Our perspective

Why the Digital Identity Process is Broken—and How ID.me Will Fix It

Jesse Wedler & Jeremy Zhu
22 Mar 2021
Why the Digital Identity Process is Broken—and How ID.me Will Fix It

By Jesse Wedler, partner at CapitalG, and Jeremy Zhu, investor at CapitalG.

In the digital world, there’s one gateway through which we access any critical service online, from government benefits, to healthcare to banking. That gateway is identity verification, and, unfortunately, in its current state it fails too many people too much of the time. The dominant approach for identity verification today requires every single user to set up a unique login, verify their identity, and remember a password — for every single site they access. This approach fails to deliver on both convenience and security. Yet, we’re more reliant on digital access for critical services than we’ve ever been before.

The Current System Fails Both Consumers and Enterprises

Verifying an identity digitally poses unique technical challenges that don’t exist in the physical world.

On the front-end, there needs to be a user-friendly way to capture consumer information and photos of identifying documents. On the back-end, the documentation needs to be verified to be truthful, and the identity needs to be validated across various databases. It’s much more than seeing whether the driver’s license matches the face of the person presenting it.

Commonly applied approaches to online identity verification, such as knowledge-based authentication (KBA), don’t work effectively because fraudsters have wide access to this information via data breaches. To increase security, many enterprises have resorted to building their own unique techstacks by cobbling together piecemeal systems and data vendors while simultaneously trying to build a product with an intuitive front-end user experience. This piecemeal approach is extraordinarily expensive both to build and to maintain.

Another challenge with piecemeal solutions is that they force enterprises to try to balance the give and take between the pass-through rate (letting people through) and the potential risk of fraud. Being too loose leaves a business open to bad actors who can take advantage of the system. Being too strict means legitimate customers can be denied service.

Existing systems aren’t only problematic for enterprises. They create lousy experiences for consumers, too. Few customers can keep track of quite so many passwords, and then when they forget them, they’re subjected to having to navigate their way through arduous workflows or calls to the service desk when they need access. More troublesome than the hassle of existing systems, though, is that they completely fail to work for entire segments of the population. For example, many people don’t have robust credit records. That shouldn’t keep them from accessing critical services. Also, some subsets of the population experience life events that make verification with traditional databases challenging. People who change last names after marriage may need to wait weeks or months before credit databases are updated. Existing systems are leaving whole swaths of the population under-served or unserved altogether.

Covid Has Intensified the Need for Change — Fast

Covid has exposed digital identity verification’s significant weaknesses now that digital channels are the only point of access for so many key services. With record-setting unemployment claims in the tens of millions, skyrocketing demand for telehealth services, and the closing of physical locations, organizations are facing an unprecedented, sometimes crushing reliance on their digital infrastructures.

The need to verify so many identities in such an intense timeframe has exposed the inability of traditional systems to meet the moment — and the scale of these problems is staggering. An estimated 30–35% of customers are unable to pass verification due to these gaps in the status quo approaches. That’s millions of people who aren’t getting the services that they need. And while there is a clear need for more efficient and inclusive identity verification solutions, it’s unrealistic that every organization can or should build this technical infrastructure themselves.

We believe there is a large opportunity for an identity infrastructure provider, like Twilio for communications and Stripe for payments, which provides effective and scalable identity verification via an API.

ID.me Is Fixing the Broken Digital Identity Process

Founded in 2010, ID.me started by verifying veterans and military personnel in order to access commercial and government benefits online. CEO Blake Hall wanted to create a better approach to verification that allows everybody to prove their identity online.

Over time they developed a product that met the needs of the enterprise: capable of the highest level NIST verification capabilities, delivered via API for easy integration, and able to identify 100% of a target population — all within an intuitive, easy-to-use product that protects the privacy of its users.

Once verified, users can use their ID.me identity across other organizations that accept ID.me, like a pre-verified passport for the internet. This flywheel helps both consumers and businesses, reducing the time, cost and friction of verifying users. The approach is working–ID.me has 39 million members and more than 70,000 new users signing up per day. Furthermore, every user has ownership of their ID.me profile and the ability to control which companies or government agencies have access to their information, including the option to delete their profile and all traces of their data at any time.

CapitalG’s Investment in ID.me

The world is ready for a new approach to digital identity. Every conversation we have had with Blake and his team has given us more conviction that they are building a truly unique platform built on exceptional technology. ID.me is working to become the trusted identity layer of the internet and we are thrilled to partner with their team on their journey to provide equal digital access for all.

Want to join an awesome team? ID.me is hiring across all positions — https://www.ID.me/careers

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