Digital transformation across all aspects of business makes verifiable data the currency for seamless and secure processes in 2023
By Trevor Butterworth and Heather Dahl
Across every sector, digital transformation is the agenda. It means doing more and doing better, often with the economic constraint of having less. It means reorienting to changing employee demographics and labor shortages while meeting customer expectations for seamless experiences and greater efficiencies — often managed from a mobile device. It means adopting new platforms for product design, simulation, and lifecycle management, integrating data from sensor-equipped devices, and in-sourcing supplies.
It means adapting to continuous brand or product engagement by creating and integrating new data streams while complying with data privacy law. And it means seeing digital relationships in terms of authenticity: they aren’t just about modified data flows, they are about creating new kinds of genuine, peer-to-peer interaction based on consent.
Successful digital transformation will deliver better products, experiences, and services, for both B2B and B2C companies, while reducing costs, friction, and risk.
Trusted data is the currency of digital transformation
Trusted data is data that is verifiable. The quicker it can be verified, the more seamless the process that depends on the authenticity and integrity of the data. That may sound simple and obvious, but the inability to trust the authenticity and integrity of data has throttled digital interaction with punishing costs in fraud and friction. There is no reliable verification layer for people, entities, or the data they wish to share; the internet was built without one.
Verifiable credential technology (often referred to as decentralized identity or self-sovereign identity) changes all this. It means data can be immediately acted upon while reducing the risk of fraud. In practical terms, there’s no need to check in with the source of the data or rely on a third party to store data in order to cross check and manage data verification; the data is issued in a credential from a trusted issuer and is not written to a database or a blockchain; It can be shared by consent and verified through metadata across direct, uniquely encrypted peer-to-peer communications channels. All this removes friction and adds consent, privacy, and security. The result is trusted data, seamlessly verified.
Trusted data not only accelerates seamless processes, it enables new kinds of digital processes and services by removing barriers to digital interaction and enabling interaction to scale.
So how do we think trusted data will be used in 2023 to drive digital transformation? Here are our predictions.
1. Digital wallets will take a backseat to “super” credentials
Perhaps because digital wallets are apps, and apps are what make mobile devices powerful, digital wallet apps have come to be seen as “really important” to implementing verifiable credential technology. But — just as a fancy wallet doesn’t do much in the real world if there’s nothing of value in it — a killer digital wallet is only as useful as what it actually stores, which is to say, digital credentials.
Create interoperable “super” credentials for seamless KYC, payments, and travel, and a digital wallet becomes super useful. There isn’t a critical shortage of wallet apps; Hyperledger Aries has an open-source white label wallet — Bifold — that anyone can adapt, build on, and offer with their credentials. This is why we see the hype of a killer wallet being replaced in 2023 by the practicality of a “super” credential.
2. DeGov will gain commercial and public sector traction
One of our earliest insights into consumer needs was that governance needed to be simple to implement and yet capable of handling complex information flows, rapid rule change, jurisdictional hierarchies, and—crucially— offline environments. Governance authorities need to be confident that they are in charge of the governance decisions within their jurisdictions and Decentralized Ecosystem Governance (DeGov) enables that accountability.DeGov began with machine-readable files that could be cached in the software for each party in an ecosystem, and it has now expanded to a specification, currently under discussion at the Decentralized Identity Foundation (DIF), with efforts to standardize and interoperate with other governance implementations at ToIP.
The net result is that we have a coherent, powerful, and easy-to-use way for establishing and managing trust in an ecosystem, one that results in a smooth user experience with the capacity for verification in offline situations. DeGov will catalyze commercial and public sector use cases of increasing complexity.
3. KYC credentials pave the way for payment disruption
Identity assurance is expensive to do, time consuming, and has to be done over and over again, causing frustration and friction for both the customer and the financial institution. The crypto and banking sectors both experienced a doubling of identity fraud in 2022 from 2021, and payment fraud increased by 40 percent. At the same time, financial losses from identity theft rose to almost $6.1 billion in 2022.A know-your-customer (KYC) credential (with biometric binding to a device) means both one-time identity assurance and proof-of-card ownership without the need for storing and sharing any personally identifiable information.
By simplifying KYC, verifiable credentials will save time, effort, friction, and, significantly, cost. This also means that the barrier to performing KYC will be lowered, encouraging identity assurance to be more widely performed.
The combination of reduced friction and increased trust will change ecommerce, invoicing, mortgage brokering, payments — and DeGov — will make this easy to coordinate and manage on a global scale.
4. Passwords will become a relic of the old times — like rotary phones and punch cards
No one loves passwords and usernames. According to a recent poll, 68% of consumers would be willing to use non-password login options on their mobile apps. There is no digital future where they turn into vinyl and the kids will want to use them because they’re cool. Our digital lives will be immeasurably better once they are gone.The way to replace a username and the password is to create a trusted digital relationship with a verifiable credential. The authentication problem that passwords and user logins are meant to solve vanishes, because they are no longer needed as a substitute for a trusted digital relationship.
Digital-forward companies that use verifiable credentials for login will be able to build stronger relationships with their customers, develop more effective product lifecycle management, and collate product data and consumer feedback. These digital relationships will use DIDComm technology for direct, peer-to-peer secure communication between entities, and they will be data privacy compliant, as data can be shared by explicit consent and in privacy-preserving ways.
5. There will be new models for monetizing credentials
First, verifiable credentials will save you money, then they’ll make you money. The immediate value proposition for verifiable credential technology is in fixing inefficient and insecure verification processes, especially around payments. Then they can be deployed to tackle problems that are, presently, filed under “the cost of doing business,” such as chargeback fraud. But as trusted data scales, it also presents opportunities for both better digital relationships and products and services that deliver the customer value (think seamless travel). If the cost of KYC is minimal, the cost and risk of entering a market is correspondingly reduced. Anything that provides a valued customer with more value and efficiency has the potential to become a new business model.
Much of the talk around “super apps” reflects the behavior and expectations of a maturing digital-first demographic that wants to be able to manage everything as simply as possible through their phone. But super apps aren’t going to work without trusted data that’s interoperable across ecosystems. They aren’t going to be super if they can’t deliver privacy, consent, and security.
Verifiable credential technology doesn’t require everyone moving to a new system or companies and organizations trashing their existing systems. It’s a technology layer that transforms what you already have. And because it is open source, there’s no vendor lock in. It’s a tool and a toolbox for innovation and interoperability. Those that have it will be able to accelerate digital transformation. Those that don’t will face equally rapid obsolescence.
To learn more about how you can deploy-open-source verifiable credentials now, contact us.
Photo (modified) by Tech Daily on Unsplash