Digital identity providers must adapt for emerging nations, report finds

25/08/16

Developing digital identity solutions for emerging countries will challenge both the government and private sector providers, according to a new market research report.

In a new report, Caribou Digital notes that while state-led initiatives can drive adoption through their mandatory nature, that private-sector identity systems still require “a clear and significant carrot” to boost take-up.

The firm sees a large gap between layers of digital identity such as one offered by social media - a light verification identity platform - and more hefty systems such as state-led identity platforms.

“[N]ew entrants into this space will have to navigate a layer that may look like a sandwich filling between two slices of bread, one being Facebook’s (at the moment) light verification identity platform and the other being any state-led identity platform—in other words, at both ends of the spectrum there are incumbents which will be difficult to compete against”.

Caribou notes that in countries such as India and Pakistan, the government is taking the lead to introduce digital identity, using their ability to drive people to register and reaching over a billion users very quickly.

While this creates a huge potential platform for the private sector to build other services on top, the firm is unsure on how the private sector – from Facebook, to the mobile operators, to start ups – is starting to crowd into this space.

“Driving demand to digital identity services is hard – it’s not a product many users spontaneously ask for, it’s more a by-product or gateway to what they really want to do. Understanding, and responding to, demand drivers for identity-based digital products will be critical for these private sector actors.”

The firm concludes its report with a warning that technology is not necessarily the key factor in deciding which players succeed in the space:

“Advancements in biometrics, encryption, and distributed computing are leading to sophisticated technology solutions and new business models for managing digital identity. But again we must emphasize that while the technology is easy to focus on, the “analog complements” in this sector—the regulatory environments, political structures, cultural attitudes, and more—are just as critical for success, especially given their diversity across different markets. “

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