Current and pending legislation is driving political discussion regarding digital IDs. This article aims to identify the sentiments pushing forward with the need for digital ID and what the risks are that drive fear around its implementation.

What is a digital ID?

A digital ID is an electronic representation of an individual's identity used for online identity verification. It allows people to access various services and streamline the authentication process across platforms. Essentially, it's like a virtual equivalent of physical documents such as a driver's license, passport, birth certificate or Medicare card.

Digital IDs can include:

• Basic information (name, date of birth, address)

• Authentication credentials (usernames, passwords, email addresses)

• Biometric data (fingerprints, facial recognition)

• Device information

• Digital certificates and signatures

There are two main types of digital IDs:

1. Traditional Digital IDs: Managed by centralized authorities like governments or corporations.

2. Decentralized Digital IDs: Give users full control over their personal information, enhancing privacy and security.

Digital IDs are becoming increasingly important as they offer greater accessibility, security, and convenience in our digital interactions.

Why are we moving towards Digital Identity Verification?

Digital identities are increasingly becoming a part of everyday life, with governments, companies, and institutions moving toward online identification systems to verify your identity. From online banking to business verification to government services, digital IDs are one document designed to streamline processes and provide security throughout the verification process.

The world is moving towards digital IDs for several key reasons:

1. Efficiency and Convenience: Digital IDs streamline the process of verifying identities, making it quicker and easier to access services online. This reduces the need for physical documents and in-person verification

2. Cost Reduction: Implementing digital IDs can significantly cut costs associated with printing, distributing, and managing physical identification documents

3. Fraud Prevention: Digital IDs enhance security by incorporating advanced technologies like biometrics, which are harder to forge compared to traditional IDs

4. Less Bureaucracy: Digital IDs simplify administrative processes, reducing paperwork and making it easier for individuals to interact with government and private sector service

5. Global Digital Society: As more services move online, digital IDs are essential for creating a seamless digital ecosystem where individuals can securely access a wide range of services from anywhere in the world

6. Inclusion: Digital IDs can help provide legal identity to those who lack traditional ID documents, thereby granting them access to essential services like healthcare, banking, and education

These benefits make digital IDs a crucial component of modernizing identity verification and enhancing the overall digital experience for more users.

Online Identity Verification: Expanding Access to Services

Digital IDs simplify the process of verifying identity online, making it easier for individuals to access services such as renewing an Australian passport, applying for a valid Australian visa, or confirming their legal name with a name certificate. With systems like Service Victoria and face verification services, Australians can seamlessly verify documents like marriage certificates, birth certificates, or a driver’s licence, reducing the need for physical paperwork. These advancements also support emerging markets by creating a more secure digital ecosystem where photo ID and document verification unlock access to a variety of other services, from learner permits to WorkSafe licences in South Australia and beyond.

So why are so many people concerned about Digital Identity Documents?

Digital identity documents are designed to make the process of getting your identity verified more efficient, but their implementation raises significant concerns. Many fear that systems requiring verification services, such as linking an Australian driver licence, marriage certificate, or current foreign passport to digital databases, could expose sensitive data to misuse. Additionally, technologies like face verification services may feel invasive, as they aggregate personal details for access to services like learner permits, WorkSafe licences, or even Australian citizenship certificates. Without robust safeguards, these systems risk undermining trust and could limit entrance to new markets or essential services.

1. Privacy Concerns: The Risk of Surveillance

Tracking and Profiling: Digital IDs, by their nature, aggregate data. There is fear that governments or corporations may use this data to track individuals’ every move—whether through transactions, travel, or social interactions (such as social media interactions). This level of surveillance can feel invasive and oppressive and may be in opposition to community or social values of freedom and privacy. 

Lack of Control: Many people worry that with a digital ID, they will lose control over their personal information. For instance, once digital IDs are tied to databases, there’s the risk that sensitive data could be accessed, misused, or even sold. For example, if an individual is required to provide their Digital ID each time they enter an establishment, such as a bar, that data could be aggregated and the individual profiled. Information such as someone’s social habits would be valuable to marketers and even insurers. 

Unintended Consequences: The combination of digital IDs with other technologies (e.g., facial recognition, and location tracking) could create a "big brother" scenario where individuals are constantly monitored. Bunnings recently was cautioned by the Privacy Commissioner, after utilising facial recognition software to identify individuals from their “face print” (without consent) to determine if specific individuals were banned from entering a Bunnings store. Whilst this may seem like a logical approach to managing difficult and dangerous customers, because there was no consent obtained, and because no laws are in place to regulate this kind of technology, many are concerned the software could fail or potentially become a means for segregation, ostracization or discrimination. 

2. Security Risks: A Target for Hackers and Data Breaches

Data Breaches: Digital ID systems store vast amounts of personal information. When this data is compromised, whether through hacking or other means, the results can be catastrophic. There have been a number of high-profile data breaches (e.g., the Equifax breach) which highlight the vulnerability of centralized data systems. Forming data silos in an unregulated way without legislated standards which are monitored, poses a risk to those who have their personal information held by those providers. 

Identity Theft: The more personal data that’s stored digitally, the greater the risk of identity theft. Hackers may target digital ID systems to steal users' information, potentially leading to fraudulent activities that can take years to resolve. This risk can be mitigated with high-security standards. Largely the push to move to digital IDs by organisations, it to reduce their own PII handling risks. If Digital ID providers specialise in handling sensitive information, and to an approved standard, then the cost of cyber security and process in managing this data can be reduced.  

Cybersecurity Flaws: While digital IDs are meant to provide secure access to services, if not properly protected, they can be exploited. Weak encryption or outdated security measures can make digital IDs susceptible to manipulation or fraud. Managing this needs to be controlled via legislated standards that are improved by industry standards of excellence. There also needs to be mandatory reporting of security breaches and strict penalties for failing to operate within the standards of excellence.

3. Social and Economic Exclusion: A Digital Divide

Access Inequality: In many regions, especially in developing countries or remote areas, access to the necessary technology (e.g., smartphones, internet access) is limited. This creates a risk that those without access to digital tools will be excluded from services that require a digital ID. Likewise, not all members of the community will have the most recent technology skill set, nor the most recent models of digital tools. 

Discrimination: There's the possibility of discrimination based on the data tied to a person’s digital ID. For instance, marginalized communities might be disproportionately affected if their IDs are linked to economic status, health records, or social behaviours.

Bureaucratic Challenges: A reliance on digital ID systems could lead to complications for those who face difficulties navigating digital technologies, such as the elderly or disabled, who might find it hard to adapt to online verification processes.

4. The Risk of Misuse: Government and Corporate Overreach

State Control: One of the biggest fears surrounding digital IDs is the potential for government overreach. Governments might use digital ID systems to exert control over citizens, such as restricting access to certain services or penalizing individuals for non-compliance.

Corporate Exploitation: In the corporate world, companies may misuse digital ID data for targeted advertising or even to discriminate against individuals in hiring or financial decisions. There's concern that businesses might profit from selling or sharing personal information without consent.

Lack of Accountability: A major concern is the lack of oversight in digital ID systems. Who is responsible for an identity document breach, and how can citizens ensure that their data is not misused? Without proper accountability, there is no assurance that digital ID systems will be handled ethically.

5. Ethical Dilemmas: Consent and Autonomy

Informed Consent: Many digital ID systems are being rolled out with little or no public consultation. Citizens may not fully understand the implications of digital IDs or may feel pressured into accepting them for fear of being left out of society’s digital systems.

Coercion: Some people fear that participation in a digital ID system may not be optional, or that opting out could result in penalties, limiting their ability to access services or conduct daily activities (e.g., travel, healthcare, financial transactions).

Loss of Autonomy: Digital identities could be used to tie individuals to a set of predefined actions or behaviours, affecting their freedom. For instance, if digital IDs are linked to social credit systems, people might be judged on behaviours, limiting personal autonomy.

Balancing Benefits and Risks: Can Digital ID Systems Be Secure and Fair?

Technological Solutions

Some of the solutions being developed to address these fears, such as decentralized digital identities, blockchain technology for security, and end-to-end encryption.

Ultimately individuals and their associated entities need to have choices in societies where freedom and liberty are valued.

An individual may, for example, choose to use one Digital ID provider for all matters related to their finances, their banking, accounting and financial investments, however, for matters related to health (doctors’ appointments, pathology tests and hospital services) they might wish to utilise another provider. This then segregates health information from financial information and de-risks the individual. It might even be the case that individuals choose to take this further, utilising one Digital ID provider for banking and lending but segregating that information from investments and financial advice.

Policy Recommendations

Governments and organizations can mitigate Digital ID risks by creating transparent policies, ensuring public oversight, and prioritizing user consent. Emphasizing the need for public awareness and ongoing conversations around digital identity adoption is critical, not only for mass adoption of the efficiencies and security advantages of digital identities but also to have a consensus on the matter, with complete input on all likely risks to be mitigated.

So what will the future look like?

The future of digital IDs will find a balance between their benefits and the fears they raised. Government, industry and the public must come together to work through the risks associated with Digital IDs and demand standards that protect all entities against the risks highlighted.

Public concern should be raised when organisations stack risk into one of the above categories.

In the coming years, this author sees Digital IDs utilised in a similar fashion to payment platforms, where service providers (government and industry) will offer a mix of solutions for identity verification, derisking themselves and offering the consumer choice.

Moving forward with caution.

While digital identities offer significant benefits in terms of security and convenience, we must proceed with caution. Governments, businesses, and citizens alike should be vigilant in safeguarding privacy, ensuring security, and preventing misuse.