Page 50 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

2013). For developing countries, surveillance, fair and democratic elections, and fostering national unity are all
mentioned in the evidence we review as reasons for implementing an identity system. In addition, identification
systems’ development potential is reflected in goal 16.9 of the proposed Sustainable Development Goals
(SDGs): “provide legal identity for all including birth registration” by 2030 in order to “promote peaceful and
inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable
and inclusive institutions at all levels” (The Division for Sustainable Development, United Nations, 2015; World
Bank, 2015).

The complexity of government administration in “the modern world” is a major problem facing developing
countries. Often, individual government programs have their own database of beneficiaries that are not
digitized and therefore cannot be easily merged (Giné, n.d.). Delivering public services efficiently and providing
financial inclusion to the poor in partnership with the private sector depends on accurate identification and
authentication of citizens and residents. Government programs must have the capacity to cross-reference
databases and information (ibid.).

Technological innovations have opened up new possibilities for governments to develop comprehensive
identity management systems that link peoples’ identities through their entire life (Bennett & Lyon, 2008),
from birth certificate, civil registration, driver’s license, to marriage certificate, voter registration and national
identity card. At the same time, governments in developing countries are expected to carry out many of the
same functions that richer countries are capable of performing; these functions include “providing universal
access to healthcare and education, implementing know your customer (KYC) rules for financial institutions,
and administering a wide variety of transfer programs” (Gelb & Clark, 2013).
As identification technology evolves, so do identification systems. Many of the programs we review are updating
their initial systems to incorporate electronic and biometric elements into their ID programs. Gelb & Clark
(2013) find that the biometrics industry grew at 28 percent annually between 2005 and 2010 and that the
rate was even higher in developing regions, at 34 percent. They also quote estimates which suggest that as
of 2012, over 1 billion people in developing countries have had their biometrics captured for one or more
purposes. Incorporating biometric technologies in national identity systems is particularly useful for the growth
of electronic government (e-government) as well as providing both public and private services (ibid.). As
compared to manual, paper-based registers, advanced electronic capture and storage of data are able to
reduce costs and human error as well as increase administrative efficiency (World Bank, 2014).

Electronic and biometric identification systems also have the potential to link national identity to multiple
functional applications (World Bank, 2015). With electronic identity programs, a wide range of services can
be delivered on computers or mobile devices. Besides using fingerprints, PINs, and/or signatures as means of
authentication for commercial transactions and for access to financial and social services, more precise digital
biometric technology has been used in combination with mobile devices to create “mobile money” for secure
and cashless commercial transactions and social transfers (World Bank, 2014; Gelb & Clark, 2013). Biometrics
have also been used beyond authentication to secure identities in order to fulfill KYC requirements for opening
bank accounts, to register and de-duplicate beneficiaries, to authenticate cash or in-kind transfers at the point
of service, and to fulfill various other services such as health, voting and civil service reform (Gelb & Clark,
2013). A World Bank report quoted several projections showing that the number of “digital government/citizen
transactions worldwide will grow to about $67 billion by 2020” (World Bank, 2015). As a result of linkages
between national ID programs and financial services, these programs are also believe to have the potential
to promote financial inclusion.
This literature review aims to answer the following research questions:

1 What developing countries have national identity programs, and what are the characteristics of these
programs?
2 What is the level of coverage of these national identity programs, in terms of percentage of a country’s
overall population and of particular population groups (e.g., poor populations)?
3 To what extent are national identity programs being connected to and used to support provision of
services and products, especially in the finance, agriculture, and health sectors?

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