Or: “Whose identity is it anyway?”
Over the past few years, there have been a significant number of serious data breaches among among banks, utilities, telcos, insurers and public bodies. As a result, hackers are able to access the confidential data and financial records of millions of customers, leading to ransomware demands, wide dissemination of private information, identity theft, and multiple phishing attempts and similar scams.
What most of these hacks reveal is the vulnerability of centralised systems as well as the unnecessary storage of personal data – making these single points of failure a target for such exploits. Worse, the banks and others seem to think they “own” this personal data once they have obtained it, as evidenced by the way they (mis)manage it.
I fully understand the need for KYC/AML, and the requirement to verify customers under the 100 Points of Identification system. However, once I have been verified, why does each bank, telco and utility company need to keep copies or records of my personal data on their systems? Under a common 100 Points verification process, shouldn’t we have a more efficient and less vulnerable system? If I have been verified by one bank in Australia, why can’t I be automatically verified by every other bank in Australia (e.g., if I wanted to open an account with them), or indeed any other company using the same 100 Points system?
Which is where the concept of Self-Sovereign Identity comes into play. This approach should mean that with the 100 Points system, even if initially I need to submit evidence of my driver’s license, passport or birth certificate, once I have been verified by the network I can “retrieve” my personal data (revoke the access permission), or specify with each party on the network how long they can hold my personal data, and for what specific purpose.
This way, each party on the network does not need to retain a copy of the original documents. Instead, my profile is captured as a digital ID that confirms who I am, and confirms that I have been verified by the network; it does not require me to keep disclosing my personal data to each party on the network. (There are providers of Digital ID solutions, but because they are centralised, and unilateral, we end up with multiple and inconsistent Digital ID systems, which are just as vulnerable to the risk of a single point of failure…)
But of course, banks etc. insist that not only do they have to ask for 100 Points of ID each and every time I open an account, they are required to retain copies or digital versions of my personal data. Hence, we should not be surprised by the number of data hacks we keep experiencing.
The current approach to identity in banking, telcos and utilities is baffling. Just a few examples I can think of:
1. In trying to upgrade my current mobile phone plan with my existing provider, I had to re-submit personal information via a mobile app (and this is a telco that experienced a major hack last year, resulting in me having to apply for a new driver’s license). If I have already been verified, why the need to ask for my personal data again, and via a mobile app?
2. I’ve lived at my current address for more than 5 years. I still receive bank statements intended for the previous occupant. I have tried on numerous occasions to inform the bank that this person is no longer living here. I’ve used the standard “Return to Sender” method, and tried to contact the bank direct, but because I am not the named account addressee or authorised representative, they won’t talk to me. Fair enough. But, the addressee is actually a self-managed superannuation fund. Given the fallout from the Banking Royal Commission, and the additional layers of verification, supervision and audit that apply to such funds, I’m surprised that this issue has not been picked up the bank concerned. It’s very easy to look up the current registered address of an SMSF via the APRA website, if only the bank could be bothered to investigate why the statements keep getting returned.
3. I have been trying to remove the name of a former director as a signatory to a company bank account. The bank kept asking for various forms and “proof” that this signatory was no longer a director and no longer authorised to access the account. Even though I have done this (and had to pay for an accountant to sign a letter confirming the director has resigned their position), if the bank had bothered to look up the ASIC company register, they would see that this person was no longer a company officer. Meanwhile, the bank statements keep arriving addressed to the ex-director. Apparently, the bank’s own “systems” don’t talk to one another (a common refrain when trying to navigate legacy corporate behemoths).
In each of the above, the use of a Digital ID system would streamline the process for updating customer records, and reduce the risk of data vulnerabilities. But that requires effort on the part of the entities concerned – clearly, the current fines for data breaches and for misconduct in financial services are not enough.
Next week: AI vs IP