The Age of Consent – The Case for Federated Bank ID
The Age of Consent | The Case for Federated Bank ID 1 When the pyramids were being built, there wasn’t any other way of doing it than starting from the bottom and working up. As we build out the digital economy, there isn’t any gravity to force us to begin with the foundations. We sometimes realise we have started work in the middle and are missing the lower levels: for example, poor Strong Customer Authentication (SCA) is proving an impediment to the development of open banking. The modernisation of payment systems is a serious undertaking that aims to bring money into the 21st century. Ecommerce and digital platforms are already 24/7/365 and always on, but the banking system is not. Banking still runs on batch processes and “store-and-forward” messaging. Fintechs are building bridges between clockwork banking systems and the world of digital platforms, but there is a need to update core national payment infrastructures. There is a significant amount of work for governments, regulators, banks, and bigtechs and fintechs to help upgrade the “fiat currency stack” of systems. 1 Real-time Introduction retail payment schemes are being introduced around the world, and regulators are opening up banking systems through APIs. Each country is following its own blueprint and not always starting work on the foundations. This could be dangerous: if the fiat currency system doesn’t meet the needs of 21st century digital commerce, then cryptocurrency alternatives to national currencies are waiting in the wings. Banks are fully occupied by a changing regulatory landscape, emerging competitors from fintech and bigtech, and a host of new, potentially disruptive technologies that they fear missing out on. In this noisy environment, it can be very difficult to focus on the few must-win battles that will secure the role of banks as the financial layer in the digital economy. As software and digital platforms reorganise the economy, it is becoming clearer that digital ID and data protection legislation are the base layers of the digital pyramid. Upon this solid foundation, the digital economy will be built. And banks have a key role to play.