Digital Identity Ecosystem Opportunity for Banks

www.chyp.comPlease copy and distribute@AusPayNet
#DigitalID

www.chyp.comPlease copy and distribute01/08/20172
Digital Identity – Why Now?
the opportunity for banks
David G.W. Birch
Director, Consult Hyperion
Australia and New Zealand
July 2017

www.chyp.comPlease copy and distribute
David G.W. Birch
An internationally-recognised thought leader in digital identity and
digital money;
Named one of the global top 15 favourite sources of business
information (Wired magazine);
In the London FinTech top ten (City A.M.); most influential
commentators
Ranked one of the top five Leaders in IDentity (Rise);
One of the top ten Twitter accounts followed by innovators, along
with Bill Gates and Richard Branson (PR Daily);
One of the top ten most influential voices in banking (Financial
Brand);
Ranked Europe’s most influential commentator on emerging
payments (Total Payments magazine).
3

Available at all good bookshops…
>
4

Identity as a Strategy
“It’s not about payment. It’s about identity”
Jack Dorsey, Founder of Square and Twitter (New York Times, 22nd December 2013)
5

Thinking it Through
6
Section 1, Digital identity model;
Section 2, Identity infrastructure architectures;
Section 3, Banking sector identity imperatives;
Section 4, Informed speculation about identity innovation.

Section 1: Understanding Identity
7 01/08/2017
What is ”digital identity”?
A simple model of digital identity that
shows the dynamics of the sector

A Three Domain Model
8

Identification Domain
Binding a digital identity to a mundane identity is expensive
9

Authorisation Domain
Allow me to… get on a plane
10

Authentication Domain
Establishing the right to use an identity
11

Using Identities
In practice, identities from each layer will be needed
12

Section 2: Approaches to Identity
13 01/08/2017
How can digital identity be used?
Different models are emerging

“Transatlantic Model”
UK Example
14

“Scandinavian Model”
Norwegian Model
15

“Continental Model”
Estonian Example
16

“Transpacific Model” (Perhaps…)
Canadian Example
17

“Asian Model”
Indian Example
18

“Web Model”
Self-Sovereign (Sovrin) Example
19

Section 3: Why Now?
20 01/08/2017
Why should banks develop a digital
identity strategy now?
Regulation, of course…

Personal Data
21

PSD2 Means Business
22

Shifting to APIs
Of course it’s a 2x2…
23

UK Example: Starling
24

Continental Example: BBVA
25

Continental+ Example: ItsMe
26

Commonwealth Example: CBA
27

Section 4: Where Next?
28 01/08/2017
We haven’t fixed the old ID
and the new ID is here
New technologies mean big changes
are coming to identity

Internet of Things and Fintech
29

Blockchain and Regtech
30

Visit our website: http://www.chyp.com
Follow us on Twitter: @chyppings
Email us: info@chyp.com
Read: Tomorrow's Transactions Blog
Listen: Consult Hyperion Podcasts
Consult Hyperion UK
Tweed House, 12 The Mount
Guildford, Surrey GU24HN, UK.
+44 1483 301793
Consult Hyperion USA
535 Madison Avenue, 19th Floor
New York, NY 10022, USA.
+1 888 835 6124
Contact
01/08/201731

Who Are Consult Hyperion?
Consult Hyperion specialises in working out the
opportunities and threats which result from the
harmony and collision of security, networks and
transactions.
We are constantly assessing these factors, as they
change continuously, and delivering ideas, solutions
and products to our clients
32

What Do We Do?
We have a structured and practical approach to
secure electronic transaction systems from the
local to the global
33
Strategy
Roadmapping
Market Analysis
Business Modelling
Prototyping
Requirements Analysis
Risk Analysis
System Architecture
Technical Specification
Procurement Support
Software Development
Vendor Management
Project Management
Certification Management
Acceptance Testing
Evaluation
We can help clients in all phases of the product and service lifecycle, from the whiteboard scribble to
the person in the street’s everyday use

Who do we do it For?
34 01/08/2017

35©SecureKey Technologies Inc. All rights reserved. Proprietary and Confidential.
@AusPayNet
#DigitalID

Chuck
Hounsell
SVP of Payments, TD

Banks have big
challenges
▪ Open Data – Open Banking
▪ Decline in transaction revenue
▪ Increased competition
▪ Presence at transaction in
decline
▪ Need to create new value
▪ How do we leverage unique
position of trust with customers
to make their lives easier?

▪ Account opening is hard and
expensive
▪ Fraudsters keep getting better
▪ It’s a mobile first world
▪ Regulatory requirements
▪ Customers hate friction
▪ Governments driven identity
models
▪ IoT creates many more attributes
▪ Consumers want more control over
their data
Why build a digital identity
ecosystem?

What is needed for success
▪ Must be an open ecosystem –that can onboard a world of attributes
▪ Must be commercial by design – a marketplace for attributes with market price
▪ Must set the standard for privacy and security
▪ Must work in real time
▪ Must become part of how you do many things everyday
▪ The proof will be measured in millions of dollars of friction costs eliminated and the
change customers expectations for thousands of interactions

Digital Identity in Canada –
ecosystem required!!
ANDRE BOYSEN, CIO | @igorilla
SECUREKEY TECHNOLOGIES

Data Breaches 2017
Statistics from: VulnDB – Risk Based Security; Data Breach QuickView

Piecemeal responses don’t work

SECUREKEY
RAISES
$27 MILLION
FROM MAJOR
BANKS
TO DEVELOP
DIGITAL
IDENTITY
NETWORK

Digital Assets and Destinations
My Digital
Asset
Providers
My Places
to Share
Open
bank/
telco
account
Change
address
See my
medical
records
Prove
that I
am
trusted
Prove
age of
majority

Use Case Example – Opening a Telco Account
Your device will be delivered on
May 1, 2017

Transform cost centre to revenue centre
▪ Silo Approach
▪ $100M call centre costs for
▪ Income verification
▪ Superannuation contribution limit
▪ Assume 10M calls
▪ Cost $10 per call
▪ Ecosystem Approach
▪ Claims loaded in to service
▪ Banks willing to pay $2.50
▪ Better close rate
▪ Don’t have to handle paper
▪ Net Revenue $2.00 to Gov
$12.00 positive cashflow

Places Frictionless Identity Will Help
Apply for a new banking product
BANK ACCOUNT OPEN
Apply for insurance
Sign up for Utility or Telco service
Apply for Government Benefits or
programs
Sign into accounts online
Claim benefits
Collect parcels from post office
Club and memberships
HEALTH CARE
Log-ins
BUSINESS ACCOUNTS
Rent a vehicle
Signup utility/telco services
Collect prescription medicines
Receive health care
APARTMENT RENTAL
Access Medical Records
Share medical Records
Make medical appointment
Discount/Loyalty Redemption
Call centre support
GOVERNMENT SERVICES
Proof of age
Proof of residency
Payroll
Employee onboarding
UTILITY OPEN
Business Proof of control
Hotel Check In
Immigration
Accommodation and
hotel check-in
Airline check-in
Online bookings - Airbnb etc.
Pay tax
Apply for a license
Voting
Change of address
Adoption guardian/POA
Name change

Use Case Example – Opening a Bank Account

Find places listed by verified, trusted landlords
Kijiji
Use Case Example – Apartment Rental
Vet prospective tenants, including credit scores and a
background check, and receive applications online
(416)421-3524

Use Case Example – Apartment Rental (continued)
Sign-up for insuranceSign your lease Pay deposit and rent
View Lease
Sign Contract Now
Kijiji
$29.67
$20,000
$5,000
View Terms & Conditions
Sign-up for internet, TV

Rationale for Blockchain
Pros
• Consumer is in the
middle
• Provider of Claims
doesn’t know where
they are shared
Cons
• Lots of work and
Friction
• Lots of Opportunity
for Fraud
• When parties connect
directly each knows
about the other
Banks
Governments
Commerce, rentals, health
social buying
Utilities
TRADITIONAL APPROACH

Pros
• Easier to connect
Cons
• Honest but Curious
• Single Point of
Failure
• Often requires or
builds honeypots of
data (big fraud target)
• User Tracking
• Central mapping
opens the data –
relying on controls
Banks
Governments
social buying
Utilities
Credential
Broker
CENTRAL CREDENTIAL BROKER

Pros
• No Data visible to
network operator
• No central database or
honeypots
• No central point of
failure
• Triple Blind –
PRIVACY
• Cannot track user
across relying parties
Cons
• New - open standards
needed
Banks
Governments
social buying
Utilities
IDENTITY AND ATTRIBUTE SHARING NETWORK
BUILT ON HYPERLEDGER FABRIC

"You are You" with Efficiency, Privacy
and Security
• Putting the consumer in middle
• Frictionless experiences
• Strong ID Validation
✓ Multiple sources
• Strong Authentication:
✓ What I know
✓ What I have
✓ What I am
• Privacy first
• Requires an Ecosystem

@AusPayNet
#DigitalID

Delivering a Pan-Canadian Trust Framework and
Privacy by Design Principled World-Class Innovation
Andre Boysen, Treasurer
Jully 2017
DIACC.ca

Innovation
Canada can be a world leader in digital
innovation. We can’t afford not to be.
- Hon. Bill Morneau, Minister of Finance
DIACC.ca

2010 Electronic Payments Task Force
DIACC.ca
Provide concrete, actionable advice
and recommendations to Minister of
Finance.
• safe and efficient payments system
• effective in light of new innovations

- Fraud
+ Trust
- Costs
+ Opportunities
Interoperability
Canadian
innovations,
solutions, and
services
DIACC.ca
DIA Framework to Grow Canada’s GDP

Digital ID & Authentication Council of Canada
Develop a Canadian digital identification
and authentication (DIA) framework
1. Identify and Develop Standards for
Verifiable Interoperability
2. Promote Adoption
3. Develop Canadian IP and Workforce
DIACC.ca
Result of the federal government’s Payments System Task Force
Non-profit coalition of public and private sector leaders
Securing Canada’s full, secure, and beneficial participation the global digital economy

Public and Private Sector Commitment
Global Digital Economy
DIACC.ca
Collaboration

Growing Coalition of Public & Private Sector Members
Financial
Sector
Governmen
t
Technology Service Providers
Telco, Service & Strategy

Interoperable
Verifiable Interoperable Platform for
Digital Identity
DIACC.ca

Robust, secure, scalable01
Implement, protect, enhance Privacy by Design02
Inclusive, open, meets broad stakeholder needs03
Transparent governances and operations04
Provide Canadians choice, control, convenience05
Built on open standards-based protocol06
international standards interoperability07
Cost effective open to competitive market forces08
Able to be independently assessed, audited, subject to enforcement09
Minimum data transfer between authoritative sources, no new identity databases10
Canadian Principles for DIA

Verifiable Interoperability
Business
LegalTechnical
Pan-Canadian Trust Framework - business, legal, and technical processes
Canada’s full, secure, and beneficial participation in the digital economy
• A foundation of high-level Canadian standards
• Describes roles, services, and requirements
• Governments, financial institutions, mobile network
operators, service & strategy providers, software
vendors
• All federal, provincial, and territorial public sector
service delivery leads, all public sector CIOs
DIACC.ca

Relationship
s
OrganizationPerso
n
Strategy for Verification of…
Intersection of personal and corporate identity…

Partnerships
Share Information Securely
Respecting Privacy
DIACC.ca

Transition
DIACC awarded
$800k DHS S&T Silicon Valley Innovation
to fund SecureKey developed project
consumer-centric, privacy-enhanced system toward
modern distributed privacy enhancing architectures
Applied Research - Blockchain for Consumer ID
ImplementDocument
Explore
Propel
Transition

Transition
Proof of Concept 1 – Business Problem
Transition
Can a simple method be established to allow a user to create a new
account online that we will meet regulatory and business
requirements for a bank?

Transition
Proof of Concept 1 – Findings
Transition
• Developed a Proof of Concept which demonstrated how Canadian residents
could open new financial accounts entirely online by leveraging new
technology including, but not limited to: attribute sharing, data imaging, and
radio-frequency identification (RFID) technology.
• The idea is that this first Proof of Concept shall accessible enough to
understand and complex enough to test the models under consideration.

Transition
Transition
Is there a way to decrease the effort and improve the experience of
demonstrating proof of residency for entitlement to provincial
programs?

Transition
Transition
• Developed a proof of concept to provide a residency check, on demand, with a
reasonable level of assurance.
• The residency check confirmed physical activity within a geographic area for a
specified period of time by allowing users to consent to share living footprint
data (from a bank or telco).
• The PoC may leveraged new and existing technology and business processes
and allows either the Requesting Party or the Authoritative Party to identify the
individual.

Transition
Transition
The time and effort to create and maintain
corporate registry information that is shared
between jurisdictions (Province to Province,
Province to Federal Government, Provincial
Government to Municipal Government) is high.
For example, adding Manitoba to the New West
Partnership will create a significant amount of
work and new processes and checkpoints.
Is there a way to decrease the
effort and improve the experience
of both Corporate Registrars and
business owners?
Developed in collaboration
considering blockchain related
capabilities…

Transition
Transition
• Potential to assist corporate registries challenges cross jurisdictionally
• Potential to modernize elements of registry systems where specific actions
need recording, and providence of those actions is key
• Development is iterative and will take collaboration across interested parties
• Companion POC Report to be published in 2017…
• Thank you - Province of British Columbia and IBM!

Canada’s contribution to the global market place
Privacy-respecting, secure,
user-centric, and convenient
Public and private sectors
making a substantial and
sustained commitment
Accelerating the establishment
of a world-class and made-for-
Canada digital ID platform.
DIACC.ca

Thank you!
Andre Boysen / Treasurer

Chuck
Hounsell
SVP of Payments, TD

Being present at the transaction creates new
opportunities for payments and more
• Identity events require payment capabilities to be successful
• To pay for goods
• Pay fees – licensing, premiums, contract driven
• Set up post dated payment arrangements - lease driven, contractual
• Provide large value real time options – provide higher limits
• Escrow options
• Provide credit options
• Leverage and integrate existing payment schemes
“VERIFIED PAYMENTS” will provide customers with an immediate set of choices from
their FI, and deliver immediate payments to the relying party

VERIFIED IMMEDIATE PAYMENT SOLUTION
• The customer is returned to the FI to initiate payment
• The FI will provide payment options – debit account, used Creditcard,
Line of credit, create new loan, utilize loyalty programs
• By initiating at the FI, higher values can be made available leveraging
higher authentication capabilities
• The relying party receives immediate real time payment leveraging
real time payment rails.
• Additional capabilities are being developed to provide post dated and
escrow capabilities, payment guarantees and more.

@AusPayNet
#DigitalID

Cindy Nicholson
Associate Director – Financial
Services Industry Innovation
Optus
Chuck Hounsell
Senior Vice President,
Payments
TD Bank Group
Steve Wilson
Managing Director
Lockstep
Jo Cooper
Co Founder & Managing
Director
Cloud Insurance Pty
Limited
Nigel Dobson
GM Wholesale Digital
Transformation
ANZ
PANEL DISCUSSION
Topic: “Reactions from the Australian Market”
Moderator: Victoria Richardson, AusPayNet
@AusPayNet
#DigitalID

@AusPayNet
#DigitalID

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