Absa says adopting a digital ID based on blockchain technology can help clamp down on the abuse of personal data, curb identity theft, and enable easier access to financial services.
Specifically, the bank has punted using a self-sovereign digital identity (SSDI) system that uses secure electronic credentials issued by relevant authorities — such as Home Affairs, credit bureaus, and financial services organisations.
These credentials can be stored in a mobile app for users to share at their discretion.
“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,” Absa explained.
The bank said this would transform the arduous document-based process typically required each time you need to prove an aspect of your identity into an electronic mobile request/response that takes seconds.
This would allow you to more easily provide proof of your identity number or address, and handle legal and regulatory compliance like FICA.
SSDI gives consumers a way to control their personal information with less risk of identity theft and gives individuals who don’t have physical documents a means to build up legal proof of identity, enabling easier access to benefits and financial services.
Once adopted on a large scale, using SSID will lower transaction costs, protect customer information, and limit cybercrime opportunities, Absa said.
“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,” Absa stated.
Absa said financial institutions like banks are best placed to build the platforms and ecosystems that will make SSDI possible due to the volume of personal information they handle.
The local financial services industry has already made significant progress in developing an effective SSDI system.
The bank has been actively involved in the Global Sovrin Network since 2018.
The project envisions the global deployment of the world’s first open-source public-permissioned distributed ledger technology network (blockchain) built specifically for SSDI, 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,” Absa said.
The project’s collaborators are now exploring ways to make the governance framework machine-readable and enable implementation via automated electronic channels as part of the overall identity management system.
Absa said the tipping point for SSDI adoption would be when other industries, like education, medical care, telecommunications, and retail, start embedding it in their operations.
“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,” Absa said.