City of London and EY call for national digital ID
The UK risks losing its position as a global financial hub unless it rapidly upgrades its digital verification infrastructure.
A new study from EY and the City of London Corporation warned that delays in establishing a government-backed, scalable digital verification system (DVS) could cost the UK billions in economic benefits.
Meanwhile, it is increasing businesses and consumers’ vulnerability to fraudulent behaviour.
With major economies like the US and EU racing ahead with national digital ID frameworks, the report urged the UK to implement a robust DVS as soon as possible, or risk being left behind in the fintech revolution.
The cost of inaction
The financial sector across the UK has faced the problem of mounting fraud losses in banking-related theft, with compliance costs for the sector increasing.
Meanwhile, consumer trust remains fragile, yet this report revealed that a well-designed DVS could help mitigate these concerns.
What’s more, it suggested this move could unlock an estimated £4.8bn in benefits by 2031 through reduced fraud and improved efficiency.
Chris Hayward, policy chairman at the City of London Corporation, said: “The UK is at a tipping point in public support. With the UK poised at the forefront of digital innovation, the implementation of a comprehensive digital verification framework is timely.”
A competitive advantage for the UK
Beyond fraud prevention, a robust DVS scheme could enhance the UK position as an attractive destination for fintech investment.
Fintech expert Sir Ron Kalifa said the initiative “exemplifies our dedication to innovation and excellence in the sector.”
“By enhancing the reliability and security of digital identities”, she continued, “we not only streamline consumer interactions but also secure our status as the global financial leader”.
The centre for finance, innovation and technology (CFIT) has revealed its efforts to integrate a UK-wide digital verification model, yet questions remain about government backing and the speed of implementation.
Falling behind global rivals
While the UK has made progress with digital identity pilots underway and the Data Bill advancing through parliament, the country is still playing catch up.
The EU has already implemented its eIDAS regulation, giving its citizens and businesses access to a unified digital identity verification.
The US is also rapidly expanding its state-level digital identification initiatives, with American financial firms integrating them into fraud prevention measures too.