It has been a challenging year for us all and one cannot underestimate the impact of the pandemic on so many people around the world. However, there is significant hope that 2021 will be a much better year for many of us.
2020 has been a year of the acceleration of digital transformation.
More people are working from home – At its highest figure during the Covid lockdown, 38 percent of the UK’s workforce was classified as exclusively working from home. [Source 1: UK ONS]
More people are banking remotely – More people are turning to digital banking, mobile and online, and many people are new entrants in using this technology. A study by McKinsey discovered a 20 percent rise in digital banking during the COVID-19 crisis – that’s two years’ growth in just a couple of months. [Source 2: McKinsey]
More payments are moving online – A study from McKinsey says that in the first six months of 2020, consumers spent US$347 billion online with US retailers, up 30 percent from the same period in 2019.
Once it is safe to do so, and the COVID-19 vaccinations have reached the majority of the world’s population, then we shall undoubtedly see the pendulum swing quite dramatically back to physical interaction. We are social beings and a pent-up demand for physical interaction means we will embrace physical shopping, face-to-face business meetings and events and international travel. However, a new normal will emerge as normal life resumes and we again experience the inconvenience of long queues for parking at the shopping mall or travelling three hours for a 30 minute business meeting. The pendulum will again move towards the virtual world resulting in a balance of physical and virtual interactions with the distinction between the two narrowing. Much of the change in behaviour that has been a result of this pandemic will stick.
The improved digital infrastructure and a change in work culture will go hand-in-hand to support a much more virtual lifestyle. Businesses will support increased working from home and will benefit from improved productivity, reduced costs from smaller office space and improvements in employee mental health – getting that work-life balance is so important.
In the world of digital trust and security, in particular with authentication, biometrics, fraud and security, and identity, I believe that the following will happen in 2021.
Authentication: Despite the many predictions that 2020 will see the ‘death of the password’ it still dominates the authentication landscape. The need for secure and frictionless authentication mechanisms that work across all channels and devices has never been so pressing but the fact remains that the password is still king. PSD2 Strong Customer Authentication (SCA) has increased the use of 2FA and MFA but banks and payment service providers are largely turning to SMS delivered OTPs despite many reservations from security experts and groups such as NIST. Standards such as FIDO and other passwordless initiatives provide organisations with alternatives to passwords that eliminate many of the security weaknesses, but adoption levels remain muted. There have been positive moves from some of the large tech networks including Microsoft and Google with their authentication apps but in many cases, it is still not mandatory for users to adopt them. I believe regulatory pressure will be the biggest driver to move away from passwords in 2021.
Biometrics: Expect another stellar year for biometric adoption across a wide range of verticals. I predict that behavioral biometrics will be more widely used in partnership with anti-fraud and authentication solutions especially in heavily regulated industries including financial services (EUs SCA and 3-D Secure 2.0 are driving forces in payments).
Will 2021 be the year that biometric payment cards finally arrive for consumers? Expect an uptick in pilots around the world and increasing commercial rollouts to enable secure, safe, frictionless and no-limit payments in physical locations. Surveys from 2020, including our own yet to be published UK survey, indicate that there is strong demand for these cards and a willingness to pay a nominal sum per month for the privilege of owning one. With the rise of contactless cards in many regions of the world, the addition of biometric authentication will make them the top of wallet choice for millions of consumers.
Biometric accuracy and the ability to withstand presentation attacks (liveness or genuine presence assurance) will continue to improve in 2021 making biometrics a reliable method to identify and authenticate people across a wide range of devices and channels.
Biometrics will be vital for a wide range of applications across many different verticals; to support a safe (often touchless) and seamless travel experience, as a pivotal component in remote digital onboarding, to secure the next generation of connected cars, to link the physical and digital worlds for government-issued digital identity and to both actively and passively authenticate people.
Fraud and Security: There is enormous pressure on fraud and security systems to withstand increasing levels of attack on core systems. Covid-19 has led to increasing levels of fraud attempts against digital services. The UK’s Action Fraud reported a 400 percent increase in COVID-19 related fraud during March 2020 with the majority of reports related to online incidents. As remote onboarding increases there will attacks on the tools that are being used to support this process, including using AI-powered attack tools to fool face biometric systems and the collection of personal information for use in synthetic identity attacks. Attacks on remote account opening has increased during the COVID-19 period and it has become one of the favoured attack points for criminals. In terms of a response from fraud teams, I predict increasing levels of cooperation between fraud and security teams to withstand the assault. This will include increasing adoption of layered tools that protect all levels of digital interaction with customers from discovery, onboarding, authentication and transaction processing.
Throughout 2021, more states will enact privacy and data protection legislation akin to the GDPR and California’s CCPA legislation.
Identity: A portable government-issued digital identity is proving to be a fundamental requirement in supporting digital transformation. It has the ability to provide an anchor for a wide range of linked digital identity credentials. This may be issued in a centralised or decentralised (self-sovereign) model – there are merits for both. Governments manage a rich depository of verified identity data across a number of different agencies. I predict that during 2021 governments will wake up to the opportunity that this data provides by enabling third parties to access this data in the same manner that government-issued documents are used in the physical world.
Age verification will be a popular application for next-generation digital identity solutions. I predict that blockchain technology is a realistic platform for age verification services as it can be supported by a zero-knowledge proof protocol that only supplies a cryptographic representation to the answer – am I legally permitted to access/purchase/consume age restricted products and services, including digital adult content and the consumption of alcohol? For instance, I am a student (this for me was some years back) and I am legally permitted to drink alcohol, but I am at an age where I need to verify my age when entering a venue that serves alcohol. Instead of using a physical government-issued document that proves that I am legally allowed to consume alcohol, along with long list of other personal attributes that are irrelevant to the consumption of alcohol, I (the prover) give permission to the venue management (the verifier) to access my digital identity app (wallet) to verify my age. The verifier doesn’t not need to know my date of birth, they only need to know the answer to the question – am I legally permitted to consume alcohol, to which the answer can only be ‘yes’ or ‘no’.
2020 saw Goode Intelligence work with a wide range of digital identity bodies and providers and we’ll be continuing this collaboration in 2021.
I would like to wish all of you a happy and safe holiday season and I look forward to connecting with you during 2021 – a hopefully less stressful year than 2020.
Alan https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/bulletins/coronavirustheukeconomyandsocietyfasterindicators/1october2020