The benefits of decentralized identity for your organization
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Decentralized identity represents a state-change in the way people and organizations interact. For the first time, people will have control over their own data, and organizations can realize significant benefits with regards to brand, communications, costs and compliance.
In this article, we’re going to take a detailed look at how this value shows up for businesses.
Because this new technology is so extensible and so modular, you can adopt it incrementally. And while it may start with single purpose credentials (typically used in a password/login-type flow), the value curve extends all the way up to entirely new, cross-organizational and cross-jurisdiction business models.
But, for the purposes of this article, let’s start at the beginning of the value curve, with single purpose credentials.
Realizing immediate benefits
Using the example of an individual, Emma, let’s see how a real person might use a single purpose credential in a hypothetical context. Emma’s organization, Field Construction Company, issues a very basic employee credential to her. She can use this to log in to one company system, like payroll software. It’s a point solution, giving both the issuer (Field Construction Company) and the holder (Emma) immediate benefits they can both realize right away.
From the organization’s point of view, they’ll start to see benefits in the following areas:
- Simplification of the password lifecycle.
- Password-free login without email or SMS.
- Convenience and reduced friction of managing logins.
- Reduced admin costs.
If we want to add some more utility to Emma’s credential, we'll need what’s called a multi-purpose credential, which is essentially a credential with more attributes.
Adding more utility to credentials
Multi-purpose credentials contain more attributes about the individual, and so are slightly more complex. As a result, Emma might use this credential to login to different systems within the same organization.
Emma’s organization issues this credential as a privacy preserving credential, which allows what’s called ‘selective disclosure’, as a way of maintaining individual privacy. This means Emma can opt to login to one system using just a small subset of her attributes, instead of sharing every attribute.
For the organization, this type of credential will typically lead to things like:
- Faster and more efficient employee onboarding.
- A frictionless login experience across channels.
- Easy access to relevant details.
- Reduced admin, form filling and handling costs.
- New opportunities for business efficiency.
- Improved audit trails to support compliance.
In other words, reducing the form-filling nature – along with the associated mistakes – of this side of the organization.
Opening up credential ecosystems
Moving up the value chain, we reach trusted groups. This is where the credential ecosystem starts to open up, with more stakeholders now involved.
This means we’d no longer have just Emma and her organization, but the partner organizations Emma’s organization interacts with. Let’s look at how we can use credentials to cross some of these boundaries with an example.
Emma now has a credential from her organization, Field Construction Company, and she wants to go on a training course. Once she’s finished the course, the training provider issues her a certificate in the form of a credential. She can keep this new credential alongside her employee credential.
Then, there are single-use credentials, which can increase security and eliminate a significant amount of admin. Below, we’ll illustrate how a time-bound credential can be used to reduce admin and save time.
- Emma needs to visit a client construction site to complete a job, so the client issues her a time-bound credential to access their secure construction site. Emma stores this in her digital wallet.
- Emma presents her credential to enter the construction site (in the form of the credential), Emma visits and completes the work she needs to do.
- She then returns to her office and logs the job in an internal logging system, which triggers her organization to send the job completion report through to the client.
- The client receives the report and automatically revokes the time-bound credential, thus ensuring security as Emma can no longer access the construction site.
Using credentials in this way unlocks entirely new opportunities for simplifying processes and removing friction across complex journeys, not to mention reducing verification inefficiencies between organizations. But here’s where things get exciting.
Using credentials across ecosystems
Beyond trusted groups, Emma can start use her credentials across multiple different organizations, not necessarily just the organizations she’s interacting with in an employment context.
She’ll use credentials for things like:
- Driver's license
- Employee Identification Number (IRS)
- State ID card
She’ll collect these from different parts of the ecosystem, and then different people and organizations can rely on them and verify their authenticity.
Credentials help to break down data silos and build bridges between different stakeholders. Businesses that choose to adopt this technology will be able to capture a large amount of value by operating on shared incentives and by operating with other businesses in an open data economy.
We can only see this network effect start to take off because of the shared identity infrastructure that we’ve just been talking about. This drives a range of benefits for organizations operating in the network:
- Verify new network participants and data provided by external issuers.
- Enable cross-network value transfer between organizations and people to amplify network effects.
- Combine credentials in complex ways to deliver authenticated and trusted user experiences.
- Create integrations and partnerships with other organizations and native support out-of-the-box.
By now, we’ve worked our way right up the value curve – we’ve arrived at the stage of entirely new business models.
How credentials enable new business models
With the ability to use the technologies we’ve discussed everywhere; this is where the possibilities open in a truly novel and exciting way.
Across sectors and countries, we can see that all types of businesses drive new value out of credentials. These organizations can reduce friction, improve compliance functions, enable immediate verification of complex entitlements and claims and speed up supply chains. In effect, credentials add value to all sorts of processes that benefit from verifiable data.
These capabilities enable businesses to build entirely new classes of decentralized identity services and even new revenue lines. It also drives value back to the stakeholder – the end user. This person now has much more control over their data, and the relationship between the organization and this stakeholder is now much more user centric.
Embracing these changes enables organizations to start using credentials immediately without needing to transform the way the business operates. In time, the investment in the infrastructure and the tooling gives businesses a huge amount of capability to innovate and extend the digital trust ecosystem.