The Centre for Finance, Innovation and Technology (CFIT) has released a blueprint for combatting fraud through the introduction of a Digital Company ID.
A Digital Company ID aims to prove that a company is real through verifiable data points and credentials, which can only be changed at the source. This initiative is similar to the UK government’s planned launch of the GOV.UK Wallet, a digital wallet that will allow residents to verify their identity via their phones.
Some prominent UK finance stakeholders believe that digital ID has the potential to solve some significant payments pain points, particularly fraud. For example, The Payments Association Director General, Tony Craddock, shared this view with Payment Expert recently, following the government’s announcement of its digital wallet.
Charlotte Crosswell OBE, Chair of the CFIT, believes the same can be said for a Digital Company ID.
“CFIT has brought together some of the brightest industry minds to work together and find solutions to reduce the fast-rising, multi-billion-pound annual cost of fraud to the economy,” Crosswell said.
“Fraud stifles economic growth by burdening businesses and banks with unnecessary costs, slowing access to setting up bank accounts and the loan finance needed for businesses to invest and grow.”
A company ID will combat fraud directly through unified and secure data sharing, aiming to disrupt fraud networks and close exploitable gaps. Additionally, the ID will indirectly enable financial institutions to use the money saved in compliance costs to bolster defences against fraud.
Financial institutions could save around £1.7bn in compliance costs by adopting a digital ID, according to quantitative analysis of bank onboarding and KYB processes. This research is the product of a Coalition, which includes some of the leading experts in financial crime.
Elyn Corfield, CEO of Business and Commercial Banking at Lloyds Bank, commented: “The coalition has proven that digitising how banks undertake know your customer obligations will help make compliance checks more user-friendly for Britain’s small businesses and support the UK’s fight against financial crime.
“Delivering easier and quicker access to bank accounts and finance will also enable businesses to secure greater investment for growth and deliver more jobs for people across the UK.”
The Coalition has urged the government, regulators and financial sector to implement essential regulatory frameworks and initiatives to put the research into practice.
Economic Secretary at HM Treasury, Emma Reynolds MP, said: “The UK’s leading financial services sector is key to driving growth and putting money in people’s pockets through the Plan for Change.
“CFIT’s work in countering fraud demonstrates the UK’s position as an innovator within the global financial ecosystem. I look forward to considering the Coalition’s findings as part of our range of work to grow the sector.”
