Banking

Can Utah’s digital driver’s license be a viable form of customer ID?

The recent rise in mobile and contactless payments has created an opportunity to bring government IDs into the mobile wallet as well, and a credit union in Utah is the first to deploy the state’s digital ID.

Utah Community Credit Union (UCCU), a Provo-based credit union with $2.18 billion in assets and more than 216,000 members, is working with the Utah Department of Public Safety and Utah Driver’s Licence Division to test a mobile ID system with 100 members. The test begins the final week of June, expanding to more members later this year.

It’s the issue of buy-in where the credit union model could prove useful. Credit unions often share services such as ATMs and branches, and a downstream effect from the UCCU deployment that pushes other credit unions to accept driver’s licenses as part of authentication could also have an indirect impact on other financial institutions outside of the credit union market.

“It’s important for the credit union to be out in front of digital ID,” said Justin Olson, chief information officer of UCCU.

“Mobile ID such as this may become even more critical when it comes to shared branching,” he said. “I can see that being a valuable tool to verify transactions from another credit union.”

Utah’s mobile driver’s license allows users to verify their identities in a process that’s comparable to making a mobile payment.

The credit union views the digital ID as part of a broader digital strategy to boost automated contactless financial transactions and customer interactions in all parts of its business, Olson said.

Members use an app to download a mobile driver’s license, and UCCU has deployed readers at its public-facing sites such as branches to verify the license via a contactless tap.

Utah is one of the first states to adhere to ISO/IEC FDIS 18013-5, a standard that guides digital IDs that is going through the International Organization for Standardization’s vetting process.

“When we onboard a new product or service, that government-issued ID is the key for compliance and the key to protect others from identity theft and fraud,” Olson said.

Other public or private enterprises that join the Utah mobile driver’s license project will deploy a similar technology upgrade as UCCU, enabling a consistent experience for businesses, schools, government offices and other organizations. These parties will accept a digital ID that’s also transferable to other jurisdictions that adopt the ISO mobile driver’s license protocols.

Most states and Canadian provinces are in some stage of progress with implementing, studying or testing mobile driver’s licenses that, once operable, would work with Utah’s license, according to the Secure Technology Alliance. These jurisdictions would then be able to pair their local mobile driver’s licenses with UCCU’s digital ID, as well as other participants in the Utah mobile driver’s license pilot, which the state hopes will include merchants and public agencies.

“Any state that adopts the mobile license standard would be able to accept the IDs,” said David Kelts, director of mobile ID at GET Group North American, a Waltham, Massachusetts-based software company that’s powering the technology for the Utah digital ID project. “Users won’t have to hand a card over to a business to prove their ID, and businesses will have the assurance that it’s a state-issued credential that comes with the certainty of having government backing.”

Like any project that requires participants to share sensitive data, the Utah system will be challenged to recruit more financial institutions to participate, as well as other businesses and governments in other states.

There are hundreds of digital ID projects underway globally, most of which require participants to cede at least some control over user enrollment or other data management in favor of collective authentication. And thus far, most government-directed digital ID projects are outside of the U.S., such as India’s Aadhaar project, which has helped push digital payments in India through the national UPI rail. Private sector participation is challenging to achieve and mobile wallets aren’t universally compatible.

The major participants in the Utah project at launch are UCCU and the state liquor stores, and the state driver’s license agency says several convenience store and supermarket chains are implementing the technology.

“We’ve invited anyone who would have cause to use a driver’s license for authentication,” said Ryan Williams, program manager for the Utah Drivers License division. “Our goal is to have a credential that’s usable anywhere an ID can be used.”

There is ample opportunity for digital ID in the credit union industry, according to Julie Esser, senior vice president of client engagement at Bonifii, a Denver-based credit union service organization formerly known as CU Ledger.

Bonifii has worked on blockchain-based technology products that are designed to boost access and interoperability of technology at credit unions. The organization released updates in June to its data standards that are designed to boost security and privacy for application programming interfaces and digital authentication as credit unions add more online and mobile financial services.

“As more credit unions were forced to turn to interacting with their members virtually over the past year, the interest to invest in digital ID has risen,” Esser said.

Credit unions traditionally have used different requirements to authenticate a member’s identity, such as knowledge-based questions at call centers, or a driver’s license or other physical form of ID at branches and usernames and passwords for online access, along with two-factor authentication.

“By turning to a digital ID, members have more control of who has access to their information, when and how,” Esser said. Bonifii is looking into how its standards will be interoperable with the ISO standards used in the Utah project.

COOP Financial Services, a credit union services organization that supports shared technology among a network of credit unions across the U.S., did not comment for this story.

“Digital ID is certainly a hot topic across the globe. While there are a few efforts underway in the U.S. market to try to create a ubiquitous digital ID, I haven’t seen any gain significant traction just yet,” said Julie Conroy, a research director at Aite Group. “I could see that a shared digital identity across a cooperative of credit unions could have potential. There would be a lot of considerations though, in terms of what the goal of this is and the desired outcome.”



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