This article will define digital identity, its use, and how organizations can ensure their customers' digital attributes are kept safe through digital identity verification.
What Is Digital Identity and Why Is It Important?
What is an online identity? It comprises all the personal data a person has online that can be traced back to them. It consists of web browsing activity, biometric behavioral data, and personal data held in online databases or web applications. It also includes usernames, passwords, and other information used to verify a person's identity and allow them access to private internet spaces.
Why does digital identity matter? For several reasons.
- Privacy. Most people have various personal information that they do not want to share with others. It’s important to understand digital identity to be kept secure and private.
- Security. Bad actors can obtain sensitive information, such as banking credentials, that could be used for fraudulent activity or crime. Understanding digital identity helps you protect your customers from scams and identity theft.
- Control. Companies can benefit from personal data. For example, internet service providers may sell browsing data to companies so that they can create more personalized and targeted advertising. Understanding your digital identity allows you to better control who sees—and profits from—information.
Digital Identity Examples
What specific pieces of information make up your digital identity? Many online data sources could be part of a person's digital identity. Anything from social media posts, photos, online banking information, browsing history, search engine results, etc. If it can be traced back to you, it’s part of your digital footprint.
We can divide the information that makes up digital identity into two categories: digital attributes and digital activities.
Digital attributes include personally identifiable information that exists in online records. These may be private records or public records. For example, the information a person sends about themself when accessing medical services, paying taxes, or enrolling in university would fall in this category. Other examples are:
- Email addresses
- Login credentials, usernames, and passwords
- Date of birth
- ID Numbers (driver’s license, passport number, etc.)
- Biometrics (fingerprint, eye scan)
- Images of government-issued ID cards or documents (passport, driver’s license, etc.)
- Bank details
- Medical history
Digital activities are online behaviors that a person does or records how they have used the internet. These can also include records from apps that track their behavior or location. For example, digital activities can consist of:
- Browsing history
- Search queries
- Posts and pictures on social media sites like Facebook and Instagram
- Likes, comments, and shares on social media sites
- Forum posts
- Signed petitions
- Apps downloaded
- Exercise and health history
- Purchase history
- Cell phone usage
This article will focus on the digital attributes that make up a person's digital identity and how organizations can use these attributes to confirm a user's identity and onboard new customers.
What Is Digital Identity Verification and How Does It Work?
Digital identity verification is the process of confirming a person is who they claim to be by collecting digital proof in real-time to compare and match it to a previously confirmed identity document. In practice, organizations perform digital identity verification by maintaining a data set of confirmed traits, features, or pieces of information about their users. This data set can include passwords, biometric data, passport numbers, email addresses, etc. Then, the organization asks users to show proof of identity and match it with these data sets. They compare this set of proof of identity to their database. If data match, they consider the user's identity verified.
For example, a user will need to verify their identity when opening a new bank account. To prevent fraud, the bank must ensure the identity of the person opening the account is their own. The user can present a live identity proof such as a biometric or facial scan, and the bank will compare it to a confirmed credential, such as a driver's license or passport.
Digital Identity Use Cases
Virtually every industry requires some form of identity verification. Many require increasingly stringent verification processes, multiple proofs of identity, and even multi-factor authentication. Here are some examples of how digital identity is used in various industries.
Retail and eCommerce
Retail is becoming increasingly digital as people shift to primarily shopping for goods and services online. With increased digital transactions and sharing of sensitive data, retailers must balance their customer safety and fraud prevention with a convenient customer experience.
One example of how they’re doing this is with technology like instant checkout. Instant checkout lets customers pay for merchandise using their mobile device’s wallet—Apple Pay or Google Pay—by verifying the customer's identity through your device password, fingerprint, or facial recognition.
Banking is also trending toward a digital business model with increased consumer demand for mobile banking features. Banks and financial institutions face the double task of preventing fraud and identity theft for their customers and complying with laws intended to prevent crime and money laundering. That’s why banks are required to carefully identify and verify their clients’ information when opening an account. They also must periodically update that information. These regulations are commonly referred to as “KYC” or “Know Your Customer” regulations.
Financial institutions use several tools to ensure that their clients are who they say they are. For example, with Reusable KYC, individuals can verify their identity with just a single organization. That organization can then verify the individual for other partner organizations. Several companies now offer this service as an app. You go through a KYC process with that app, and then you can use that app to onboard with a financial institution. The KYC process can then be performed with just a click of a button.
Fraud and scams are rife within the tourism industry. Some estimates put the global cost of fraudulent activities in tourism at $21 billion each year. But travel companies are increasingly using face ID and other forms of identity verification to prevent fraud and comply with KYC rules.
How Digital Identity Information is Exposed
As the scope of our digital identities expands into numerous industries, it’s increasingly important to understand how to keep information private and safe.
So, where is private information being exposed? Here are a few ways that personal data can become public.
- Public Wi-Fi networks. The free public networks you might use at a hotel, coffee shop, or airport can pose significant risks. These often have poor security, which makes them vulnerable to hacks. When a person connects to these networks, an attacker could see their activity and steal their information.
- Unsecured websites. Most websites now use secure web protocol. Websites that do have URLs that begin with HTTPS. But some still use the unsecured versions—HTTP. These unsecured websites are more vulnerable to malware and cyber-attacks. If the website is compromised, it could fail to keep a user's information secure.
- Third-party data breaches. Third-party data breaches occur when your data is stolen, not from an organization you’re associated with but from a third-party organization. For example, imagine a customer purchasing through an online retailer that uses Stripe’s payment system, and Stripe gets hacked. The person's information might be vulnerable—even though they don’t have a relationship with Stripe.
- Phishing attempts. Phishing is when bad actors deploy malicious software on a person's device or trick them into revealing sensitive information. One standard phishing scheme is to send an email that looks like it’s from a legitimate organization, like a bank, and ask for a user's login credentials. They can then use that information to access the user's account or sell it to others.
- Weak passwords and re-using passwords. Passwords are the primary way that we protect our sensitive information. Unfortunately, it’s common for people to use short passwords. Short passwords are vulnerable to attacks. And if a person reuses the password, one leak could mean that hackers gain access to all that person's accounts.
- Location sharing settings. Some apps collect and use information about a user's location. Depending on sharing settings, location data may be exposed and collected by others without the user's permission or knowledge.
- Adding strangers to social media accounts. Social media offers a treasure trove of personal information. People regularly share their opinions and pictures of themselves and where they live, who they’re connected to, and where they work. Even if you use relatively strict privacy settings, this information can be exposed.
- Smart devices. There are now billions of devices connected to the internet that are not mobile phones or computers—everything from fridges to cars to speakers. These typically have weak security and are vulnerable to exposing unwanted information. Hackers can even pick up your password from discarded smart devices, including light bulbs.
How Individuals Can Protect Digital Identity
Given all of the potential risks, individuals must take action to protect their digital identities. You can employ several digital identity management strategies to enhance your privacy and minimize risk. Here are some easy methods you can use to increase your protection.
Use Encrypted Connections
You can make sure that you are using encrypted connections simply by looking at the URL of the address bar. Is there a little lock icon beside the website address? That lock signifies that the website uses a secure connection, so it’s less vulnerable to other parties collecting your information.
This may not be as important if you’re simply reading a blog post. But if you’re using any website where you need to enter your credit card number or other sensitive information, look for that little lock icon.
Avoid Public WiFi Networks
Hackers with the proper skill set can see your activity on these networks. It’s best to avoid them. Again, it’s not so important if you’re looking at cat videos. But be careful not to make online payments or disclose sensitive information over public wifi networks. If you must use a public wifi network, consider using a virtual private network (VPN) to enhance your privacy.
Configure Smart Devices To Be More Secure
While smart devices are particularly vulnerable to hackers, there are some actions you can take to make them more secure. For example, some simple tips for smart device privacy include changing default passwords on routers, creating guest networks for visitors, and regularly updating software.
Use a Password Manager
One of the reasons people create weak passwords or reuse strong passwords is that it’s difficult to remember many strong passwords. The answer is to use a password manager. Most smartphones now have these built-in—they help you create strong passwords and then remember those passwords on your device so you don’t forget them.
Other benefits of password managers are that they help you remember to update your passwords regularly, automatically generate passwords that are hard to guess, and use different passwords for all your accounts. They also help protect you from phishing scams because if a website is not trustworthy, they will not enter your information.
Keep Your Identifications Safe
Your social security number, passport, and driver’s license number are prevalent forms of identification. Knowing these numbers can tell bad actors a lot about you. That’s why it’s best to leave these at home and minimize the risk that they’ll get into someone else’s hands. Also, be curious when you’re asked to provide these pieces of information. Consider asking why the organization needs it and whether it’s necessary.
How Organizations Can Protect the Digital Identities of Users
It's not just individuals that have to protect their privacy. Any organizations that collect personal user data are obligated to keep it secure. That means businesses need to have the infrastructure to ensure their customers' data is secure and private.
Most organizations implement basic security measures during onboarding, such as adding a security question or password. However, these security measures are easily guessed or stolen. To create an additional layer of security, organizations must invest in technology that doesn't rely on user knowledge but instead on their unique, irreplicable characteristics. For this reason, many organizations are turning to biometrics as a method to verify and continually authenticate a user's identity.
The Incode Omni Platform is designed to do just that. The end-to-end identity platform offers enterprise-ready solutions for verifying digital identity and keeping customer data safe. At the same time, it provides a seamless customer experience at every point of contact.