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World Bank Group: Digital Identification vs. Poverty

digital identification and the fight against global poverty
As the world continues to populate and technology becomes more widely available, the need for digital identification has become vital in the fight against global poverty. Currently, the World Bank has calculated that nearly one billion people worldwide do not have any formal identification, half of whom are in Africa. Thus, many people are without access to a range of essential services like banking, healthcare and general education.

In response, the World Bank Group began an initiative in 2014 to directly tackle this issue. The Identification for Development (ID4D) organization comprises experts, investors and technologies working to bring every person into the digital world.

What is Digital Identification?

Simply put, digital identification is a process in which an individual’s identity is confirmed through digital channels. A digital ID can range from a government-issued ID to a PIN to biometric data. Digital identification provides multiple important opportunities, such as opening bank accounts, establishing credentials for jobs and gaining access to education. Though these forms of identification seem common, many people struggle daily to prove their identity through these methods.

To understand the importance of identity management, one must understand the value and advantages it brings. In low-income countries, over 45% of women and 30% of men have no ID at all. In addition to the gender gap, a World Bank Group survey cited that the most impoverished 20% are the most likely to lack an ID. This places a veil over these communities, making them virtually “invisible.” It bars them from the opportunities and services that they most need to break out of the cycle of poverty.

However, digital identification can and is changing this. Identification for Development (ID4D) is doing pivotal work in building digital bridges, keeping transparency and empowering communities.

How ID4D Works

The ID4D initiative works in conjunction with 10 World Bank Group sectors that work toward digital expansion, economic inclusion, social safeguards and more for those in need of these services. The program primarily focuses on educating communities on the need and benefit of digital identification. Additionally, the group works alongside governments to implement effective and inclusive digital identification systems. The process of building up communities takes time and research. ID4D, therefore, performs assessments and creates a dialogue to understand the communities it serves.

Who ID4D Serves

Identification for Development serves the global community. For instance, the World Group Bank has supported the Moroccon government by designing and implementing a digital ID system. This project reformed the Moroccan social safety net system into a secure and functional digital society and economy.

Likewise, in West Africa, ID4D is in the beginning stages of implementing a new national ID system. This system will allow for easier access to mutual recognition and authentication processes throughout the area. A part of this project involves setting legal standards, industry standards and overall help promote and establish reliable ID systems between borders.

The Benefits of Digital Identification

There are numerous benefits to bringing underdeveloped regions into the digital atmosphere. First and foremost being the generation and broadening of new markets and customer indexes. Giving untapped markets the ability to tap into the digital realm financially gives poor communities a way to build savings, establish a digital trail, build credit and pay for what they need in micro-payments. Furthermore, digital identification helps to prevent fraud in various aspects. For example, with the help of digital identification, Nigeria and other countries have successfully used biometric records to reduce federal beneficiaries.

Not only does digital identification help communities at large, but it paves the way for women to provide for their families. Women account for around 70% of the world’s working population but receive only 10% of the income. As a result, women cannot afford to help raise their families out of poverty. Therefore, increasing women’s ability to verify their identities allows them to claim their income without issue, creating a highly effective method to combat global poverty.

– Sallie Blackmon
Photo: Flickr

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India’s Digital Transformation

India’s Digital Transformation
Over the last decade, India has tackled barriers like undocumented citizen identities and minimal access to formal banking and new technologies with a series of innovative programs and digital services. This article will explore India’s digital transformation.

Digital Identification and Financial Inclusion

Efforts to digitize India first took off in 2009 with the launch of a digital identity system called Aadhaar. Aadhaar aimed to provide every citizen with a digital identity. Aadhaar obtained IDs through a biometric-authenticated 12 digit number that created them according to applicant’s iris and fingerprint scans. Aadhaar has provided over 600 million voluntary applicants with UID’s (unique identifications) since its launch. The success of Aadhaar gave even the most rural populations the ability to identify themselves and avoid the hassle of ineffective systems.

Although the majority of citizens obtained digital IDs, a portion of the population still lacked access to digital banking services. Limited access excluded citizens from participating in formal banking that could improve their lives. With the demand for digital banking services increasing, India embarked on its next phase of digital innovation.

In 2014, with added backing from the Modi government, India created the Jan Dhan financial inclusion program. Jhan Dhan sought to get as many Aadhaar identity holders to participate in digital banking as possible. Within the first day of the program’s launch, Aadhaar identifications set up 10 million paperless bank accounts. The program also promised account holders accident insurance for up to 100,000 rupees (or $1,500) and an overdraft capacity of 5,000 rupees ($80).

Empowered with digital identification and banking, citizens could digitally access government services with more ease. The increase in mobile banking also created new layers for India’s digital transformation.

Demonetization and BHIM

By 2017, Aadhaar identification had become a required function for formal banking, SIM connections and income tax returns. With the majority of the population using digital services, the need for India to demonetize became more apparent. India’s total demonetization seemed daunting, but it appears to have worked well for the country. India’s decision to demonetize was so abrupt, the demand for services like Aadhaar and Jan Dhan, among others, increased rapidly. With the replacement of its old currency and the demand for digital services rising so quickly, India’s digital transformation took its next steps.

To help with the transition of demonetization, India’s Prime Minister launched BHIM (Baharat Interface For Money) in 2016. The app serves as a digital payment platform in tandem with the country’s UPI interface. BHIM also works with a 2G network, meaning that people even the most rural parts of India can access this service. This network allows UPI account holders to send and receive instant payments from non-UPI holders, which cushioned the shock of demonetization for more of the population.

The app also offers a wealth of diverse services for users and businesses. Currently, it allows users to shop/pay for services online, transfer money to family and friends, receive customer payments with no additional cost and check transaction history and account balance at any time.

Three years after its launch, BHIM collaborated with over 100 banks nationwide and in early 2018 people downloaded the app 21.65 million times for Android phones and over a million for Apple. Data that RBI and the National Corporation of India collected also demonstrated that out of 145 million UPI transactions that year, BHIM carried out 9.1 million of them.

Although India requires more work, it has dedicated itself to improvements through innovative technology and creative solutions over the last decade. As it continues its efforts, the country’s citizens should have increased access to banking services.

– Ashlyn Jensen
Photo: Flickr