The UK’s digital identity crisis
What is the first thing everyone does when they engage online, whether it’s accessing a bank account, buying or selling goods, or applying for government benefits?
The UK needs to prioritise and accelerate digital identity adoption
We have to identify ourselves, either explicitly (for example, via biometric recognition) or implicitly (for example, via delivery address and/or payment details).
Digital identity is the cornerstone of any digital transformation in every country, let alone industry.
According to Statista, India’s Aadhaar system boasts 1.3 billion registered users. It works both online and offline, supporting biometric recognition through fingerprints or iris scans. Aadhaar is linked to various government services, enabling users to have bank accounts for receiving and making payments.
The impact of Aadhaar in India cannot be underestimated; as part of a broader digital infrastructure, it arguably makes India a global leader in digital identity.
Yet India is not alone in achieving digital identity adoption rates of over 80%. Other countries with high adoption rates include Singapore (SingPass), the UAE (UAE Pass), Saudi Arabia (Absher), Sweden and Norway (BankID), Estonia (e-Residency), Kenya (Huduma Namba), and Brazil (Cadastro de Pessoas Físicas – CPF). This list is not exhaustive, but it highlights that, regardless of population size, it is possible to roll out digital identity across a country.
In stark contrast, the UK amassed a paltry 8.6 million users for its GOV.UK Verify scheme before it was shut down in 2023 due to a variety of issues. Its replacement, GOV.UK One Login, has yet to be integrated across all government services, which will be key to adoption. It is fair to say that the UK currently has one of the lowest rates of digital identity adoption globally.
As a country, there are a number of reasons why this matters:
- Missed economic opportunities: Digital identities can streamline business operations, reduce fraud, and enhance customer experiences, driving economic growth. Slow adoption means the UK may lag behind in this area.
- Inefficiencies in public services: Effective digital identity systems can significantly reduce bureaucratic inefficiencies, saving time and resources for both citizens and the government. The UK’s slower adoption hampers these potential efficiencies.
- Lag in innovation: Countries leading in digital identity are often at the forefront of broader digital innovation. The UK risks falling behind in developing and implementing advanced digital solutions.
All of this has a downstream impact on industry. For example, consider the home buying process. Without a digital ID, a home buyer must be identified independently by multiple parties: their solicitor, the mortgage lender, and the estate agent selling the property (before an offer can be made). Then again they must be identified by utility companies (water, gas, and electricity), the council, and services (TV, broadband, and so on) when new accounts have to be set up. Typically, this involves sharing a photo ID and proof of address, causing our personal information to be shared with multiple organisations. This alone should put people off buying a house.
Why does this matter? As the world continues to move into industry tech (fintech, agritech, biotech, and so on), we will see greater innovation as industries overlap. Embedded finance is a prime example of financial services entering other industries. As Angela Strange at Andreessen Horowitz said a few years ago, “Every company will be a fintech company.” In this world, sharing customer data will require sharing customer identity (with customer permission), hence why digital identity is key to digital transformation.
This week, I’m just saying that the UK needs to prioritise and accelerate digital identity adoption not only to compete globally, but to attract and retain talent and industry support. Until now, I never really thought of the UK as a laggard in anything.
About the author
Dharmesh Mistry has been in banking for more than 30 years both in senior positions at Tier 1 banks and as a serial entrepreneur. He has been at the forefront of banking technology and innovation, from the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).
He has been on both sides of the fence and he’s not afraid to share his opinions.
He founded proptech start-up AskHomey (sold to a private investor in spring 2023) and is an investor and mentor in proptech and fintech. He also co-hosts the Demystify Podcast.
Follow Dharmesh on X @dharmeshmistry and LinkedIn.
Read all his “I’m just saying” musings here.
