Governments look to digital ID to modernize services and boost growth

The World Bank’s Identification for Development (ID4D) initiative announced that one billion people did not have official proof of identity (ID) as of 2018. Without a recognized ID, it is difficult to enroll in school, open a bank account, obtain a mobile phone, claim pensions, access healthcare, or register businesses. As governments around the world digitize services, largely in response to COVID-19, individuals are required not only to prove their identities, but to do so on digital channels. This is a challenge not only for people without legal ID, but also for individuals with ID documents that are hard to use digitally. The McKinsey Global Institute estimated that 3.4 billion people are in this situation. Cloud-based digital ID systems can be a solution to this challenge.

What is a digital ID?

Digital ID systems are personal identification systems that use digital technology from the initial capture of data to its validation. By creating a unique digital ID per person, identities can be easily verified through digital channels. This creates a robust scope of benefits — and cloud-based approaches to implementing these systems provide the speed, scale, and security needed for digital ID to succeed.

Improving accessibility and inclusion

Digital ID systems allow for the more efficient implementation of all services that hinge on personal identification, making them more accessible. As individuals face fewer obstacles to prove who they are, the list of services to which they have access expands. A digital ID system can be a powerful equalizer, helping disadvantaged communities participate more fully in society.

Financial services are often inaccessible for people without legal identities, keeping them stuck in an informal, cash-based economy. In India’s rural areas, for example, access to traditional banking was scarce. However, Aadhaar, the world’s largest digital ID system with more than 1.2 billion registrants (88% of India’s total population of 1.36 billion), now processes more than 73 million banking transactions per month, most of which originate from those rural areas.

Providing agile public services

With the foundation of a digital ID system that reduces operational costs, decreases turnaround times, and increases delivery speed, governments can implement more responsive and agile public services.

In South Korea, for instance, each person’s unique Resident Identification Number (RIN) is also used as a patient identifier in the healthcare system. This digital ID system allowed the Korean government to quickly deploy a comprehensive digital contact tracing strategy when dealing with COVID-19, and to leverage sophisticated real-time data to make rapid public health decisions.

In Pakistan, a digital ID framework allowed families to check via SMS message whether they were eligible for the Ehsaas Emergency Cash program. This helped deliver prompt financial support to 12 million households.

Fighting fraud

When processing government-to-person payments, such as public wages and cash transfers, non-digital systems are vulnerable to errors and corruption. A robust digital ID system makes impersonation more difficult and rules out ineligible candidates for a specific payment.

In Uganda, verification of civil servants’ identities against the national ID database led to the elimination of 4,664 ghost workers and saved $6.9 million USD. In Thailand, more than $29.7 million USD was saved by cross-checking beneficiaries of a cash transfers program against other government databases.

Reducing workload and eliminating redundant systems

Beyond minimizing the misallocation of public funds due to fraud and errors, digital ID systems can reduce workload for public agencies. It’s estimated that streamlined systems built on universal digital ID could save governments 110 billion hours of work, along with the associated reduction in expenditure.

As agencies find ways to collaborate more easily using digital ID, they do not need to request redundant personal information and can reduce unnecessary data collection. A unique digital ID favors data minimization, which means collecting the minimum amount of data needed to deliver a service.

This is especially important when addressing concerns surrounding personal data protection. Despite uncertainty, well-implemented digital ID systems can actually be much safer than fragmented records situated across multiple government departments.

Beyond public services: Economic growth

The benefits of digital ID systems extend further than public services. If more people are able to prove their identities easily – so they can open bank accounts, make payments, and register businesses – the economy expands. In emerging countries, on average, an estimated 6% of additional GDP could be unlocked by achieving full digital ID coverage, according to the aforementioned McKinsey Global Institute report.

In Estonia, a country leading in digital identity, electronic identification (eID) has supported the e-Residency program, which grants access to Estonian services for non-nationals living abroad. More than 1,300 new companies have been created, bringing an additional USD 4.6 million into the Estonian economy.

Privacy, security, and inclusion by design

Implementing digital ID systems also presents challenges, especially in relation to data privacy and trust, as well as concerns about how organizations use individuals’ data. Building trust on top of robust data privacy frameworks is essential. Digital security is also critical, and a digital ID system must be supported by a strong information security framework. Cloud-based solutions can address these challenges, as they provide increased levels of data security and allow privacy-enhancing capabilities not attainable with an on-premises approach.

Additionally, as digital ID systems are usually based on biometrics, governments must be mindful of designing solutions that do not leave people behind. Thus, alternatives that keep accessibility in mind must be incorporated when formulating policy.

Looking forward

Digital ID has become essential now that COVID-19 has expedited digital transformation worldwide, and with it, the need for accessible digital engagement. A growing number of countries and governments are already taking steps to launch or advance digital ID systems that benefit people and societies.

Learn more about digital ID by reading the Amazon Web Services (AWS) Institute report Digital Identity: The opportunity for government with the Access Partnership, or the briefing of the Digital Identity Roundtable, hosted by the Tony Blair Institute for Global Change and AWS Institute, where senior policymakers shared lessons and identified common challenges about digital identification. Visit the AWS Institute for more.

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