The UK Fintech sector suggests implementing ‘virtual passports’ for businesses to curb financial crime and save £600m annually.
- New research by the Centre for Finance, Innovation and Technology (CFIT) advocates for digital IDs to combat fraud effectively.
- Economic fraud in the UK incurs annual costs nearing £200bn, highlighting the urgent need for prevention measures.
- With projected global spending on digital IDs reaching $26bn, the initiative is timely and aligns with current trends.
- Collaborations with major banks and regulatory bodies are already underway to explore this innovative fraud prevention measure.
The Centre for Finance, Innovation and Technology (CFIT), supported by the government, has proposed the adoption of digital IDs for businesses as a strategic measure to address the substantial financial losses caused by fraud in the UK economy. This initiative could potentially save the economy around £600m annually, as estimated by new research findings. Economic crime is a significant burden on the UK, with annual losses approaching £200bn.
Charlotte Crosswell, leading CFIT, emphasised the profound impact of economic crime on both consumers and businesses. According to her, “The dynamic elements of Smart Data and Digital ID, along with cross-sector interoperability, have been key to the success of the coalition to date.” This highlights the potential for creating a more secure and efficient financial environment through digital means.
CFIT’s initiative has garnered the participation of notable financial institutions including Lloyds, Monzo, Barclays, and Revolut. Additionally, digital identity companies such as OneID and Yoti, in collaboration with governmental bodies like the Financial Conduct Authority (FCA) and Companies House, are exploring how such digital verification processes can be integrated effectively.
Jordan Shwide, Monzo Business’s general manager, expressed enthusiasm about this development, stating, “This not only enables quicker access to financial services for legitimate businesses, but it also means lots of business information lives in one place. This should make it harder for scammers to set up fake companies and ultimately help prevent people falling victim to fraud.”
The global expenditure on digital identity verification was approximately $15.2bn last year and is expected to grow by 74% by the end of 2024, reaching $26bn. This significant increase reflects the growing recognition of digital verification’s role in fraud prevention worldwide.
Fraud in the UK saw a monetary decline in 2023, with losses amounting to £1.17bn, slightly lower than the previous year’s £1.22bn. Such data underscores the persistent threat that fraud poses and the necessity for innovative solutions, like digital IDs, to mitigate these risks effectively.
The implementation of digital IDs could mark a significant advancement in reducing financial crime and enhancing economic security in the UK.
