There is no doubt that 2020 was a trying year for the UK. Besides the pandemic-shaped elephant in the room, there was the looming issue of a Brexit trade deal. Since March last year, quite rightly the Government’s focus has been on protecting health, jobs, and our economy in the short term. But this left a lot of uncertainty about how the UK would operate once the Brexit transition came to an end, especially for the financial services industry.
There have been fears that the UK financial services industry may become economically isolated from its European neighbours. For decades, London has widely been the banking capital of the world, or at least Europe. It has become a melting pot where financial innovation and technology has enabled traditional banks and financial institutions to create innovative services for consumers, working alongside FinTech start-ups.
However, with support and collaboration between Government and industry, there is a lot of scope to not only maintain this progress, but to accelerate it and to run a world class digital economy. Now the Brexit transition period has come to an end, the UK is continuing to work closely with the European financial services market, both on regulation and trading, and leading the way in much of this. The UK is powering developments of seamless financial services which will be internationally interoperable.
When high streets opened up last summer after the first lockdown, we expected a bounce back to the ‘old ways’ of doing things but there has been a nation-wide dip in the number of people visiting their local bank branch since, and almost all financial decisions, from opening a savings account all the way up to seeking mortgage advice, has shifted onto the internet. This means 3 million new bank accounts, 2.2 million new pension pots and 2.5 million new mortgages a year will be opened without requiring the customer leaving their home.
This shift has brought to light several shortcomings in existing digital financial services systems – from frustrating experiences when using online banking, through to data breaches, fraud and identity theft – all of which cause annoyance and detriment for the customer and everything from a fall in switching accounts to major losses for financial services providers.
The UK’s response to this malaise has been very strong. TISA is creating a comprehensive Digital ID Scheme, which will be launched in Spring 2022, and will bring together regulators, legislators, trade bodies, and industry to create a framework that will allow IDs to be digital and usable across financial services.
The solution to this problem is creating a single reusable, secure ID owned and controlled by the consumer. That way, customers retain control of their identity while being afforded the flexibility to access new products quickly and safely. But there is a far bigger opportunity on the cards here.
Back in 2019, before the pandemic, McKinsey reported that ‘extending full Digital Identity coverage could unlock economic value in the UK equivalent to 3% of GDP in 2030’ in their Digital ID report. Similarly, the Open Identity Exchange estimates £1.5 billion per year could be saved from improving efficiency of “know your customer” processes and identity authentication alone, and up to £8.5billion saved in identity-related fraud. The Digital ID Scheme brings benefits to UK economy as a whole and has the scope to make a significant impact on the state of financial services as we move into 2021 and beyond.
The UK is in a very good position to lead the charge on digital transformation, with the framework in place to position us at the forefront of nascent, transformative technology. The potential for both consumers and financial institutions in Britain and beyond is transformative, and the impact on our economy will be realised.
With thanks to Biometricupdate.com and Harry Weber-Brown of TISA. The full story is here: https://www.biometricupdate.com/202101/digital-transformation-will-confirm-britains-place-in-the-world-post-brexit
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