Editorial

McKinsey: Good digital ID is a new frontier in value creation for the world’s individuals and institutions

Of the 7.6 billion people on Planet Earth, a billion lack a legally recognised form of identification, 3.4 have some form of legally recognised ID but limited ability to use it over digital channels – leaving less than half with a legally recognised ID that lets them to fully participate in the digital economy, adds the World Bank

Posted 25 June 2019 by

We all know that if done wrong (copied or poorly implemented), Digital ID can be a problem.

But maybe an aspect we’re not really following up as much as we should is the economic aspect – because, in the words of McKinsey, when well-designed, it not only enables civic and social empowerment, “but also makes possible real and inclusive economic gains”.

The claim came in an in-depth study published by the consulting firm’s ‘Global Institute’ (MGI) a few weeks back, Digital identification: A key to inclusive growth, which went on to note that the positive impact of ID is a less well understood aspect of the technology.

And positive it could well be – as its study claims to identify how extending full digital ID coverage could unlock economic value equivalent to 3 to 13% of GDP in 2030, with just over half of the potential economic value “potentially accruing to individuals”.

Source of this conclusion: a framework to understand the potential economic impact of digital ID, informed by MGI’s analysis of nearly 100 ways in which digital ID can be used in Brazil, China, Ethiopia, India, Nigeria, the United Kingdom, and the US.

“With careful system design and policies to promote uptake and mitigate risks, digital ID could be a powerful key to inclusive growth, offering quantifiable economic value to individuals, beyond significant noneconomic benefits,” claims the report.

The study also identifies four attributes of “good ID” – that it has to be

  • Verified and authenticated to a high degree of assurance
  • Unique
  • Established with individual consent
  • Protects user privacy and ensures control over personal data.

It also notes that the biggest impact of ID could be in developing economies in particular, double to what it could offer “mature” economies: “In emerging economies, much of the value could be captured even through basic digital ID with essential functionalities.”

Go here for a full copy of the report, which offers a lot of really useful food for ID thought.