Report: Why banks must act now to deliver secure digital ID

A new report from European payments solutions experts Nets argues that banks must act now to deliver secure digital ID solutions for their customers as commerce goes online and governments and regulators gear up for a digital future.

Why banks must act now to deliver secure digital ID

Failure to do so could see banks missing out on revenue opportunities both in their home markets and across borders, and falling behind more nimble digital-first competitors that are emerging from the online revolution.

The report sets out a range of drivers that are leading to digital ID, from regulatory developments in Europe such as AMLD6, DORA and eIDAS 2.0 through to the dramatic increase in dropped transactions and fraud risk.

According to the report, 7 in 10 European consumers dropped out of digital onboarding or online transactions last year, turned off by complex and time-consuming authentication requests.

Nets’ report also covers the rising cost of fraud in the digital arena and increasing criminal sophistication seen in attack vectors such as Account Takeover (ATO) and synthetic ID fraud, which rose by 16% across Europe last year.

Another factor covered by the study is rising competition.

As the digital economy grows, fresh opportunities are emerging linked to e-commerce and new payment types enabled by the digital revolution such as request to pay (R2P) and Account-to-Account (A2A) payments.

In turn, these opportunities are attracting a new wave of digital-first competitors to retail banking, including non-bank financial institutions such as Klarna and Afterpay through to digital-only “neobanks” such as Curve, N26 and Revolut.

With this new wave of competitors posting growth rates of up to 21% per year over the next decade, retail banks must find competitive differentiators to distinguish themselves – and comprehensive digital ID solutions are one of the best means for today’s banks to capitalise on the greater trust and better consumer relationships they enjoy.

By introducing digital ID that works across their online estate, the Nets report argues banks can create a better user experience, improve loyalty, grow revenues and encourage the uptake of innovative, digital-first services.

These drivers help to explain why the global digital identity market was worth $23.4 billion in 2021 and is set to almost quadruple in size to reach $93 billion by 2030, according to Polaris Market Research.

To address this rapid growth, the comprehensive and wide-ranging study features examples of digital ID in action with financial institutions, governments and social service organisations.

The study also makes recommendations as to how banks can best implement digital ID solutions, including examples of how to partner with governments and expert providers for best results.

Download a free copy of new report from Nets now to learn more about what’s driving the development of digital ID across Europe.