In South Korea, a consortium of three mobile operators, three financial services firms and a technology company have created a partnership to launch a blockchain-based form of mobile identification in 2020, according to a report. Participating companies include SK Telecom, KT, LG UPlus, Samsung Electronics, KEB Hana Bank, Woori Bank and IT solutions company Koscom.
They will create a technology to help establish a “self-sovereign identity,” a new form of identification that will remove the involvement of intermediaries, enabling individuals and organizations to assert their identity in online transactions.
The consortium’s mobile system will allow individuals to store key pieces of personal information and use them whenever they need to. The safe and secure management of the stored data will be enabled by Samsung Knox, Samsung’s mobile security solution for enterprises.
Concerns about security and identity are rife today among consumers and enterprises alike, due to increasing numbers of incidents of hacking, malware installation and identity theft. Mobile operators, as key participants in and enablers of internet-based financial transactions and communications, are vulnerable to the consequences of fraud—directly in terms of lost revenue and indirectly in terms of lost customer confidence. If operators want to ensure that the maximum number of transactions go over their networks, they should convince users that their identities will be safe while making such transactions.
Blockchain technology has been getting a lot of attention in the media lately as the basis for cryptocurrencies such as Bitcoin and Facebook’s new Libra. Of course, not all of that attention has been positive; cryptocurrencies have been denounced as unreliable, meaningless or even Ponzi schemes. However, blockchain in and of itself is a very effective means of delivering assurance as to the provenance of transmitted data. As such, it is a valid technique to use in assuring identity.
As we have said, MNOs benefit from protecting the identity of their clients, whether consumer or enterprise. For South Korea’s three major operators to partner with technology firms and financial institutions in creating what amounts to a secure-ID ecosystem is a proactive and savvy move, in our view. The upfront costs will likely be more than redeemable in terms of revenues derived directly from selling the “self-sovereign identity” solution, while revenue from increased traffic in mobile money and retail transactions will benefit all parties. In order for the system to be of maximum utility, it is fitting that all three major operators are partnering rather than one of them achieving first-mover advantage. That is of course because the secure ID is most effective if it works across all mobile networks in the country.