So my digital identity with them does not ensure I get service as a result of the behaviour of others.

In general, though, it follows that there is pressure from many participants for some kind of individual, verifiable, registration scheme, ideally operating globally.

One proposal for such a scheme is the concept of "Self-Sovereign Identity " discussed in 2016 by Christopher Allen.

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