Financial institutions need to recognise the risks inherent in integrating large scale digital ID systems
The rapid pace of innovation in the digital identity (ID) space has reached an inflection point. Digital ID standards, technology and processes, have evolved to a point where digital ID systems are, or could soon be, available at scale.
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JPMorgan Chase is planning to ban fintech apps from using customer passwords to access their bank accounts
The motivation behind the new system comes from security concerns. JPMorgan Chase & Co's chairman and CEO Jamie Dimon first warned about the dangers of data sharing in a shareholder letter in 2016. He voiced concerns about third parties selling or trading customer information in ways that they might not fully understand — particularly since few people read privacy statements.
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With 40-70% of FIs website traffic coming from screen scraping companies providing access to Personal Financial Management apps like Mint, FIs have finally woken up to the need to provide secure, controlled access to their products in an increasingly unbundled and distributed world. FIs are going to require customers to use oAuth to ensure proper security and controls, but traditional US screen scraping companies don’t look favorably on oAuth due to the user experience. The Plaid/CapitalOne battle was a preview of things to come between screen scrapers and Fis, requiring scrapers to go through the front door, not the back.
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Data-sharing debate grows contentious as fintechs vent grievances
“The most important part of this is giving control to the customer,” Jamie Dimon, chairman and CEO of JPMorgan Chase, said in a statement at the time. “Customers will get to decide what they want to share and when they want to share it — without having to hand over their password.”
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Traditional Banks Vs. Tech Giants: Who Will Win?
"More consumers trus big tech firms with their money
Banks can mobilize small teams around individual episodes to earn customer advocacy and loyalty:
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53% of the surveyed banks are afraid of GAFA companies
"53% of the surveyed banks are afraid of GAFA companies (Google, Apple, Facebook, Amazon) entering the market in the long run.
44% of the respondents representing banks are afraid of the outflow of customers to other banks due to the entry of PSD2 into force."
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50% of consumers abandon applications
Key takeaways for retail banking
52% of all respondents give up on retail banking applications
Digitally onboarded consumers want more services and are more loyal
72% of consumers want an all-digital onboarding system
Read the full report by SIGNICAT
The identity verification market is expected to grow to USD 12.8 billion by 2024.
"The identity verification market is expected to grow from USD 6.0 billion in 2019 to USD 12.8 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 16.0% during the forecast period. The major factors driving the growth of the market are the increasing emphasis on compliance management and rising number of identity-related frauds and data breaches."
Read the report by Markets and Markets
Digital ID coverage could unlock economic value
"In our seven focus countries, extending full digital ID coverage could unlock economic value equivalent to 3 to 13 percent of GDP in 2030—if the digital ID program enables multiple high-value use cases and attains high levels of usage."
Read the full report by Mckinsey
GDPR’s Big Moment Has Just Arrived – With a $228 Million Data Breach Fine
"The first large-scale penalty has been announced, with British Airways facing a fine of £183 million (on the day the fine was announced, equivalent to just short of $228 million) for a data breach disclosed by the company in Sept 2018."
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Hidden Costs of Verification
"The key to pushing the boundaries on where and how blockchain technology can be used will be to identify what type of information needs to be verified for particular types of transactions, and what institutions will be necessary in order to make that information accessible and verifiable."
Read the full article by MIT Cryptoeconomics Lab