Modern digital IDs and trust solutions are crucial for preventing fraud and ensuring compliance. Alexander Jones from MATTR explains how mDLs advance this effort, offering a secure and convenient way to verify identities.
In pursuit of customer conversions, financial services are being forced to evolve. Instead of being limited to in-person interactions at their local bank, customers expect to engage wherever and whenever they want across multiple digital channels. However, this push for convenience has also given rise to evolving fraud and security threats.
But there no longer needs to be a tradeoff between the convenience that customers want and the security they expect.
A recent Gartner report stated that by 2026, at least 500 million smartphone users will be regularly making verifiable claims using a digital wallet. This emergence of credentials as enablers of digital trust is replacing cumbersome and costly interactions with convenient and efficient ones, moving organisations from insuring against negative outcomes to avoiding them entirely.
Digital transformation in financial services has been driven by the need for enhanced efficiency, security, and customer experience. Traditional banking, which relies heavily on attempts at verification of physical documents, is being replaced by technologies that offer greater convenience and assurance. This shift has been accelerated by the rise of mobile technology, which has enabled financial institutions to offer services that are accessible anytime, anywhere.
In an era where digital fraud is rising and increasingly powered by AI, financial institutions must implement robust measures to protect themselves and their customers. Modern digital identity and trust solutions are fundamental to preventing fraud and ensuring regulatory compliance. Mobile driver's licences (mDLs) represent a significant leap forward in this regard, providing a convenient and secure way for individuals to assert their identities.
mDLs are more than just digital copies of physical driver's licences. Based on ISO/IEC 18013 standards (authored by MATTR staff, as well as other related standards), an mDL leverages well-tested security practices to provide a high-assurance portable identity. They offer many advantages over traditional licences such as selective disclosure of the relevant pieces of information and tamper-evident cryptography to ensure the integrity and security of that information.
One of the numerous benefits of mDLs is their ability to help streamline the onboarding and customer verification process. Instead of presenting a physical ID and undergoing error-prone manual checks, users can quickly and securely share their digital licence information with financial institutions. This not only speeds up conversion but also reduces the risk of errors and fraud associated with legacy physical and digital verification processes.
Moreover, mDLs offer enhanced security features that protect against identity theft, abuse, and fraud. For instance, biometrics and device binding ensures that only the individual who was issued the mDL is presenting it. Encryption technologies safeguard the transmission and storage of personal data, making it more difficult to intercept or manipulate, not to mention features enabling organisations to digitally validate the credential without having to establish a direct relationship with the issuing authority first.
Governments are also developing guidance frameworks to address privacy and interoperability concerns. In the US for example, the National Institute of Standards and Technology (NIST) is specifically working on developing cybersecurity guidance for mobile driver’s licences. These initiatives are on top of the established standards and aim to create a more secure and user-friendly digital identity ecosystem that protects individuals from fraud while simplifying access to services.
Digital trust is a cornerstone of modern financial services, helping to establish and maintain customer relationships. It encompasses the confidence that customers have in the security, privacy, and convenience of digital systems and transactions.
With 43% of businesses experiencing data breaches due to inadequate security measures, financial institutions must constantly evolve to protect sensitive data, guard against fraud, and maintain trust. Data encryption and conventional methods of authentication alone are not enough to mitigate these evolving threats. By natively including advanced security features, mDLs make it simple for customers to strongly assert their identity and protect against fraud. Organizations that implement advanced digital identity solutions, such as mDLs, have reported up to a 30% reduction in identity fraud incidents.
The Harvard Business Review reports that 72% of American consumers are reluctant to share information with businesses, due to privacy concerns. Ideally suited to mitigate these concerns and designed with privacy in mind, mDLs allow users to control and limit what information is shared and with whom. This is particularly important in the financial sector, where establishing and maintaining trust is the top priority. According to EY, the biggest driver of financial trust is confidence that the financial institution is protecting customer data.
Security and privacy are important for consumers and financial institutions, but easy-to-use services are the ones consumers will adopt and come back to. With the ability to use them both in-person and online, and baked-in protection for personal information, the ease of use that mDLs provide is unmatched. This convenience is particularly valuable to financial services where the fight to attract and retain customers frequently comes down to convenience.
Looking ahead, the adoption of mobile driver's licences in financial services is expected to expand as the general adoption of mDLs continues to grow. Staying ahead of the ongoing evolution of security, privacy, and regulatory concerns will be crucial for maintaining digital trust in the future, and the successful implementation of modern technologies like mDLs is essential for organisations facing the rise of AI-powered fraud.
mDLs represent a significant step forward in customer identification and verification for financial institutions. By offering enhanced security, streamlined onboarding and verification processes, as well as unparalleled convenience, mDLs offer new opportunities to drive conversions and loyalty while mitigating risks associated with traditional physical identification.
As financial institutions continue to embrace digital solutions, mobile driver's licences will only be one of an emerging set of scalable high-assurance replacements for legacy digital and physical claims contributing to a more secure and efficient digital financial ecosystem.
About Alexander Jones
Alexander has over twenty years of experience in security technologies, focusing on highly regulated industries such as healthcare and finance. Most recently, he spent six years at Auth0/Okta as their Field CTO helping their customers drive growth and business adaptability. He currently serves as SVP of Customer Solutions at MATTR.
About MATTR
By building bridges and breaking silos, we create a new type of freedom through digital trust. At MATTR our standards-based infrastructure is designed for all types of verifiable data and built for interoperability, security, and scalable digital trust.
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