Banking on Change

CHAPTER 14Banking on Identity

David G. W. Birch

This chapter examines the strategic value that banks could find in becoming the guarantors of digital identities.

At the beginning of 2019, the Governor of the Bank of England, Mark Carney, suggested that it was time to introduce digital identity cards because they ‘would make it safer for people to access money online’.¹ Mr Carney is absolutely right about this. The friction introduced into not only online financial services, but also online everything else by the lack of an effective digital identity infrastructure is evident. Indeed, only a day after Mr Carney's remarks, the UK's Emerging Payments Association (EPA) released its report on money laundering and payments-related financial crime, calling for UK financial institutions to create a ‘national digital identity scheme to tackle these threats’.²

Mr Carney was wrong, however, when he went on to say that such a scheme could also prove controversial and could ‘only be introduced by the Government rather than the Bank of England’. In my opinion the controversial notion of a British national digital identity card of some kind should not be confused with the uncontroversial notion of some form of financial sector-specific, digital identity for the purposes of interacting with regulated financial institutions.

The British government's approach to digital identity (the ‘Verify’ scheme) ran into the sand and never delivered what was hoped for.³ When it comes to online identification, ...