Digital identity verification is a term that is evolving and often given different definitions, according to an update from Juniper Research.
Juniper Research considers digital identity to be defined more formally as follows: ‘A digital representation of an entity; this can be one or more individual pieces of identifying data, an event, or a signal such as an assurance indicator, and similar, yet to be determined, items defined by the industry.’
According to the research report from Juniper Research, digital identity verification goes beyond simply “identifying an individual; it also involves validating their digital attributes and features through technological solutions.”
The report from Juniper Research explained that this process “utilizes digital methods to confirm a person’s identity; allowing for remote verification to ensure the individual is who they claim to be.”
As noted in the update from Juniper Research, it is commonly used for onboarding customers to services, but also “plays a role in authorizing financial transactions and access management.”
As the threats and fraud techniques employed by malicious actors become more sophisticated, it is “crucial for organizations handling sensitive data to adopt the latest technologies to protect their users.”
The research report from Juniper Research added that many digital identity verification providers offer solutions that enhance the accuracy, security, and overall user experience of identity verification, particularly during the onboarding process.”
Juniper Research pointed out that given the diverse range of use cases, it’s important to recognize that “different verification methods may perform better in specific contexts.”
As stated in the report, a verified identity is the “result of digital identity verification; providing a trustworthy basis for accessing both public and private sector services.”
Juniper Research further explained that by “utilizing advanced digital identity verification systems, the likelihood of incorrectly identifying an individual or entity is significantly reduced.”
This is particularly crucial in “highly regulated sectors like financial services.”
There are various regulations “that dictate when a company must verify a user’s identity and the level of certainty required.”
The Juniper Research report added that these regulations “are typically outlined in AML (Anti-money Laundering) and KYC (Know Your Customer) rules, highlighting the connection between fraudulent identities and criminal activity.”
Digital identity verification plays “a central role in the digital transformation of services.”
According to the update, the push for digital identity verification is “driven by the need to protect customer information, ensure that only legitimate customers can access services, and comply with regulatory requirements.”
New approaches are also “improving the user experience by eliminating the need for passwords or other knowledge-based authentication methods.”
This has resulted in a thriving market, with technology being “developed alongside other solutions like regtech (regulatory technology) and
fraud-detection systems.”
Shifting Regulations – eIDAS
eIDAS is one of the most comprehensive frameworks for digital identity.
Juniper Research also noted that its position “as the primary digital identity regulation in Europe, one of the largest markets of digital services, means that it shapes practices for digital identity providers, verifiers, and authenticators.”
The report added that despite operating in each member state individually, assurances can be “moved across borders under the legislation.”
eIDAS outlines the requirements for “online entities to be trusted providers of identity. It also sets out trusted serviceproviders, who are providers that meet the criteria of the specific member state that they are operating in. eIDAS regulation allows such providers to issue credentials with the same presumed legal force as a physical signature.”
The trust framework for providers also “supplies specifications for electronically sealed documents and timestamping facilities. In June 2021, the European Commission published the Proposal for a Regulation amending eIDAS, which would become known as eIDAS2.”
The proposal reportedly includes the overall concept of “an EU ID Wallet (European Digital Identity Wallet) which allows users to store identity data, credentials and attributes linked to their identity, as well as regulating cross-border electronic identifications, unique identifications, and introducing electronic attestation of attributes.”
Another crucial point of the proposal is “that it introduces new qualified trust services, such as remote qualified signature creation devices and electronic ledgers. eIDAS2 was published into the Official Journal of the European Union on 30th April 2024 and was officially entered into effect on 20th May 2024.”
According to the regulation, EU member states must “provide EU ID Wallets to citizens up to 24 months after the adoption of Implementing Acts.”
Juniper Research also mentioned that the Wallet will be “available to EU citizens, residents, and businesses who want to identify themselves or provide confirmation of certain personal information, and it can be used for both online and offline public and private services across the EU.”
Juniper Research further explained that this “addresses several shortcomings of the digital identity services offered by governments in the EU before the regulation was put into effect; namely that these services were not available to the entire population and they were often limited to online public services.”
Although not achieving the anticipated customer uptake, eIDAS had led the way to the “development of various identity verification and credential sharing offerings suchas those employed in the Nordics, for example Norway’s Bank ID solution, culminating in the proposed EU Digital Wallet.”