Speaking in a session with Legal & General Mortgage Club Stuart Young, chair of the digital identity group, said that in a use case with insurance brokers, conveyancers who adopt the digital identity trust scheme standards could see PII cover reduce by 40 to 60 per cent.
He added that this could also have read across for brokers, and that this was just one of a myriad of benefits of the scheme.
The digital identity trust scheme will allow consumers to use one digital identity when buying or selling a home that is then shared by the consumer with connected parties such as estate agents, conveyancers, mortgage intermediaries and mortgage lenders.
This will not only save time and effort for the consumer, but it would also reduce fraud and operational costs. He also noted that it could allow lenders to upsell on products.
He said that in Norway, which adopted a one identity standard, the technology had lowered mortgage fraud from one per cent of transactions to 0.00042 per cent. He also said that processing times in certain Scandinavian countries had been reduced from 16 days to one day.
Trial and error
A pilot for the scheme opened at the end of last month and will run until August next year. It currently has five identity providers, a company or system that creates and manages identity and authentication, signed up for the scheme with more expected to join the scheme later this year.
He added that identity providers would also have to be certified as part of the scheme which would help foster trust in the system. This would be done using a set of government standards.
Young said: “Today, identity providers don’t carry any liability because the process is: I provide you with the information and it’s entirely up to your own risk assessment to make a decision based on the information that I’ve given to you, but if you look through the scheme, the liabilities are now pushed back on to the identity providers.
“In the end if they don’t do what they’re contractually meant to do or make a slip up in what they’re doing. that gives you recourse so they are actually having to carry liability now and that is written into the contracts of the scheme.”
Lenders can use any identity providers certified with the scheme without having to enter negotiations or contractual obligations with one provider and could use a variety of providers for different cases.
He said that this had opened up the scheme to more innovative and creative types of identity providers as it allowed more providers to be certified and gave lenders peace of mind.
Young said that a “key challenge” was ensuring inclusivity as some consumers relied on physical documentation, so it would also use eight different identity profiles which would allow the scheme to cater for a wider variety of people.
The consumer gets their digital identity via one of the certified providers and downloads it on to their device and then they can share that with whoever they need, which means the client is in control and it overcomes issues around GDPR.
He said that this work was currently high on the agenda for both the Department for Digital, Culture, Media and Sport as well as Department for Levelling Up, Housing and Communities as it fulfills two government objectives.
Young said: “We need to start getting banks, mortgage lenders, brokers, conveyancers and estate agents engaged in the ecosystem. This is going into a pilot and from government down to the regulators and representative bodies across the four stakeholder groups have all agreed there’s an element of risk in this.”
He added that there might be some initial hurdles as some companies would be members of the scheme and others wouldn’t, meaning digital identity may not be accepted by everyone but this needed to be overcome.
He said: “We can drive this forward, the confidence for the industry is knowing that there’s government backing behind it. Your regulators are behind it and your representative bodies are behind it.”
