Decentralized identity can deliver significant benefits to consumers and institutions alike: faster, smoother customer experiences, including passwordless login; enhanced cybersecurity, and securing call centers from AI-driven fraud. But how do we get started?

By Tim Spring

Mutually authenticated trust

Did you know that the Nigerian prince scam is over a century old? The earliest record can be traced back to 1910, when people would receive a paper letter claiming a wealthy nobleman had found himself in prison, and needed just a little help to bribe his way out, after which you would be handsomely rewarded. The root of this scam is that no one can verify identity through the mail, and this problem has stalked us into the age of the internet, with many different and effective kinds of phishing schemes.

Now, finally, we have a way to solve the root problem. With decentralized identity, users will have a way to share verifiable credentials through DIDComm protocols with each other before even beginning an interaction, allowing both the customer to confirm that it is their bank, and the bank to confirm it is their customer. These verifiable credentials are tamper-proof and issued by an authority, such as a government or financial institution. You can think of it as if you started every conversation with each party sharing their driver’s license or passport — you can be reasonably certain of who you’re talking to because you trust the government that issued them that document.

This confidence in who you’re interacting with will be the driving change that brings decentralized identity to banking.

Finance is a highly-regulated industry facing relentless identity fraud, exasperating customer experiences (because they have to make very sure their customer is who they claim to be), and costly inefficiencies (often because they often have to verify their customers multiple times). Verifiable credentials are a solution that stops all this. They offer a simple, tamper-proof way to instantly prove your identity as an account holder (no more need for multi-factor authentication) and for the bank to prove that it is your bank and not a phishing attack.

Decentralized identity education

The customer experience for banking is paramount, especially among younger, more digital generations. But, while 78% of adults in the U.S. prefer to bank via a mobile app or website, security is still a top concern, with 42% of people who don’t use mobile banking apps reporting it is because they simply don’t trust them.

This was echoed by Dan Gisolfi, Head of Research and Development at Discover Financial Services, when looking at regulations in a recent discussion with Indicio. Despite the benefits of decentralized identity, financial institutions are hampered by regulatory uncertainty — regulators either aren’t fully aware of the technology, or don’t fully understand it.

However, the European Union’s embrace of decentralized identity and digital identity wallets will force everyone’s hand. Many financial institutions are international and will have to adopt the technology to meet customer expectations and match competitors.

At the same time, information campaigns can show how decentralized identity is simply too useful and too powerful a security solution to be ignored. Because the technology is so simple to use, it will be fast to catch on, similar to how credit cards replaced checks, and then Apple and Google payment systems are slowly replacing credit cards. Simplicity and security will win out.

So how will it affect you?

The good news is that your life as a customer will get a whole lot simpler and less stressful. With verifiable credentials you’ll be able to prove who you are to the bank, access services, and complete transactions faster and easier than ever before. You likely won’t even notice these technologies in your day to day interactions, but they’ll be there keeping you secure.

The biggest difference you will notice will be the lack of need for multiple manual document checks. As more institutions realize the value of trust through decentralized identity, physical driver’s licenses, passports, and other proof of identity will be largely unnecessary, resulting in faster customer service since an employee doesn’t need to manually double check everything.

Get ahead start by getting started now

Everyone wants to be ahead of the game when it comes to technology, and there are a few ways that you can start experimenting with decentralized identity for yourself right now.

The first way is by downloading a digital identity wallet. Indicio has one called Holdr+ that anyone can download for free on the App Store or Google Play. Not only will this app let you start holding verifiable credentials, it will let you experiment with mutually authenticated communication through DIDcomm. All you need to do is scan each other’s QR code to connect.

There are many demonstrations of what this technology can do, including several from Indicio. While this technology is perfectly set up to streamline customer authentication and transactions, it can also hold all your information necessary for travel, prove educational achievements, and verify employment.

Or, if you’re an organization interested in potential adoption for your customers our team would be happy to discuss how that might look with you.

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