As of 2013 here are 7.125 billion people in the world (World Bank) 39% of which are using the Internet (ITU). 318.9 million of these people live in the United States where as many as 74% use the Internet (Census).
Increasingly these people are accessing services that require them to prove their identity over the internet. This manifests itself in many ways, commonly in the United States this is done through use of Knowledge Based Authentication (KBA) where knowledge of details from users credit reports are leveraged to authenticate users. This approach has several serious problems:
- In the United States alone 29% of people have no credit history at all (Gallup) making this approach inaccessible for these users,
- A number likely much larger than this have such limited credit histories this approach to authentication is ineffective for them,
- Numerous studies show the usability characteristics of these solutions are poor and result in user abandonment,
- The limited data available in these credit reports and the way KBA is integrated into these services reduces both the security and privacy each time the information is used.
As a result services often times attempt to leverage a person’s pre-existing relationships with other services such as banks. This approach also have serious failings:
- In the United States 7.7% of people are unbanked (FDIC) and 20% are underbanked,
World-wide the number of unbanked is 35%,
- For liability and business interest reasons almost no financial services organizations offer federated identity services for their customers,
- When banks are used a concept of a “penny-test” is often used requiring disclosing sufficient information to enable them to potentially draw electronic checks from the persons account,
- The infrequent nature of this transaction and inherent complexity of the task again has poor usability characteristics and results in transaction abandonment,
- This leaves services attempting to rely on binding multiple social “identities” together to authenticate the user. Unfortunately these social “identities” are often no more than pseudonyms which do not meet the regulatory obligations that many businesses and agencies must meet. Additionally the binding of these identities together reduces the users privacy significantly in that it becomes trivial to track activities of that user across services.
This situation creates a socioeconomic glass ceiling where those who can not participate in these authentication systems do not have access to the lower cost and generally higher value services available on the Internet.
Additionally there is still a class of transactions where the existing mechanisms do not work (such as a person establishing their first bank account) and others that require the disclosure of more information than necessary to meet the authentication requirements (for example age verification).
Outside the United States the situation is even more grim where the the numbers of the unbanked are significantly higher and often privacy regulations prevent the use of many of the above approaches. As a result many services can not be brought online and those that can commonly rely on the lowest common denominator – proof of control of a simple email address.
This problem is made even more complicated when services need to verify professional accreditations or roles within an organization.
What do you think? Is this a real problem?
I think it is. I also think this is a solvable problem (for some value of solvable) but as of yet I do not see anyone building solutions that address this problem of initial identity verification effectively.