Harnessing the power of digital identification can potentially save the UK economy £600m annually in financial crime.
- The Centre for Finance, Innovation and Technology (CFIT) advocates for digital IDs to reduce fraud.
- Digital identification is crucial as economic crime costs the UK nearly £200bn each year.
- Key players in finance and technology are exploring corporate digital IDs as a solution.
- The global digital ID verification market is expected to grow significantly by 2024.
In an ambitious move, the Centre for Finance, Innovation and Technology (CFIT), supported by the government, has put forth the idea of adopting digital identification systems for businesses. The strategic aim is to slash the annual losses incurred from financial crimes, estimated at a staggering £600m.
Fraud remains a significant burden on the UK economy, with economic crime’s total annual cost nearing £200bn. In response, CFIT, chaired by Charlotte Crosswell, proposes the implementation of corporate digital IDs. They argue that these IDs not only prevent fraud but also streamline processes, ultimately contributing to a more secure and efficient financial landscape.
Charlotte Crosswell, the chair of CFIT, stated, ‘Economic crime remains a major threat to the UK’s economic security, and has a profoundly distressing impact on consumers and businesses. At CFIT, we are committed to addressing this and making the financial services industry more robust against fraud.’ The CFIT initiative aims to push forward a ‘secure smart-data economy’ through the synergy of various technological advancements.
Collaborative efforts are underway with proof of concept partners including major banks such as Lloyds, Monzo, Barclays, and Revolut. Digital identity firms like OneID and Yoti, along with regulatory bodies like the Financial Conduct Authority (FCA) and Companies House, are also participating.
Monzo Business General Manager Jordan Shwide expressed enthusiasm, highlighting the benefits of digital verification, stating, ‘This not only enables quicker access to financial services for legitimate businesses, but it also means lots of business information lives in one place. This should make it harder for scammers to set up fake companies and ultimately help prevent people falling victim to fraud.’
The UK Treasury has shown interest, with Chancellor Rachel Reeves indicating that the Treasury will consider findings from CFIT’s ongoing work. This interest aligns with the National Payments Vision.
Globally, spending on digital identity verification hit $15.2bn last year, with projections indicating a 74% increase by the end of 2024, reaching more than $26bn. This trend underscores a growing recognition of digital IDs’ value in combating fraud.
As reported by UK Finance, fraudsters managed to steal £1.17bn in 2023, showing a slight decrease from previous years. The continued push towards innovative solutions like digital IDs could further reduce such figures in the future.
Corporate digital IDs could be a game-changer in safeguarding the UK economy against fraud, providing a pathway to a smarter financial future.
