Page 63 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

7.1.3 Enabling additional revenue streams

As the scope of available data sets for consumers of DFS expands, the potential to leverage this information to
enhance existing and future financial services is substantial. Subject to permission from regulatory authorities,
new data-driven services could be used to impact future commercial growth.

7.2 Social and cultural impacts of digital identity on DFS

Naturally, the flow of personal information throughout private and public domains has the potential to fuel both
positive, and negative social impacts. The analysis in sections 3 and 4 of this document reveals that identity
schemes and technologies are often positioned in a trade-off between privacy and inclusion.

7.2.1 Increased risk to an individual’s right to privacy

Privacy is an obvious concern in the delivery of digital identity systems, particularly when utilising those systems
to enhance inclusion in developing markets. Although legal frameworks advocating privacy are relatively well
developed in western geographies such as Europe (for example, GDPR ), the same protections are not as
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well developed in emerging markets. There are some noticeable contrasts; for example, in the United States,
there are privacy controls in place against public sector usage of personal data, but few controls apply to the
private sector – in India, by contrast, there are controls against private sector usage of personal data, but few
controls on Governmental usage of citizen data.

Technological advances in systems supporting digital identity have the potential to expose the gap between
referenceable data points and required access permissions. With potential IDPs positioned to be able to expose
this vulnerability, the privacy of underserved individuals is clearly at risk.

7.2.2 Enhanced inclusion
Digital identity systems have the capability to establish a point of reference for individuals who would have
otherwise been financially excluded. Although the benefits of inclusion are well documented, the most enabling
services are typically the ones with the highest potential for detrimental effects on privacy. As such, it is likely
that, in due time, regulation will be implemented preventing use of their full potential.

7.3 Regulatory impact of digital identity on DFS

Regulation plays an important role in managing the risks associated with digital identity services and is a key
factor in influencing how they impact DFS.

7.3.1 Driving adoption of the risk-based approach among regulators

Developments within digital identity are enabling regulators to implement a risk-based approach to local
legislation, with more confidence.
For example, the Central Bank of Nigeria’s “regulatory framework for mobile payments services” defines a
“name and number” requirement for “unbanked” registrations, as part of a three-tier structure . Each tier has
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set transaction limits relative to the risks involved with the level of due diligence performed. As consumer data
footprints become more accessible, regulators will be able to set greater limits for individuals who are only able
to provide single points of reference. In addition, in response to delays in the roll out of the Government eID
programme managed by NIMC, the CBN launched a programme to issue bank verification numbers (BVNs) to
all holders of bank accounts – effectively a private sector-led digital identity. The BVN allows account holders to

24 http:// data. consilium. europa. eu/ doc/ document/ ST- 9565- 2015- INIT/ en/ pdf
25 Source: http:// www. cbn. gov. ng/ out/ circulars/ bod/ 2009/ regulatory%20 framework%20 %20for%20 mobile%20 payments%20
services%20 in%20 nigeria. pdf

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