Digital identity is an electronically verified set of attributes that uniquely describe a person and can be beneficial in providing simplified application processes, swift transaction approvals, lower costs, enhanced security, and can also be used to speed up financial transactions. But some consumers are still wary about embracing it, even if it makes their lives easier.
Their biggest concern? Security and safety of their personal information. According to the National Housing Survey (NHS) conducted by Fannie Mae, 50 percent of the respondents cited this as their biggest concern. At 18 percent, consumers also cited the information being used for purposes other than what the individual intended it for as the second major concern for them when it came to sharing a digital identity.
However, if you look at the industry landscape today, more financial services and technology companies are developing and enhancing digital identity systems, as this technology gains traction around the world. The creation of one, if done well, has the potential to reduce cyber-related risks and empower the consumer by making buying and renting a home safer and more efficient, the survey said.
When it comes to having faith in this system, millennials, those with a higher education and higher incomes are leading the way. The survey found that these groups of Americans were more interested in having a digital financial identity. And if they had to be created, half of the respondents believed that large financial institutions or the U.S. Government should be in charge of these identities. Together, large financial institutions and the U.S. Government got 48 percent of the vote from respondents when they were asked which institutions they would trust to manage such a digital identity.
Challenges and education opportunities remain, however. The survey reports that 42 percent of respondents said they would not be more interested if digital identity reduced their mortgage origination costs by $500, and 47 percent said they weren’t interested even if it meant instant mortgage approval, eliminating the need to produce any financial documents, or closing the loan within two weeks.
“Currently, the mindset is that data must be attached to a ‘physical’ piece of paper—whether that be a PDF, a printed pay stub, or a scanned image of a document, to make it ‘true,’” wrote Jason Nadeau, VP of Factom, in a recent article for MReport. “As technology moves forward, this mindset will no longer be valid. Data will be collected directly from the source without paper support ever existing.”
To read the full details of Fannie’s survey, click here.