Data regulations are likely top of mind for any business leader, with the new EU Data Act being the latest in a long list that will be leading businesses to take stock of how they manage and secure sensitive consumer data. In reality, people leave an unnecessary amount of data – their name, address and credit card information, for example – spread across dozens of sites, under the assumption that it will be well-protected.
As the risks around collecting, storing, and sharing this data only continue to increase, now is the time for business leaders to put their customer data policies and technology under a magnifying glass and look for solutions that can put data in the hands of individuals instead.
It’s time to liberate consumer data
This is where decentralised identity comes into play. At its core, this technology removes the need for consumers to provide reams of personal data in order to access digital services. It gives them the ability to maintain control over what they disclose about themselves and what that data is used for. In a world where consumers are clamouring for more privacy and becoming increasingly suspicious of businesses that ask for unnecessary or in-depth personal information, decentralised identity can revolutionise how businesses build trusted relationships with their customers.
For businesses, putting control back into the hands of their customers can only bring benefits. Without the need to store sensitive data on internal systems, decentralised identity allows businesses to remove a significant layer of risk, both in terms of regulation and compliance, but also data security.
The process of obtaining and verifying information from customers is also a significant drain on the time and resources of businesses. Being able to verify customers without complex, expensive back-end integrations, which often increase the attack surface of an organisation, means that decision makers can funnel budgets to other areas of the business that are a source of growth, not simply risk mitigation.
Levelling up the customer experience
While the benefits of decentralised identity are many, perhaps the greatest advantage is its ability to enhance customer’s digital experience. It empowers individuals with their own identity credentials, not by way of paper documents, but with a digital wallet.
Digital wallets are a convenient, user-friendly method of sharing personal information, simplifying registration and other interactions by storing information on a device that is easily portable: an individual’s smartphone. People can securely store verified identity data like the data extracted from a driver’s license, healthcare data like a vaccination record, or educational data like an academic transcript in a digital wallet. Instead of an individual relying on a third party to store and transmit the information, the user can provide the information that’s needed directly and discreetly.
For businesses, this is a win-win: they can not only keep sensitive information at arm’s length, but they can also rest easy knowing that the human at the other end is who they say they are and that the information they are providing is valid.
Fighting fraud on a new front
In reality, the risk of fraud can never be fully eliminated, as every digital transaction brings its own level of risk. Yet, it can be significantly lessened when key security processes, including registration, verification, and login processes, are made more secure.
By implementing decentralised identity, businesses can gain far greater confidence in the identity of the user and that information they are presenting has been verified by a trusted source. Ultimately, decentralised identity can play a big role in reducing transaction fraud and account takeovers, using innovative methods such as a selfie match or PIN code verification.
An empowered future
While data regulations may be adding complexity to an already complex business environment, the way that businesses respond to the challenges around managing consumer data is vital. By adopting a decentralised identity solution, business leaders can not only create an internal data environment free from sensitive consumer information, but they can also significantly improve the digital experience they offer customers and employees; and that can only lead to business growth in the long run.