Why self-sovereign digital identity is a game changer for financial inclusion in Africa – CNBCAfrica.com

Information is power. And personal information, or more specifically, who controls it, is rapidly becoming one of the most crucial business and consumer challenges of a digital economy.

We are more connected than ever before, but identity theft, online fraud and cybersecurity breaches are increasingly commonplace. Global corporations are accused of misusing and even selling personal data. So, how do we merge the divergent and competing strands into a secure, convenient offering that empowers our customers to be in control of their identity too?

We believe the answer lies in digital identity. More specifically, self-sovereign digital identity (SSDI).

SSDI provides a quick and highly secure way for people to store and update their own identity data on a personal mobile device, and share proof of it through a secure digital verification system, without having to share actual copies of their documents.

What makes it different to other forms of digital identity management – and a game changer for financial inclusion in Africa – is that SSDI not only gives consumers a way to control their personal information with less risk of identity theft, but it also gives individuals who don’t have physical documents a means to build up legal proof of identity, enabling them to access benefits and financial services that they might not be able to obtain otherwise.

An SSDI system uses secure electronic “credentials” that are issued by relevant authorities (such as Home Affairs, credit bureaus, financial services organisation and similar) and which a person stores in a mobile app to share at their discretion. It transforms the arduous document-based process typically required each time you need to prove an aspect of your identity (identity number, legal and regulatory compliance like FICA, proof of residence and more) into an electronic mobile request/response that takes seconds.

Once adopted on a large scale, SSDI lowers transaction costs, protects customer information and limits the opportunity for cybercrime. What makes it so exciting for companies like Absa is that it lowers the cost of opening accounts, which has the potential to make small business financing more accessible, deepen savings and credit for under-banked customers, and in future even reduce the harm caused by fraud and identity theft.

So, what will it take for SSDI to take hold in Africa? Because of the volume of personal information that financial institutions require for everything, from FICA compliance to credit scores and lines of credit, they are best placed to build the platforms and environments that will make SSDI possible. The good news is that the local financial services industry has already made significant progress.

As a founding steward of the Global Sovrin Network since 2018, Absa has been actively involved in the global deployment of an open-source public-permissioned distributed ledger technology network – the world’s first to be built specifically for SSDI purpose – as well as the local development of a self-sovereign digital identity management system.

This builds on four years of Absa’s work with BankServ, other banks and multiple local and global forums, to set up an industry-wide governance framework for self-sovereign identity, including collaboration with the South African International Organisation for Standardisation (ISO) to develop documentation that covers the standards for SSDI management. Collaborators are now exploring how to make the governance framework machine-readable, to enable implementation via automated electronic channels as part of the overall identity management system.

This progress is supported by close involvement with the World Economic Forum’s (WEF’s) Identity Coalitions Network, a learning and action network of organisations that implement human-centric, collaborative digital identity solutions.

While the financial services industry has done well to lay these foundations for SSDI in Africa, the tipping point will only come when other industries start doing the same.

Much like cell phone technology and the internet, the true power of SSDI will only be unleashed when it is embedded across all sectors of society, from education and medical care to telecommunications and retail. And that will require all role players – government bodies, regulators, service providers, public and private agencies – to take up the SSDI baton and become part of the change.

Source : From the Web

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