Digital Identity & KYC

From Digital Identity to Self Sovereign Identity: the individual at the center of an integrated collaborative Ecosystem for a continuously enriching fluid digital identity.

The deployment of digital identity systems would enable about 1.7 billion people to have access to financial services and reduce the costs associated with onboarding processes by about 90 percent. Although digital identity solutions have been developed in some contexts the current scenario is characterized by some critical issues, related to the level of centralization of each domain. This leads to fragmented interaction in silos between each individual organization and its users, making it necessary in each domain to repeat those activities aimed at defining and verifying the identity attributes of a subject. There is thus a lack of trust and security. Therefore, the goal is to develop a collaborative, differentiated and integrated ecosystem. The creation of the ecosystem, must make it possible to provide a flow of information that can give a detailed and complete digital representation of a subject's identity. In this sense, it is necessary for the user to begin to hold his or her own identity. To this end, it is possible to think about the development of a decentralized identity system based on Blockchain, in which trust between counterparts is implemented through appropriate decentralized mechanisms capable of providing mathematical proof of the veracity of information. In this context, Verifiable Credentials (VCs) and Decentralized Identifiers (DIDs) are key. The former represent statements, made by a third-party certifier, about an identity and characterized by cryptographic proof; the latter are cryptographically signed identifiers. Once a DID is created, a potentially infinite number of credentials can be linked. This allows digital identity to evolve toward the concept of Self Sovereign Identity (SSI), whereby each individual turns out to be in full control of his or her own set of identifiers and credentials for defining his or her identity.
However, in an ecosystem, which is more business-driven in nature, it may not be so efficient to have too diverse and wide a range of data available, having to try to minimize the data collected toward that which is likely to result in greater value creation. Each institution must at the same time be aware that while each piece of data inherently has some value, this can be increased through sharing and integration with other data. Thus, the ecosystem needs to be structured to create a model for incentivizing sharing that can generate a gain for each party, thus overcoming the traditional logic of "data jealousy." At the same time, each user, as the owner of the data, must be provided with a clear vision of the benefits he or she is able to derive, i.e., the needs he or she might be able to satisfy and the services he or she might be able to access, so that he or she is more inclined to share. In addition, the integration of off-line and on-line channels must ensure that the subject's identity is easily recognized during the onboarding process. Therefore, it is required to explore both User Experiences to understand what operations digital onboarding can allow to be performed more effectively and what are its limitations, which could be solved by physical onboarding. The goal is to define a no longer static but dynamic snapshot of the user's profile, thus defining a fluid digital identity that is continuously enriching. Identity in this way is seen as a "path of events," each capable of reinforcing and validating specific attributes of the subject.
In the management of Digital Identity projects, it would certainly help to have legal and regulatory provisions in place that are capable of enabling the full implementation of the platforms. The personality characteristic of identity-related information, requires in this sense to reflect on three issues arising from the application of the rights and requirements enshrined in the GDPR in this context: the identification of a data item as personal, the relationship between the immutability characteristic of Blockchain and the requirements of accuracy and limitation to data retention, and the identification of the entities responsible for data processing. However, the last two critical issues, while current, often remain outside the debate related to the implementation of Blockchain projects in banking and insurance, as it is common to prefer models characterized by the use of external databases for data holding and management, which can solve them.