The REGTECH Book

Identities, the RegTech Holy Grail

By Pascal Bouvier¹ and Dasha Cherepennikova²

¹Managing Partner, MiddleGame Ventures

²Product Manager

The Identity Problem

We are living in a digital age in which individuals and entities transact and exchange in ever-increasing degrees online. The digitization of services across industries is supposed to usher in an era of great benefit to users – the convenience of being able to access services on the go from just about anywhere in the world, the immediacy of not waiting for a physical location to open, and so forth.

However, a critical linchpin of enabling these seamless online experiences – the identity layer – is woefully inadequate for the digital world and in dire need of a reboot. An average consumer in a developed country may maintain relationships with more than 200 organizations. In fact, conservative estimates posit that there are currently 50–60 billion digital identities in existence for just people (not counting entities or machines). Yet, despite this proliferation, organizations across various industries face increasing costs in identifying someone or something to a high degree of trust. Without trust, transactions become much more difficult and costly to execute in the form of customer friction, as well as losses owing to both bad actors and the inability to let in would-be good users.

For example, in e-commerce, card not present fraud (using a stolen credit card) and account takeover (logging into someone else’s account to ...