[Dave Birch] Over at the CSFI/Visa Europe Research Fellowship on “Identity and Financial Services”, I posted about a report that Adam Banks, the Chief Technology Officer for Visa Europe wrote on “The Future of Technology and Payments” last year. In it, Adam says that there is a “crisis of identity” and that

traditional identity management models are becoming increasingly unsustainable and there is an opportunity for a collective industry solution and the need for a trusted partner.

[From It is a crisis – CSFI Identity and Financial Services]

To my mind, one of the key reasons why the identity management paradigm needs resetting is that we are taking mundane conceptions of identity and translating them into what Adam calls the “parallel” virtual world. But in my view the virtual world isn’t parallel to the mundane at all: it’s different, and notions of identity in that space are not reflections or projections of mundane identity but more powerful, more nuanced and more complex. Virtual identity can do amazing things that mundane identity cannot.

Adam’s conclusions, though, are spot on: if some sort of robust personal identity management (PIM) solution were to be adopted then the implications for the payment industry are “profound” (not my words: Visa Europe’s). You can see why this: once you know who somebody is, then transferring money around is easy. If I amble into Tesco and Tesco know that for sure that it’s Dave Birch and that I have an account at Barclays, then they can just ask Barclays for the money once I’ve got my shopping: there’s no need to go through payment schemes or other third parties. There’s probably no need to even authorise: if I stiff them, I’ll never be able to buy anything from Tesco again (and if the UK retailers decide to form their own payment system, I won’t be able to buy anything from any other retailer either).

This is why the technologies associated with identity and authentication are so critical, why their exploitation will be disruptive. And, incidentally, why Adam is so right to flag the issue. Visa Europe and its members have to disrupt themselves because of this, and I am convinced that if they don’t do it them someone else will. If you’ve cracked identity and have established a value network around identity management, then payments become, frankly, easy. Identity, though I hate to chant the mantra, is the new money. There is an opportunity for a collective industry solution and the need for a trusted partner.

Identity is critical in many ways: It ensures the right degree of user personalization, enables the reliable billing of services used across a platform, and provides a strong foundation of trust for any transaction occurring on the platform.

[From Making Sense of Ever-Changing Payment Technologies: The Year of APIs and the Reshaping of the Payment Ecosystem – pymnts.com]

Patrick is right here to highlight the key role of identity in constructing the future payments infrastructure, although I would draw a slightly different diagram to illustrate the relationship. He has drawn identity on top of payment services, whereas as I would draw them side-by-side to show that some commerce applications will use identity and some will not, some commerce applications will use payments and some will not. It’s not that difficult to imagine a future Visa Europe (or perhaps even Visa Europe itself) providing services to commerce that are based on identity but not on payments (we’ve already experimented with one of them, using Visa cards to log in to government services).

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers

1 comment

  1. Perhaps the reluctance to phrase it that way is because there are many problems in this arena; if you pose it as one people will offer one solution. And one solution for an area can be misread as a panacea when it isn’t.
    Even then, identity is only a means to an end (or many ends), and bitter experience shows that folks don’t buy into it directly; more people notice things going wrong than when working seamlessly.
    Identity and identifiers can be intensely personal, and culturally significant. The concern is about the branding of “an identity problem”, not the existence.

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