Digital identity: transforming GCC economies.

Author:Al-Khouri, Ali M.
Position::Cooperation Council for the Arab States of the Gulf

The world has been undergoing transformation over the last 20 years, due to the advent of breakthrough technologies converting our societies from analog to digital models. Copper technology has given way to optical fiber, and we now have information flowing at the speed of light. We live in an interconnected world of instant access. However, in this interconnected digital world with a multitude of content domains, dissemination of information remains a challenge (OECD, 2009). Essentially, it is not so much a challenge of the medium of dissemination as the challenge of verification of the identity of online individuals, one of ensuring that the information is reaching the right seeker. Is the service beneficiary the intended one? (Al-Khouri, 2012a, 2012b). Rifkin (2001) argues that economic shifts over the last several decades have given rise to a regime where anonymous transactions are almost impossible. In a service-based economy where delivery has come to depend upon digital networks, businesses and governments alike need reliable, secure, and private means for creating, storing, transferring, and using digital identities (Rifkin, 2001).

Conventional identity documents fall short of meeting today's digital world needs (Al-Khouri, 2012b; Baym, 2010; Sullivan, 2011). There is a need for digital identity profiles by trusted identity service providers. Such identity providers would fill the void of trust. Providing secure digital identification credentials would enable many faceless transactions on the web, cutting across the different electronic access channels such as Internet portals, kiosk machines, mobile phones, and contact centers.

Nonetheless, the management of digital identity has many facets--technical, economic, social, and cultural--and is a complex area of practice (Backhouse, 2006; Camp, 2004; Fish, 2009; ITU, 2006; Neubauer & Heurix, 2010; OECD, 2011). In the digital world, the challenge is how to translate the mechanisms through which service providers and clients trust each when initiating online transactions.

According to a recent report published by Boston Consulting Group, the economic value of applications built on the use of digital identity for both public and private sector organizations is expected to reach 330 billion[euro] in Europe alone by 2020, representing a 22% annual growth rate (Liberty Global, 2012). That report also estimates that the consumer benefit will far exceed the organizational value, reaching 670 billion[euro] annually by 2020, mainly stemming from reduced prices through data-driven cost synergies, time savings through self-service transactions, and the high value that individuals place on free online services and mobile apps, supported at least in part by the sharing of their personal data. Another finding of the report indicates that two-thirds of potential value generation, 440 billion[euro] in 2020, at risk if stakeholders fail to establish trust in secure flow of data.

The existing literature is full of studies and reports that argue that management of digital identity does not seem to have reached the level of maturity that would enable the full realization of the digital economy (see, for example: ITU, 2006; OECD, 2009, 2011). The argument is based on the fact that online interactions carry a high level of risk, yet the level of security that existing digital identity management practices provide is not high enough for users to trust engagement in such transactions (Bertino, Paci, & Ferrini, 2009; Cavoukian, 2008; Fish, 2009; Koops & Leenes, 2006; Thompson, 2004; Windley, 2003). Comprehending this critical need, many governments around the world have initiated programs at the national level to provide verifiable digital identification credentials to their citizens (Al-Khouri, 2012c).

The aim of this article is to explore the role of government initiated digital identity management systems in supporting the creation of a stronger digital economy. It uses the example of GCC countries, which have led the world by issuing digital credentials to all of their citizens. These credentials are based on advanced and integrated technologies such as biometrics, public key infrastructure (PKI), and smart cards. The article will briefly discuss the potential benefits of setting up a government-owned validation authority to provide online identity verification and authentication services to both public and private sectors. This is argued to contribute to the creation of trustworthy environments and strengthen confidence in online activities critical to growth of the digital economy.

The article is structured as follows: The Smart Identity Hypothesis section sets the argument for smart identity cards and their beneficial economic impact in GCC countries, and presents a simplified model of the role of government as an identity service provider. Digital ID and Economics--The GCC Context section provides an overview of identity management infrastructure programs in GCC countries. The National ID Card and Business Transformation section presents a benefit accrual model and business transformation opportunities based on the application of the smart identity card. Smart identity card and remote transactions section explores the application of smart identity cards with their multiple factor authentication capacities for remote transactions. The National ID Card and Entrepreneurship section highlights the possible opportunities for entrepreneurs to develop and offer value-based solutions for service providers that can use the smart identity card capacities. Digital Identity in GCC and EU Countries section draws on some similarities and differences in the digital ID implementation approach between GCC and European Union (EU) countries.

The smart identity hypothesis

Identity is precisely the beaming light that guides the economic system and eventually determines the path to development. (Djafar, 2009)

Though the context of the above statement is about a country's social identity, our hypothesis is related to the fact that a digital identity may act as a beaming light to guide new frontiers of economic and development models. As such, modem identity management infrastructure implemented by governments is expected to change the way business is transacted and open up previously unknown avenues, contributing to overall economic growth. The use of smart card-based digital identity profiles is expected to transform the way services and benefits are delivered (Al-Khouri & Bal, 2007; Forget & Stervinou, 2007).

Figure 1 illustrates a government-owned identity management infrastructure providing identification and authentication services in a trusted chain established by government. The certification and registration authorities represent the enrollment and issuing processes. The use of smart identity cards and the associated verifiable credentials (e.g., digital certificates, biometrics, digital signatures, and time-stamps) provide strong authentication and non-repudiation mechanisms. Service providers in e-government or e-commerce environments can rely on government-issued identities...

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