The value of digital ID for the global economy and society

“Good” use of digital identification is a new frontier in value creation for individuals, companies, and countries. A panel of leading voices discuss how to unlock the benefits, while mitigating the risks.

On January 23 at 5:00 pm CET, global experts from business, government, and the social sector will discuss how digital identification can provide both economic and societal benefit, as well the keys to success in implementing digital ID. They will also discuss how to guard against the challenges of digital ID as a potential “dual-use technology” that can be used to the benefit of society but can also be used for undesirable purposes.

This panel discussion will include Mike Kubzansky, managing partner of Omdiyar Network; James Manyika, chairman and director of the McKinsey Global Institute; Nandan Nilekani, co-founder of Infosys and founding chairman of UIDAI; Jüri Ratas, prime minister of Estonia; and Mary Snapp, corporate vice president of philanthropies at Microsoft. It will be streamed live from the 2019 World Economic Forum Annual Meeting in Davos, and available as a recording after the live event has concluded.

About digital identification

In an era of rapid technological change, digital identification provides a significant opportunity for value creation for individuals and institutions.

Nearly one billion people globally lack a legally recognized form of identification, according to the World Bank ID4D database. The rest of the world’s 6.6 billion people either have some form of identification but limited access to services that increasingly are being provided online, or they are active online but struggle to keep track of their digital footprint securely and efficiently.

Individuals can use digital identification, or “digital ID,” to be verified unambiguously through a digital channel, unlocking access to banking, government benefits, education, and many other critical services.

Programs employing this relatively new technology have had mixed success to date—many have failed to attain even modest levels of usage, while a few have achieved large-scale implementation. Yet well-designed digital ID not only enables civic and social empowerment, but also makes possible real and inclusive economic gains—a less well understood aspect of the technology.

Digital identification: A key to inclusive growth

In new research, the McKinsey Global Institute (MGI) develops a framework to understand the potential economic impact of digital ID, informed by an analysis of nearly 100 ways in which digital ID can be used, with deep dives into seven diverse economies. The potential for economic value creation could be significant as “good” digital ID increases inclusion, formalization, and transparency while promoting digitization, however risks need to be addressed.

In the seven focus countries of Brazil, China, Ethiopia, India, Nigeria, the United Kingdom, and the United States, the report examines how digital identification can create significant economic value for individuals, business, and governments around the world:

  • There is 3-6 percent economic value by 2030 from the good use of digital ID for a typical mature or emerging economy, respectively.
  • Roughly half the potential could accrue to individuals who benefit most as consumers, including financial services, and as taxpayers and beneficiaries who gain access to efficient government e-services.
  • Institutions could gain from higher productivity, cost savings, and fraud reduction, for example by reducing customer onboarding costs and implementing streamlined employee verification processes.
  • Responsible use and high adoption of digital ID programs are not automatic and require the right principles and policies. All stakeholders – government, business and civil society – can take steps towards this.