Digital Identity

Digital identities in e-government, financial services, online shopping and more

Driven by the digital transformation, the topic of digital identity is becoming significantly more important. Digital identities play an important role not only for public authorities and health insurance companies or when opening bank accounts, applying for credit cards or loans. They are also becoming increasingly important for online purchases – and offer companies in e-commerce an enormous potential for reducing the number of abandoned purchases. In the areas of financial services, e-government and healthcare, companies and other institutions can significantly increase customer satisfaction and conversion rates by providing secure, legally compliant and user-friendly solutions.

Definition: What is a digital identity?

Every person is unique – and so is their identity. In the real world, proof of identity is usually provided in the form of an ID card or passport. In the digital world, every person also has an identity. This is referred to as a digital identity or virtual identity.

Digital identities represent the sum of information about a person in digital form. A digital identity is always required when a person needs to be clearly identified.

Areas of application for digital identities

Digital identities are now required in an infinite number of areas, for example:

• for creating an online account, such as for an email account, for social media platforms or for a streaming provider
• for opening a bank account or applying for credit cards or loans
• for online shopping
• with public authorities (e-government)
• when concluding digital contracts
• with health insurance companies.

Self-sovereign identity (SSI)

One possible solution in the context of digital identities based on blockchain technologies is the so-called ‘self-sovereign identity’, or SSI for short.

With an SSI, a person manages his or her own digital identity independently, for example using an electronic wallet. This stores the individual identity features, such as age or address, which have previously been confirmed by trusted authorities for the verification of the digital identity using blockchain.

Digital identities for public authorities and in healthcare

In e-government and healthcare (e.g. for health insurance companies), digital identities have become indispensable.

In Germany, the e-government Act (EGovG) regulates how business processes related to government are to be handled via electronic media. For example, the electronic ID card was introduced at the end of 2010 as electronic proof of identity. This differs from the non-electronic version in that it has an integrated chip containing the personal data of the cardholder in electronic form.

In the healthcare sector the situation is similar. Here, for example, a smartphone can be used as an electronic health card by giving the chip cards of those with statutory health insurance a digital counterpart on the smartphone. The same applies to the electronic patient file, which contains all of a patient’s medical data.

In connection with sensitive user data, security and data protection issues play a crucial role in the handling of digital identities, not only for health insurance companies and public authorities, but also for companies.

Blockchain technologies are increasingly coming into use in the area of digital identities to create a secure and trustworthy infrastructure and to improve services.

Digital identities in e-commerce and other sectors

Digital identities are not only important in the e-government and e-health sectors – they also play a significant role in e-commerce and other industries and online activities, for example

• Onboarding:
  In the so-called customer journey, initial onboarding is a significant moment in building customer relationships. During this process, it is important to capture and verify the customer’s digital identity. But: If this step is not seamlessly integrated and appears complicated, it can easily lead to the cancellation of the order process.
  When it comes to online shopping, depending on the industry, it may also be necessary to check special attributes, for example, if age limits need to be adhered to. If the effort required to verify the virtual identity is too great for the customer, this can quickly affect the conversion rate.
• Login:
  After an initial login, the digital identity is needed to recognise the customer when he or she logs in again. Particularly in the area of financial services, security aspects take top priority – and, of course, user-friendliness is also crucial here: if checking the digital identity is too time-consuming, the result is an easy cancellation of the purchase.
• Digital signatures:
  Whether it’s an employment contract or another type of agreement, electronic signatures are common in the digital age. They not only save time but also money. They also make it possible to sign contracts over long distances. This makes it all the more important that digital signatures are secure and verifiable and that virtual identities can be checked. This is the only way to successfully prevent fraud.

Digital identities in Germany and the EU

Digital identities in Germany: eIDs

The abbreviation ‘eID’ stands for ‘electronic identity’, which is a digital solution for verifying the identity of citizens or organisations. The eID is considered to be significantly more secure and customer-friendly than conventional proof of identity. It is regarded as being as trustworthy as ID cards, passports or driving licences. The eID enables users to retain control over actions related to their digital identity. This allows them to selectively transmit the identity details relevant to the transaction using a smartphone or card.

In the wake of the COVID-19 pandemic and the resulting need for remote work solutions, there has been a real push for digitalisation in the area of public and private services. As a result, the topic of digital identity gained a completely new relevance in Germany, the EU and beyond.

Digital Identities in Europe: eIDAS

The ‘Electronic Identification, Authentication and Trust Services’, or ‘eIDAS’ for short, is an EU regulation on electronic identification and trust services in the field of electronic transactions. The eIDAS enables citizens within the EU to conduct business using the digital identities of their national eID system.

The eIDAS thus provides an EU-wide basis for secure electronic interactions between the various EU countries.

Reusable digital identities – the future trend

The idea of using reusable digital identities has already been proven to be useful for a unified, interoperable approach to online identification. Advances in technologies such as blockchain and self-sovereign identity are driving the development of suitable solutions for reusable digital identities. Aim of these solutions is to provide individuals with a single digital identity that can be reused for various online activities, while complying with current legal requirements.

Advantages of reusable digital identities

Reusable digital identities have the following advantages, among others:

1. 1. High user-friendliness: Users only have to register once to access multiple online platforms.
   2. Higher conversion: For example, easier registration means fewer abandoned purchases, which can positively influence the conversion rate for online purchases, credit card or loan applications, and bank account openings.
   3. High level of security and data protection: Reusable digital identities use advanced authentication mechanisms such as biometrics or cryptographic keys. These reduce the risk of unauthorised access and identity theft. In addition, users have better control over their personal data.

Comprehensive information on this can be found in the white paper on reusable digital identities.

Über WebID

WebID offers a comprehensive portfolio of digital identification solutions tailored to a wide range of company-specific requirements.

With our eID solution, identification and verification is simple, convenient and fast using a smartphone app to enter the ID card PIN and read the ID card data.

TrueID is revolutionising identity verification for online activities because the process is fast, secure and data protection compliant within a few seconds.