A cross-sector coalition of companies and regulators has reported progress on its work to create a digital ID specifically tailored for corporate use.
The coalition is led by the Centre for Finance, Innovation and Technology (CFIT), a UK-based and government-backed grouping of fintech stakeholders.
CFIT stated that the coalition summarised that a digital ID would help prevent fraud and boost efficiencies for banks and other financial institutions by saving time, reducing compliance costs and creating a ‘secure smart-data economy’.
The coalition came to this conclusion after conducting research into how digital ID can be developed for and adopted by British financial institutions and fintechs. It is now hopeful that it can create a working prototype for British businesses, which it has christened a ‘digital passport’.
CFIT Chair, Charlotte Crosswell OBE, said: “Economic crime remains a major threat to the UK’s economic security, and has a profoundly distressing impact on consumers and businesses. At CFIT, we are committed to addressing this and making the financial services industry more robust against fraud.
“The dynamic elements of Smart Data and Digital ID, along with cross sector interoperability, have been key to the success of the coalition to date and demonstrate a further milestone in CFIT’s mission to boost economic growth through financial innovation.”
CFIT and government on the same page
The coalition’s work in the area of digital ID has seen input from a huge range of UK finance stakeholders. This includes the traditional banks of Lloyds, NatWest, Barclays, Santander and Virgin Money, the rising neobanks of Monzo and Revolut, and the global payments giants Visa and Mastercard.
Other participants include the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR), two of UK finance’s biggest regulators, alongside Yoti, One ID, A&O Shearman, Dun & Bradstreet, CRIF, Ernst & Young, Experian, GLEIF, LexisNexis Risk Solutions, and Companies House, the UK’s business registry.
Digital ID has caught a lot of interest in financial circles over recent years, largely due to the increase in use of mobile and web-based banking and finance services but also due to concerns around the impact of fraud and the use of AI and deepfake IDs by said fraudsters.
Official figures show that fraud accounts for 39% of reported crimes in the UK, and data from the likes of Visa shows this is having a significant impact on businesses. Recent reimbursement rules introduced for UK banks have also given these companies a bigger financial incentive to prevent fraud, including by knowing who exactly a customer is.
NatWest Group’s Head of Financial Crime Risk Management and Deputy Group MLRO, Phalé McMillan, said: “Financial crime continues to be one of the most prevalent crimes in the UK, which is why cross industry collaboration is vital to protect consumers, businesses and the overall economy.
“The proposed digital verification framework demonstrates the power of technology in protecting the financial system and customers, whilst supporting UK economic growth.”
CFIT added that the coalition’s work has been supported by Chancellor of the Excquer, Rachel Reeves, who recently announced the National Payments Vision (NPV) – a long-term vision for the eUK payments sector covering a range of areas including Open Banking and fraud prevention.
Government-backed ID verification is not an unfamiliar topic in the UK. A programme was proposed under Tony Balir’s Labour government but was shelved amid concerns around privacy. Following the party’s victory in the July election under the leadership of PM Keir Starmer, it has reinforced the idea of Digital ID under its Smart Data Bill legislation.
Reeves states that the government welcomes the coalition’s work to“explore the potential of digital verification solutions to combat economic crime” and has pledged to “consider any findings that emerge from CFIT’s work in due course”.
CFIT will announce the outputs, recommendations and next steps from the digital ID programme in Mach 2025. Digital ID is not CFIT’s only area of focus, with the organisation also working on how Smart Data can support Open Banking initiatives, again sharing some objectives to the government in this regard.
