The Age of Consent – The Case for Federated Bank ID

Treasury and Trade Solutions 4 Case Study: BankID in Sweden The Swedish BankID is the foundation of cashless payments in Sweden, but it is also a key component of a rapidly growing digital ecosystem. The development of BankID is instructive, as regulators, banks and other stakeholders seek to upgrade the fiat currency system to meet the needs of 21st century data-driven commerce. What is BankID BankID is the leading digital ID scheme in Sweden, used by 80% of the population (almost 100% for 21 - 60 year olds) for a wide variety of private and public services. 8 In 2019, it is expected that financial institutions, central governments, municipalities and thousands of private companies will use BankID over 4.5 billion times. BankID is a credential issued by a participating banking institution that can be used for digital identification and signature. It has the status of an “advanced digital signature” under EU rules, meaning that it is equivalent to a physical signature for contracting purposes. BankID is available in various formats to support different use cases: • File : electronic files stored on USB sticks or computers. • Card : physical card. • Mobile BankID : accessed through mobile application. BankID Timeline The story of BankID in Sweden is not one of overnight success. The foresight of, and continued collaboration between, consortium members has paid off over many years by adapting to new challenges and threats: • 2001 : Sweden held the presidency of the EU Council and there was a drive to make digital signatures legally binding. Banks were the natural choice to lead the scheme, enjoying a high level of public trust and 2.7 million internet banking customers. • 2002 : Finansiell ID-Teknik BID AB was formed by a consortium of banks with the aim of owning, operating and developing a general digital ID infrastructure. • 2003 : The first BankID was issued. Public authorities such as Skatteverket (Tax Agency) and Försäkringskassan (Benefits Agency) were quick to adapt their services, driving the take up of the service. • 2005 : Banks began to use BankID for internet banking in 2005, becoming the largest users of the service from 2009. • 2010 : Mobile BankID was launched for mobile phones. • 2012 : Banks launched a new person-to-person (P2P) payments service called Swish, utilizing BankID as the underlying security mechanism. 9 BankID Development Ethos Banks realised that the security of identification and signature was best pursued in a collaborative rather than competitive domain. A common solution engendered overall trust in internet banking and digital signatures. Banks decided to draw on traditional strengths of complying with stringent regulations to create a common solution that would benefit the whole ecosystem. BankID Influence on Society BankID has facilitated the development of digital government services in Sweden at central and local levels, leading to the faster processing of cases and efficiency savings in time and money. BankID has served as the basis of innovation in the development of new public and private services that could otherwise not have existed. A 2019 survey of users elicited a positive response, with customers reporting high trust and few operational issues. In the PSD2 context, the financial institutions using BankID have been well placed to comply with SCA rules as the population is already well versed in using BankID to authenticate Swish transactions. Banks report high levels of collaboration on security matters and the ability to extend value-added services like Swish to additional use cases, for example consumer-to-business (C2B) transactions. Swedish consumers use BankID between 40 and 50 times a month for a variety of transactions. Consumers report high trust in the service and freedom to execute transactions wherever they are. Towards a Cashless Society BankID and overlay services like Swish have resulted in a dwindling use of physical cash in Sweden. Only EUR8 billion of cash was in circulation in 2016 and the country is on track to become cashless by 2025. The government asks citizens to keep cash at home in case of a power cut, war or cyberattack. The Riksbank is also considering the introduction of a Central Bank Digital Currency (CBDC). 10