Identity, Digital identity and payments are becoming conflated. There is success in the evolution of Apply Pay and like systems which provide assurance to to the payee (receiver of money) that the payor (sender of money) has a strong association with the money source.

The payor has documented ownership of the cash, credit card or debit card. The receiver of money can legitimately rely on the money ownership as if the payor were holding the physical credit card as in buying something in a physical location 30 years ago.

I will focus here on the Apple Pay example. This association between the money and its ownership is strong and one way. The payor adds a credit card to his iPhone, Apple verifies ownership with the issuing bank at that point in time, and from then on the association is made and can be relied on.

But what is being proven here and how does this activity contribute to the value chain that links you, the human you, to an identity?

In a book released 1992 “The Twilight of Sovereignty,” (Charles Scribner’s Sons), he says that “in our new world, both nations and corporations will have relatively less power.”

Instant communication technologies – from fax machines to global communication grids to international television outlets such as Cable News Network – are moving power directly “to the people.” Those societies that best understand the changes in global information will adapt and prosper. The new source of wealth, he says, is not financial capital, but information. (Walter Wriston, Chairman Citibank)

Two themes are reasonably clear – payments and information

We have the clarity that

1. associates your money to you using trusted electronic validation, and
2. the value of information largely defined as privacy and ownership of your information
   

Dave Birch (Identity Is the New Money, (Perspectives Essay Series)

by David Birch, Ed Conway) makes a case which carries the additive value of new tools available to us and argues that these improvements along the value chain from social media, smart phones will strengthen the identity value.

I was reviewing the Government of Canada Fintrac site and the approved methods of “card not present” identity validation required for financial, payment, real estate and other companies. These are all designed to bridge the gap that ensures you are who you purport to be, AND you legitimately own the money involved in the transaction. The underlying theme is to ensure the financial company e.g. Bank, can be assured the people and the money involved is owned and is traceable to legitimate business activity.

It is clear that one large challenge remains in how Government is attempting to force fit bank branch over the counter identity verification with electronic means.

Then we have technology methods being deployed and those are based largely on how individuals know themselves therefore you should believe that I am who I say I am. ( e.g. smartphone camera, bank statement, utility bill, pay stub). Unfortunately each of those elements are capable of forgery. Similarly social media is forgeable; is that photograph a true likeness? And the motivations of social media are not trustable.

Non financial identity

I had an interesting COVID vaccine corollary to this discussion. My vaccines are associated with my Government of Ontario ( not Canada) issued health card. I got an email from the government (email is not verified) with my vaccine record and a QR code included. I used the QR code to add the vaccine record to my Apple Wallet. If we explore this connection; vaccine record —> email —> QR code —> Apple Wallet. There are four discrete components with no central common component to associate my single identity with those four components; and none associate with my Canada Revenue Agency Number, my passport or my drivers licence.

Relevance to Bankwatch

The identity value chain is clearly becoming more complex and will not replicate the physical “here is my drivers licence” approach. More analysis required on this.

I always believed a natural fallout of Walt Wristons comment above was that Banks were well placed as owners of basic identity and financial information to be issuers of digital identity. That never happened and is even less likely nowadays given loss of physical contact to customers.

Going back to the Dave Birch hypothesis that “Identity is the New Money” the promise is there but we still lack either a central common element to represent me or a series of proxies that accomplish the same and are trustable.

More to come.