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The economics of digital identity

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By 2020 more than 7 billion people will be communicating and performing transactions over the web on over 35 billion devices. So how can companies effectively create a digital identity that promises security, ease and comfort for its customers? This study, sponsored by Oracle, assesses the role identity plays in the digital economy. Visit hub: http://bit.ly/1LKqXfN

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The economics of digital identity

  1. 1. A research programme from The Economist Intelligence Unit Sponsoredby The economics of digital identity
  2. 2. © The Economist Intelligence Unit Limited 20151 The economics of digital identity About this research 2 Risk and reward: Mastering identity in the digital economy 3 The rise of the digital economy 4 Hurdles in the race to digital 6 Preparing for a hyperconnected future 8 Winning by securing customer trust 10 Towards a true digital “fingerprint” 12 Appendix: Survey results 13 Contents 1 2 3 4 5 6
  3. 3. © The Economist Intelligence Unit Limited 20152 The economics of digital identity About this research The economics of digital identity assesses the role identity plays in the digital economy. The report is written by The Economist Intelligence Unit (EIU) and sponsored by Oracle. The report is based on a survey of 201 IT executives from North America, which was conducted in February 2015. Respondents were drawn from a range of industries, including 18% from manufacturing and 14% each from financial services and IT and technology. Of these, 55% represent companies with up to US$1bn in annual revenue, and 45% companies with US$1bn or more. The report also incorporates interviews with the following experts and advisers: James Ryan, managing partner, Litmus Logic Ira Winkler, president, Information Systems Security Association (ISSA) and Secure Mentem Chris Hankin, professor of computing science and director, Institute for Security Science and Technology at Imperial College London Stephen Bonner, partner, KPMG The EIU would like to thank these interviewees for their time and insight. The report was written by Jessica Twentyman and edited by Riva Richmond.
  4. 4. © The Economist Intelligence Unit Limited 20153 The economics of digital identity Welcome to the digital economy, where whole industries are being fundamentally reshaped as organisations scramble to build new business models, tap new markets and create new sources of competitive advantage. The dynamics of digitisation that first emerged in industries such as music and video can now be seen everywhere— from the labour market, where jobs are matched to freelance workers in real time, to the manufacturing sector, where 3D designs can be shared across the world in an instant. By 2020, say analysts at US-based IT market research company Gartner, more than 7bn people worldwide will use over 35bn connected devices to communicate, collaborate, negotiate and perform transactions over web and mobile channels. Vast legions already do so today—and for all of us, both as consumers and employees, digital identity is our passport to this online world of goods and services. There will be winners and losers in this future of all-enveloping digital connectivity. In the rush to open up new digital channels, businesses cannot afford to lose sight of the need to identify and engage with individuals using a huge range of mobile devices. Understanding and managing digital identities is becoming critical because a single view of an individual customer is the key to knowing that person better and building a deeper relationship with him or her. “The opportunity here for businesses is vast. It’s as big as the Internet itself. But the way that a vast majority of businesses think about digital identity is outmoded, outdated. They need to catch up,” says James Ryan, a consultant and co-founder of Litmus Logic, which advises large companies on their security strategies, as well as the brains behind several technical standards in digital identity. “The market opportunity here is precisely this huge because so many organisations are dealing with the digital-identity management challenge according to old ways of thinking. It’s the organisations that can learn to look at digital identity in new ways that will be the winners.” But the risks are also immense, Mr Ryan acknowledges. Those that handle digital-identity data badly could trample customers’ privacy concerns and potentially lose their loyalty. Those that get it really wrong could leave digital-identity data vulnerable to theft. Personal data, after all, are as valuable to cybercriminals as they are to business. “There have always been ways of verifying people’s identity online. The problem is that there are far more of these ways today than there ever have been before—and that’s made the whole situation more challenging, not just in terms of managing digital identities but protecting them from hackers,” says Ira Winkler, best-selling author and president of the Information Systems Security Association (ISSA) and Secure Mentem, a security consultancy. The message is clear: companies must have a well-considered approach to the use and protection of these data in an age in which earning customers’ trust—and not letting them down—is essential to future prosperity. Risk and reward: Mastering identity in the digital economy1
  5. 5. © The Economist Intelligence Unit Limited 20154 The economics of digital identity According to a new survey of 201 senior executives in North American companies, conducted by The Economist Intelligence Unit and sponsored by Oracle, the race to digital is well under way. Almost two-thirds (64%) say digital channels are highly important to their company’s revenue— “mission critical” for 27% and “very important” for 37%. The strategic importance of digital will only rise over time: In 2-3 years’ time digital platforms will be highly important at 71% of the organisations surveyed. The challenge of managing digital identities is not new to businesses. Trusted identity information helped spearhead massive business and economic transformation and growth during this young century. E-commerce blossomed, for example, as online shoppers became increasingly confident about sharing their credit-card details online. But it was not until around 2008 that digital identity began to receive the widespread attention it now commands, says Chris Hankin, professor of computing science and director of the Institute for Security Science and Technology at Imperial College London. “In a sense, this issue has been a bit of a slow burner, but thanks to hyperconnectivity, it’s now something that every organisation needs to deal with,” he says. Professor Hankin identifies 2008 as a tipping point for two reasons: it was the year when smartphones started to be manufactured in large volumes (Apple’s second-generation 3G iPhone was launched that year, quickly followed by wave after wave of competing devices) and that social networking site Facebook started to see adoption rates skyrocket. The rise of the digital economy 2 Source: Economist Intelligence Unit survey. How important are digital platforms, such as the web, mobile, social media and Internet of Things, to your company’s revenue now? And how important will they be in three years’ time? (% respondents) Chart 1. Digital channels will be “mission critical” to over one-third of companies in three years’ time Now Three years’ time Mission-critical, our primary revenue channel(s) are digital leadership Very important, digital channels are very important, but not central, to our business Moderately important, we use digital channels but they are not very important to our business Minimally important, we use digital channels but they are not important to our business Not at all important; digital channels are not at all important or not used by our business 27 38 37 35 22 17 11 6 3 3
  6. 6. © The Economist Intelligence Unit Limited 20155 The economics of digital identity “As time went on, we started to see questions raised about what data are being collected about us—and by whom—and a wider discussion began around some of the challenges that we’ll face as a society as a result,” he says. “By around 2011 or 2012 it had become clear that, if collecting digital information about people’s identity could provide considerable commercial opportunities to businesses, it might also be a point of concern for the individuals concerned.” Today, far richer digital-identity information looks set to drive new opportunities and news ways of working. Power is shifting dramatically in the direction of the “owners” of that information and opening the door to further disruptive democratisation of markets, as younger, more agile upstarts, such as on-demand transport company Uber and peer-to-peer loans provider Lending Club snatch business from older, more established companies. The overwhelming majority of respondents to the EIU survey are already engaged in external business activities that require them to manage digital identities, including online commerce (68%), social media (55%) and mobile commerce (44%). But as Professor Hankin points out, they are also increasingly aware of the responsibilities that data stewardship entails.
  7. 7. © The Economist Intelligence Unit Limited 20156 The economics of digital identity The EIU survey shows that companies are well aware of the responsibilities of holding digital identities and are taking them seriously. When asked to identify their company’s top three digital-identity challenges, security is cited by almost three-quarters (72%) of respondents, followed by privacy (44%) and managing legal or regulatory requirements (36%). According to Mr Winkler of the ISSA, many companies could be doing much more to prevent costly security breaches. He is a great advocate of security awareness training for both employees and customers as a useful, inexpensive first step, especially to promote secure password practices. For now, executives seem confident about their companies’ abilities to handle digital identities. When it comes to managing the risks related to identity—chiefly security, privacy and fraud—60% of respondents rate their abilities as “substantially” or “somewhat” ahead of their peers. Likewise, 50% believe they are ahead of their peers in collecting and managing digital- identity data, while 47% believe themselves to be leaders in using digital identity to cut costs. But they should be wary of an “optimism bias”, says Mr Ryan of Litmus Logic. “Everyone thinks their chances of experiencing problems in these areas are pretty [low], until a serious issue demonstrates that they were, frankly, wrong about that.” Confidence levels are less high when it comes to the use of digital identity for other purposes. Only 43% of respondents consider their organisations to be above average in using digital identities to enter new markets, while 17% consider themselves below average. Similarly, in terms of monetising the personal data they hold, only 39% rate themselves as leaders, while 19% believe they lag behind (see chart 2). When asked how prepared they are to address information security requirements involved in storing and using digital identities, only 19% say their organisations are “very well prepared”. Of the remainder, 48% are “somewhat” well prepared, and 26% are only “moderately” prepared. There will be many more challenges ahead as organisations seek to build secure experiences for millions of customers who move continuously between new digital channels and platforms. As the Internet of Things (IoT) takes flight, whole networks of smart products—from smart lawnmowers to heart monitors to intelligent utility meters—will start exchanging data, reporting on their status and receiving instructions remotely. At the same time, these smart products will also give manufacturers and retailers a direct line of insight into people, says Stephen Bonner, a partner in information security at management consultancy KPMG and former global head of information risk management at financial services company Barclays. “Most of the focus today is on individuals and their personal data, but increasingly digital identity will need to be closely tied to their use and Hurdles in the race to digital 3
  8. 8. © The Economist Intelligence Unit Limited 20157 The economics of digital identity ownership of smart products,” he says. By 2020, analysts at IT research firm Gartner reckon, there will be around 26bn devices installed worldwide that are capable of these kinds of machine-to-machine (M2M) communications. The EIU survey, meanwhile, shows that 31% of respondents say they are already engaged in IoT activities requiring identity data, and a further 53% say they will be in the next three years. But how safe will these data be? In February 2015 electronics giant Samsung caused a stir when it issued a warning to customers against discussing personal information in front of their smart televisions. When its voice-activation feature is switched on, a Samsung Smart TV can listen to what is said and may share what it hears with Samsung or third parties, the company said.1 Source: Economist Intelligence Unit survey. Collecting and managing digital-identity data Cutting costs by using digital identity Managing risks related to identity (eg, security, privacy, fraud) Monetising personal data Using digital identity to enter new markets Compared to your peers, rate your company’s level of digital-identity success. (% respondents) Substantially above average Somewhat above average Average/On par with peers Somewhat below average Substantially below average Chart 2. Respondents are most confident in their ability to manage identity risks 15 35 45 3 1 14 33 45 6 2 20 40 34 4 1 13 26 42 13 6 13 30 40 13 4 1. Samsung Global Privacy Policy – SmartTV supplement, Samsung, February 2015.
  9. 9. © The Economist Intelligence Unit Limited 20158 The economics of digital identity There is clearly much work still to be done. After all, the ways in which companies can fruitfully use digital-identity data are more complex than older identity credentials such as credit and debit cards, which primarily enable financial transactions and tracking. Identity data will dictate individual participation in a whole range of activities: allowing homeowners to set the temperature on their smart-home thermostat remotely; enabling an automotive designer to view plans for next year’s top-secret, high-profile vehicle launch; and giving an energy company engineer access to control systems in a nuclear power plant. Given the new opportunities and risks, it is no surprise that interest abounds in improving digital-identity sophistication. Indeed, executives anticipate a rise in activities—often complex ones—that will require them to up their game. In the future, manufacturers might sell customers the right to 3D-print physical designs. Instead of just shipping a product, the seller must now manage usage rights, entitlements, subscriptions and intellectual capital protection. This is an altogether different and more complex set of capabilities than making and shipping physical objects. Right now, levels of confidence tend to be higher when it comes to using digital identity in internal processes. The majority of survey respondents (55%) say they are using identity data for research and development (R&D), with a further 26% planning to do so within one year. Meanwhile, 54% are using them for process automation (to speed up transactions requiring identity data, for example), with a further 31% preparing to do so in the next year. Fifty-three percent use digital identities for employee information-sharing or collaboration and 50% to improve products or services, while a further 27% and 29%, respectively, plan to do so in the next year. When it comes to product and service personalisation, 44% use digital identities today, and a further 32% will do so in the next year. Exactly the same proportions use, or plan to use, digital identities to deliver customer self-service capabilities (see chart 3). But strikingly, the question of using third-party digital-identity data provokes a mixed response. Many in the industry point to an emerging model, where companies that already have an established track record and reputation in managing digital identities—banks, credit reference agencies and social media companies, for example—create a new business for themselves in offering to authenticate users for other providers of online services. “So, in order to log into my national tax authority and file my annual return, I might use my online-banking credentials,” explains KPMG’s Mr Bonner. “It’s more convenient to me as a consumer. It’s faster and more cost-efficient for the organisation—in this case, the tax authority— that needs to authenticate me. And it recoups the money that my bank has already invested in identity management, as well as creating a new income stream for them. We’re starting to see the Preparing for a hyperconnected future 4
  10. 10. © The Economist Intelligence Unit Limited 20159 The economics of digital identity beginning of an ecosystem around this idea of digital identity as a brokered service.” This concept of an “identity ecosystem” was at the heart of a 2011 White House report, National Strategy for Trusted Identities in Cyberspace,2 according to Professor Hankin at Imperial College London. Private companies, the report notes, already use a variety of approaches to correctly identify customers, most often with usernames and passwords. “The complexity of this approach is a burden to individuals and it encourages behaviour—like the reuse of passwords—that makes online fraud and identity theft easier,” the report says. “Online businesses are faced with ever-increasing costs for managing customer accounts, the consequences of online fraud and the loss of business that results from individuals’ unwillingness to create yet another account. Moreover, both businesses and government are unable to offer many services online, because they cannot effectively identify the individuals with whom they interact.” Whenever there’s a large-scale password breach, notes Mr Bonner, “you absolutely see an uptick in fraud at other organisations, because it invariably turns out that customers are using the same passwords across multiple services.” The EIU survey shows that eight out of ten respondents say their organisations currently use at least one type of third-party identity provider for customer and/or employee identification, authorisation or validation, with the majority using several different sources. Employee services providers are cited most often, with 61% of respondents saying their organisations use providers of this sort. One-half use social media providers, while identity assurance providers are the least popular, cited by 44%. But far fewer executives say their organisations plan to use these third-party identity sources two years from now and, for those who continue to do so, provider diversity looks set to drop considerably. First, three in ten will not use any third-party identity providers in two years’ time, compared with two in ten today. The projected decrease in the use of third-party identity sources is particularly noticeable when it comes to social media and employee services companies, where the number of respondents who expect their companies to use these providers in the future drops by half. Furthermore, while most of the respondents today use more than one source, when asked about their expectations for the future, the vast majority select just one option, suggesting that many organisations crave a simpler, more coherent approach to identity. Source: Economist Intelligence Unit survey. Process automation (eg, faster transactions that require identity) Customer self-service Product or service personalisation Product or service improvements Research and development Employee information sharing or collaboration Partner or supplier information sharing or collaboration What internal business activities requiring identity data are you engaged in now or will be in the future? (% respondents) Engaged in now Preparing to do within 1 year Expect to do 2-3 years from now No plans to do Chart 3. Research and development and process automation are business activities involving identity data that most respondents are engaged in today 54 31 6 8 44 32 12 12 44 32 12 12 50 29 13 8 54 26 9 10 53 27 11 8 41 35 14 10 2. National Strategy for Trusted Identities in Cyberspace, The White House, April 2011.
  11. 11. © The Economist Intelligence Unit Limited 201510 The economics of digital identity There can be little doubt, however, that companies understand the importance of earning customers’ trust when persuading them to share their personal information with them. Some digital-identity data are harder to acquire than others. In our survey, 28% of executives say their customers are “highly willing” to share personal information, such as their name, contact information and demographic details. Fewer say they are so willing to share their likes and preferences (23%) and location data (20%). When asked to share details about their friends and family or financial information, customer willingness fades further. Only 14% of respondents say their customers are highly willing to share this kind of information. Clearly, persistent customer sensitivities limit the ability of companies to use customer information for commercial advantage. Customers are increasingly likely to ask: “Why do you need to know that about me?” The onus is obviously on organisations to respond with strategies to win these reluctant customers over. According to the survey, organisational tactics for reassuring customers vary, as does the success rate of these tactics. Explaining how data are protected is the most popular, cited by 63% of respondents, followed by providing transparency on how data are used (49%) and explaining the benefits for customers of sharing their data (39%). However, proponents of providing explanations about how data are protected are less convinced of its effectiveness than those who choose transparency about how data are used. When asked to rank the effectiveness of these approaches, 25% believe protection explanations are highly effective, compared with 35% who believe transparency is highly effective. Winning by securing customer trust 5 Source: Economist Intelligence Unit survey. Publishing a privacy policy Asking customers to “opt-out” when sharing personal information (ie, data is collected unless customers indicate they do not want it collected) Asking customers to “opt-in” when sharing personal information (ie, data is not collected without affirmative consent) Providing privacy features (eg, Controls for selecting who can access their information) Enabling customers to control their identity data (ie, ability to edit, correct or delete information) How effective are these tools in allaying customers’ privacy concerns? (% of adopters) Highly effective Moderately effective Minimally effective Not effective at all Chart 4. Enabling customers to control their identity data is the approach most likely to be seen as “highly effective” at allaying privacy fears 30 52 17 1 36 57 7 32 54 14 36 55 9 48 41 11
  12. 12. © The Economist Intelligence Unit Limited 201511 The economics of digital identity “I think it’s fair to say that today’s consumers are starting to have a more sophisticated sense of the value of their personal data,” says Professor Hankin. “They’re often willing to share it with a company where there’s a clear benefit to them: special offers, discounts, more personalised services. But where there’s less perceived benefit to them, they’re more likely to be wary.” As far as privacy fears in particular are concerned, the most common strategy is publishing a privacy policy, selected by 60% of respondents. Just under half provide customers with opt-in or opt-out options that enable them to either consent to or refuse data collection (47%) and provide privacy features that enable customers to control their information (46%). Again, there is some disagreement as to the effectiveness of these strategies. While 30% say that publishing a privacy policy is highly effective, 18% think this kind of policy is only minimally effective or not effective at all. Opt-out and opt-in tools have more supporters—they are described as “highly effective” by 36% and 32% of respondents, respectively—and are described as ineffective by only 7% and 14%, respectively (see chart 4). Organisations should examine what works and what does not and use what they learn to inform future strategies, according to Mr Ryan of Litmus Logic. “Companies that put every customer in the same bucket and assume they don’t know the value of their identity” are courting trouble, he says. “Customers are tired of being monetised without receiving value, and companies need to be alive to that fact.” “Every company should be closely monitoring what it’s doing to retain the trust of customers in terms of their digital identities,” he adds. “Trust is the predecessor to leadership. You can’t lead anyone without their trust. And you certainly can’t lead a customer to a buying decision without their trust.” As many as 80m current and former customers and employees may have fallen victim to a recent data breach at Anthem, a large US insurance company, in which information including names, dates of birth, social security numbers and income data were stolen. Many of them could be vulnerable to fraud for years to come and will have to stay ever vigilant, IT security experts say. This incident has reignited questions about consumers’ rights to control their data and to insist that companies with which they have ceased to do business do not continue to hold them—rights that few consumers enjoy today. In Europe, the situation is perhaps most clearly defined. Here, “data subjects” have the right under the European Union (EU) Data Protection Directive to access all data a company holds on them, and the right to demand the “rectification, deletion or blocking of data” that they deem incomplete, inaccurate or not processed in compliance with the data protection rules. These rights are expected to be reinforced soon with the introduction of a new EU general data protection regulation, which is currently being drafted. In particular, article 17 of the draft specifies a “right to be forgotten and to erasure” and lists a number of reasons why a person—or data subject—can demand the deletion of data relating to them, including “the data is no longer necessary for the purpose it was collected for” and “the subject withdraws consent”. The US, by contrast, has no single data protection law, but rather a complex patchwork of ad hoc industry-led regulations, based on a broad consensus that their access to a consumer’s digital footprint is key to unlocking economic growth. Still, many companies are obliged to follow EU rules when it comes to their European customers, prompting complaints about increased difficulties doing business in the region. There seems little prospect of an end to this debate. If anything, the gap between Europe and America on this issue is widening, commentators say. Customer control and the “right to be forgotten”
  13. 13. © The Economist Intelligence Unit Limited 201512 The economics of digital identity Mastering digital identities can transform an organisation’s position in the digital economy. The simple truth is this: companies that successfully harness the identity issue will be able to roll out compelling new products and services more quickly and effectively than those that do not. But it is not just a question of exploiting digital-identity data for commercial gain. To develop a truly effective strategy, customers and their comfort levels should also be at the forefront of corporate minds at all times, according to Mr Ryan of Litmus Logic. “Buyers want to do business with companies that have less cyber risk—that’s just a fact of life,” he says. “It doesn’t matter whether they’re consumers or other businesses.” Many companies impose strict security requirements on their supply chains after discovering their own security shortcomings, he explains. “As a direct result, they’re now unwilling to do business with other companies that are still in that position.” It is just as important to enable customers to choose how much information they share with an organisation, how they share it and when, according to Mr Bonner of KPMG. “If you don’t give customers and employees control over their experience of doing business with you in a way that empowers them, your level of insight into their habits could quickly become oppressive to them, and they’ll be less willing to engage.” Mr Ryan agrees: “There’s rock-solid technology already out there. We don’t necessarily need more technologies. We need rock-solid thinking about how we collect digital-identity data and how we use it.” Towards a true digital “fingerprint” 6
  14. 14. © The Economist Intelligence Unit Limited 201513 The economics of digital identity Appendix: Survey results Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses. Significantly outperformed Slightly outperformed Performed on par Slightly underperformed Significantly underperformed Compared to your peers, rate your company’s profitability in the last 12 months. (% respondents) 17 43 32 6 1 Now 2-3 years from now How important are digital platforms, such as the web, mobile, social media and Internet of Things, to your company’s revenue now? How important do you expect they will be two to three years from now? Select one in each column. (% respondents) Mission-critical, our primary revenue channel(s) are digital leadership Very important, digital channels are very important, but not central, to our business Moderately important, we use digital channels but they are not very important to our business Minimally important, we use digital channels but they are not important to our business Not at all important; digital channels are not at all important or not used by our business 27 37 22 11 3 38 35 17 6 3 Very important, digital channels are very important, but not central, to our business Mission-critical, our primary revenue channel(s) are digital leadership Moderately important, we use digital channels but they are not very important to our business Minimally important, we use digital channels but they are not important to our business Not at all important; digital channels are not at all important or not used by our business How important are digital platforms, such as the web, mobile, social media and Internet of Things, to your company’s revenue now? Select one. (% respondents) 37 27 22 11 3
  15. 15. © The Economist Intelligence Unit Limited 201514 The economics of digital identity Mission-critical, our primary revenue channel(s) are digital leadership Very important, digital channels are very important, but not central, to our business Moderately important, we use digital channels but they are not very important to our business Minimally important, we use digital channels but they are not important to our business Not at all important; digital channels are not at all important or not used by our business How important do you expect digital platforms, such as the web, mobile, social media and Internet of Things, to your company’s revenue will be two to three years from now? Select one. (% respondents) 38 35 17 6 3 Online commerce Mobile commerce Coupons or vouchers Social media (eg, customer service, marketing) Sharing economy Internet of Things Identity-data sale to third parties What external digital business activities requiring identity data are you engaged in now or will be in the future? Please select one in each row. (% respondents) Engaged in now Preparing to enter within 1 year Expect to enter 2-3 years from now No plans to enter 68 15 4 12 44 27 14 15 27 19 9 46 55 25 8 12 30 25 17 29 31 29 24 16 24 21 17 38 Collecting and managing digital-identity data Cutting costs by using digital identity Managing risks related to identity (eg, security, privacy, fraud) Monetising personal data Using digital identity to enter new markets Compared to your peers, rate your company’s level of digital-identity success. Please select one in each row. (% respondents) Substantially above average Somewhat above average Average/On par with peers Somewhat below average Substantially below average 15 35 45 3 1 14 33 45 6 2 20 40 34 4 1 13 26 42 13 6 13 30 40 13 4
  16. 16. © The Economist Intelligence Unit Limited 201515 The economics of digital identity Process automation (eg, faster transactions that require identity) Customer self-service Product or service personalisation Product or service improvements Research and development Employee information sharing or collaboration Partner or supplier information sharing or collaboration What internal business activities requiring identity data are you engaged in now or will be in the future? Please select one in each row. (% respondents) Engaged in now Preparing to do within 1 year Expect to do 2-3 years from now No plans to do 54 31 6 8 44 32 12 12 44 32 12 12 50 29 13 8 54 26 9 10 53 27 11 8 41 35 14 10 Security Privacy Managing legal or regulatory requirements User experience (eg, ease of sharing and interface use for customers or employees) Operating across many digital platforms (eg, web, social, mobile, IoT) Risks related to third-parties (eg, partners, data and technology suppliers) Using identity to drive revenue growth What are your company’s top digital-identity challenges? Select the top three. (% respondents) 72 44 36 35 31 24 12 Very well prepared Somewhat well prepared Moderately prepared Somewhat underprepared Very underprepared How prepared is your organisation to address the information-security requirements of storing and using the digital identities of customers and employees? (% respondents) 19 48 26 4 2
  17. 17. © The Economist Intelligence Unit Limited 201516 The economics of digital identity What third-party identity sources does your organisation use for customer and/or employee identification, authorisation or validation now? What parties do you expect to use two years from now? Select all that apply in each column. (Number of respondents) Now Two years from now Social-media companies (eg, Facebook, LinkedIn, Twitter) Employee-services companies (eg, benefits providers) Identity-assurance providers (eg, Equifax, Experian, Transunion, Verizon) Other We do not use any third-party identity providers 100 50 121 60 88 76 16 19 37 57 Employee-services companies (eg, benefits providers) Social-media companies (eg, Facebook, LinkedIn, Twitter) Identity-assurance providers (eg, Equifax, Experian, Transunion, Verizon) We do not use any third-party identity providers Other What third-party identity sources does your organisation use for customer and/or employee identification, authorisation or validation now? Select all that apply. (% respondents) 61 50 44 19 8 Identity-assurance providers (eg, Equifax, Experian, Transunion, Verizon) Employee-services companies (eg, benefits providers) We do not use any third-party identity providers Social-media companies (eg, Facebook, LinkedIn, Twitter) Other What third-party identity sources do you expect for your organisation to use for customer and/or employee identification, authorisation or validation two years from now? Select all that apply. (% respondents) 39 31 29 26 10
  18. 18. © The Economist Intelligence Unit Limited 201517 The economics of digital identity Personal information (eg, name, contact information, demographics) Likes and preferences Friends (eg, social graph, friend referrals) Financial information (eg. credit card, wealth, investments) Location (eg, GPS) Internet of Things data (eg, sensors in automobiles, appliances, energy meters) How willing are customers to share the following types of personal information with your organisation? Please select one in each row. (% respondents) Highly willing Moderately willing Minimally willing Not at all willing Not applicable 28 47 17 6 2 23 42 23 5 6 14 33 31 12 10 14 36 27 16 6 20 40 26 7 6 15 37 24 11 12 Explanation of how data are protected Transparency about how data are used (eg, personalisation, policies on sharing with partners) Explanation of the benefits to customers (eg, free services, personalised deals) None of the above Other Which of the following approaches does your organisation most frequently use to persuade customers to share data? Select the top two. (% respondents) 63 49 39 6 1 Transparency about how data are used (eg, personalisation, policies on sharing with partners) Explanation of how data are protected Explanation of the benefits to customers (eg, free services, personalised deals) Other How effective are these approaches with customers? Select one in each row. (% respondents) Highly effective Moderately effective Minimally effective Not effective at all 35 58 6 1 25 65 9 37 53 9 1 50 50 Publishing a privacy policy Asking customers to “opt-out” when sharing personal information (ie, data is collected unless customers indicate they do not want it collected) Asking customers to “opt-in” when sharing personal information (ie, data is not collected without affirmative consent) Providing privacy features (eg, Controls for selecting who can access their information) Enabling customers to control their identity data (ie, ability to edit, correct or delete information) What tools does your organisation use to respond to customer concerns about privacy? Select all that apply. (% respondents) 60 45 47 46 33
  19. 19. © The Economist Intelligence Unit Limited 201518 The economics of digital identity Publishing a privacy policy Asking customers to “opt-out” when sharing personal information (ie, data is collected unless customers indicate they do not want it collected) Asking customers to “opt-in” when sharing personal information (ie, data is not collected without affirmative consent) Providing privacy features (eg, Controls for selecting who can access their information) Enabling customers to control their identity data (ie, ability to edit, correct or delete information) How effective are these tools in allaying customer concerns? Select one in each row. (% respondents) Highly effective Moderately effective Minimally effective Not effective at all 30 52 17 1 36 57 7 32 54 14 36 55 9 48 41 11 $500m or less $500m to $1bn $1bn to $5bn $5bn or more What are your organisation’s global annual revenues in US dollars? (% respondents) 28 27 28 16 Manufacturing Financial services IT and technology Healthcare, pharmaceuticals and biotechnology Consumer goods Retailing Aerospace and defence Professional services Entertainment, media and publishing Telecoms Transportation, travel and tourism Education Energy and natural resources Logistics and distribution Automotive Chemicals Construction and real estate Government/Public sector Agriculture and agribusiness What is your primary industry? (% respondents) 18 14 14 9 7 7 4 4 3 3 3 2 2 2 1 1 1 1 0 Businesses (eg, 80% or more of sales are to businesses or governments) Consumers (eg, 80% or more of sales are to consumers) Both businesses and consumers Which of the following are your primary customers? (% respondents) 46 23 31 CEO/president CFO/Treasurer/comptroller CIO/CTO/Technology director Other C-level executive Head of business unit Managing Director/Executive Director SVP/VP/Director Which of the following best describes your title? (% respondents) 10 5 41 8 6 12 16 North America In which region are you based? (% respondents) 100
  20. 20. © The Economist Intelligence Unit Limited 201519 The economics of digital identity Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper. Cover:©Shutterstock
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