Other parts of this series:
In my last post, I introduced the idea of there being five roles available to banks in a GAFA (Google, Apple, Facebook and Amazon) world. To recap, the five roles are:
- Relationship Player
- Platform Provider
- Core Financial Services Manufacturer
- Innovation Playmaker
- Digital ID Enabler
These five roles are non-exclusive—financial services players can choose a single role or combine roles to fit their unique requirements and strategic vision. Each role offers many benefits and opportunities, but I think the role of Digital ID Enabler presents banks with some particularly interesting possibilities.
In the Digital ID Enabler role, the bank operates a secure platform that offers consumers easy access to digital commerce. Over time, this role might extend to the authentication of digital IDs, the overall safeguarding of individuals’ privacy and the monetization of certain personal data in compliance with relevant local privacy laws. It’s this extended role that I see as being especially valuable for banks.
Digital IDs are the electronic equivalent of a person’s identity card, and they can be presented electronically to prove a person’s identity or right to access information or services online. Types of digital ID vary widely and include:
- Email addresses and mobile phone numbers. These, along with passwords, are commonly used to identify people online.
- Selfies and fingerprints. MasterCard has launched a pilot program to replace passwords on mobile devices with photos and fingerprints. This service will be supported by mobile device companies that incorporate fingerprint scanners.
- Voice recognition. HSBC is rolling out new technology to allow customers to register their voice, so that when they use phone banking, they no longer have to remember a password. And Capital One allows customers to use Amazon Alexa for queries and transactions.
- Iris recognition. Qatar bank QNB is implementing an iris recognition solution, which is apparently 10 times more accurate than fingerprints.
As a Digital ID Enabler, I see banks providing five services:
- Issuer of (de facto) digital ID. Leverage existing digital ID and security protocols used by the bank to grant access to accounts and mobile wallets. Leverage know-your-customer (KYC) and KYC innovation, blockchain and other technologies as needed.
- Guarantor of digital ID. Leverage and improve KYC processes and anti-fraud algorithms to authenticate users and guarantee own or third party digital IDs.
- Peace-of-mind relationship layer. Create a layer whereby customers use a single bank sign-on to access digital providers—including government, commerce, email and social media. Provide active security, such as automatic password changes in case of hacker attacks, even before customers are aware. Augment verification with consumer protection guarantees.
- Secure storage and future-proofing of digital data. Provide secure private storage for personal, valuable data such as deeds, wills and photos, either on the bank’s own servers or by authenticating security of third party providers such as Dropbox. Future-proof data, making it accessible and visible in the future—for example, make sure family photos and deeds can be retrieved and viewed in 30 years’ time.
- Data “deposit account”. Monetize customer data through active sign-up and in accordance with regulatory requirements, and pay “interest” such as cashback, points, preferential interest rates, offers or royalties to customers. Extend data sets by connecting to external accounts such as Facebook and Gmail, and observe customers’ beyond-the-bank interactions.
Banks already engender a degree of trust—they keep our money safe, after all. In the role of Digital ID Enabler, they could build on that trust to become a guarantor of authenticity, central to the entire digital ecosystem, extending far beyond the financial services industry, perhaps even to the level of government.
In my next post, I’ll look at the Innovation Playmaker role and why it should be a part of banks’ long term strategy.