Digital business: Are companies ready to replace physical documents?

Identity and facial recognition. — Image by © Tim Sandle.

Many companies use digital identity verification as a robust anti-fraud measure and a tool to enhance the customer experience. Not all firms have switched over and in some sectors, reliance on manual paper systems remains strong.

Is the take-up of digital identity still lagging in the majority of businesses? A high percentage of organizations still depend on physical documents for identity verification, reveals a new Forrester Consulting study commissioned by Regula.

Regula commissioned Forrester Consulting to conduct a survey with 226 manager-level and higher decision makers responsible for their organizations’ ID verification solutions. The respondents were primarily from Europe, North America and the Middle East, with at least 500 employees or more.

The headline results of the study underscore the gap between technological capability and practical implementation, emphasising the complex journey that stands ahead for many firms when it comes to digital ID adoption.

A digital ID is an online representation of an individual, which contains personal information, credentials, and attributes used to establish and authenticate identity in digital spaces.

“The New Imperative: Digital IDs” study highlights the on-going necessity of physical identity documents, revealing that 46 percent of organizations still manually verify documents, even in sectors normally associated with digital advancement like Finance.

Some companies have automated this process (53 percent) or switched to more secure forms of user authentication such as biometrics (54 percent) or multi-factor authentication (49 percent).

A significant number of companies (44 percent) use third-party services that also often count on physical documents for thorough identity checks.

As to why there are many sectors still reliant upon paper systems, the reasons are diverse. Despite advancements in digital IDs, many barriers remain such as the lack of global standards, cybersecurity concerns, and technological disparities that hinder their widespread adoption.

In case of global standards, the lack of a general legislative framework is rated by 74 percent of respondents as an obstacle. The majority of companies would like to see global digital ID standards and legislation to ensure the interoperability of such IDs across borders.

How likely is global regulation to emerge? With varied regional perspectives on identity and privacy (71 percent) and the technological disparity between countries (70 percent)—which are also named among the concerns—agreeing on these standards will be challenging.

This means digital ID will increase but many firms will still retain paper records, at least until a common framework is developed.