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Motive Insights - How do we manage identity when our presence is more online than physical?

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February 20 · Issue #293 · View online
Motive Insights
How do we manage identity when our presence is more online than physical?
The average adult now spends ~7 hours a day connected to the internet, generating ~1.7 megabytes of new data every second. This data if collated and analysed provides a rich understanding of an individual, including the organizations they engage with, the communities they participate in, their financial health and almost all other facets of their business and personal lives.
For financial services organisations these “digital identities” are becoming more valuable in understanding their counterparties than the physical documents and official records that are the hallmark of the ID&V, KYC, AML, risk and credit underwriting processes today.
The value of this data is well reflected in the value of the Data Broker industry, currently standing at around $200Bn.
However, the same data if in the hand of bad-actors increases our vulnerability to crime perpetrated through online channels. Impersonation scams, romance fraud, investment scams and broader cybercrime grew 41% in 2021, ransomware damages grew 57x from 2015-2021.
We are starting to see ID&V and authentication platforms adopt alternative data sets including biometrics, geolocation, behavioural analytics, liveness tests and broader online metrics to help prove identity and detect potentially fraudulent behaviour. These solutions show great promise for improved financial access, reduced onboarding friction, better customer understanding and stronger protection against fraud, money-laundering and other criminal activity
As these solutions mature in parallel with data privacy regulations, society will begin to adopt firmer parameters on what data we wish to share and whom we trust to access it.
Alongside the mainstream, a variety of decentralized identity solutions are attracting an increased level of attention, on the promise of giving individuals back control over their data and identity through a fundamental restructuring of the currently centralized ecosystem.
At its core, decentralized identity is about creating a framework in which individuals (rather than centralized parties) will own their digital identities, with the ability to share details of these with parties of their choosing in a way thought to be more private and secure than the existing models.
An example of one such decentralized approach is Sign-In with Ethereum (SIWE), which proposes a new form of authentication that enables users to control their digital identity with their Ethereum account and ENS profile instead of relying on a traditional intermediary. If adopted more broadly, SIWE could provide users with a self-custodial alternative to centralized identity providers when signing in to popular Web2 and Web3 based services. As Chris Dixon eloquently states, “Composability is to software as compounding interest is to finance.” - the open-source nature of solutions such as SIWE or ENS makes them instantly more composable, enabling other projects to easily incorporate their code within their own solution, driving a virtuous cycle of adoption and innovation.
This can already be evidenced through their adoption by upcoming projects such as PhotoChromic. Developed by Motive Create, PhotoChromic combines ENS and SIWE, alongside NFTs and biometric data in order to provide users with their own unique self-sovereign identity that can be utilised across a variety of Web3 applications.  
It’s still early for many of these decentralised identity solutions, and whether they’ll be able to provide a credible and sustainable long-term alternative to their centralized counterparties remains to be seen. However, if the broader trend of decentralization and the proliferation of open-source software is anything to go by, the adoption of self-sovereign identity solutions will be one to watch over the coming years for consumers, businesses and investors alike.
About the Authors:
Tom Harris is a Director at Motive Partners and Matt Molloy is a Vice President at Motive Partners, both working within Motive’s innovation business, Motive Create.

Quote of the Week
“If you buy something like Bitcoin or some cryptocurrency, you don’t have anything that is producing anything, you’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.“
Just a few years after calling it ”rat poison,“ Warren Buffet has made a sizeable investment in Nubank, a digital bank based in Brazil which is big on digital currencies and offers several bitcoin products. Buffet’s company, Berkshire Hathaway, announced its crypto investments in its 13F filing earlier this week revealing the purchase of $1 billion in shares of Nubank.
Many view this decision to back Nubank to potentially be a change in strategy and could be a positive signal that the company is shifting its focus toward fintech firms and also might be a sign that he is starting to warm up to cryptocurrencies or cryptocurrency products.
Greg Waisman, co-founder and chief operating officer of crypto wallet service Mercuryo:
“The Nubank investment can be tagged as Buffett’s way of supporting the fintech/crypto world without taking back his criticisms of the past.”
Crypto-related investment products have grown substantially in recent years. According to Bloomberg Intelligence data, the number of crypto-related products has almost doubled, rising from 35 to 80. This new investment in Nubank could be Buffet’s entry into the space.
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What We're Reading This Week
Here’s How Much People Spend On St. Valentine’s Day
Brazil's Banco Itaú partners US paytech Rêv to launch multi-currency digital wallet
State of Remote Work 2021
BBVA to invest $300 million in Brazilian digital bank Neon
Beyond digital banking
Bank of America invests in UK paytech Banked, launches new online payment solution
Better Tomorrow Ventures closes on $225M fintech-focused fund, which is triple the size of its last fund
Trulioo acquires HelloFlow to create "end-to-end identity platform"
Citi's Fraser, first female CEO of a major U.S. bank, gets $22.5 million for 2021
How one founder is using fintech to get more EVs on the road
Coinbase eyes challenge to Western Union with crypto remittances
Posh Technologies fuels call center automation with $27.5M funding
VTB Bank and PSB conduct first test transfers of digital ruble
JPMorgan opens metaverse lounge
Regulation, Protection & Privacy
Report: Nearly two-thirds of orgs lack basic API security
Key Hires & Talent
ExtraHop names new CEO in planned transition following private equity acquisition
Food for Thought
“It’s through curiosity and looking at opportunities in new ways that we’ve always mapped our path.”
~Michael Dell
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