The new reality of identity

Start-ups and scale-ups are currently dividing up the market for identifiers on the Internet. That means more diversity.

When Gamestop stock prices skyrocketed a few weeks ago, frustration was running high among some investors. Not necessarily because they hadn't invested in the stock, but because they couldn't bring themselves to open an account. That, after all, requires identification, which now often takes place via video - and which in some cases was completely overloaded.

The reason for this was usually simply human resources. That's because the Videoident process requires consumers to talk on the phone via video to an agent on the other side, holding up their ID document to the camera, for example. If the counterpart can confirm that the customer is who they say they are, the account is opened. If the number of people wanting to identify themselves in this way now increases rapidly, platform operators face a problem: Where am I supposed to get agents so quickly - and what do I do when the rush subsides?

Because human resources are finite and cannot be used flexibly at will, the operators of the large platforms such as WebID or IDnow and also new attackers such as Solarisbank have been looking at new methods for some time. Accordingly, the outcry in the scene was joyful when the Federal Office for Information Security (BSI), together with the Federal Network Agency, allowed automated procedures such as AI solutions to be used for identification a few days ago, albeit only in certain areas.

IDnow and Solarisbank, among others, are already on the market with their solutions.

What sounds technical at first has relatively simple consequences: Humans are no longer needed in all cases. Instead of a video agent, users could chat with a computer in the future, for example. The computer would then recognize and evaluate the ID documents with the help of artificial intelligence. At the same time, a video could run along so that, in exceptional cases, humans could also check once again whether the user is actually who he or she claims to be. These new procedures are initially only permitted in certain fields of application, for example in insurance or telecommunications. Consumers will not yet be allowed to open bank accounts in Germany in this way. But that, too, could change in the coming months.

The Munich-based scale-up IDnow with more than 300 employees has already developed such a solution under the name Auto Ident and launched it in some countries such as the UK. The company promises that identification by artificial intelligence is just as secure as, for example, in a branch or with the conventional Videoident procedure. In Germany, it also wants to use the technology in the permitted industries and hopes that the authorities in this country also approve the procedure for the opening of, for example, bank accounts.

New competitors such as Solarisbank in Berlin are taking a different, equally automatic approach. It has been offering the so-called Bankident for some time. Instead of a video chat, the customer must first enter his personal information, then log into his bank account and carry out a test transaction. He then receives an SMS-TAN to create a qualified electronic signature.

At the same time, a Solarisbank partner where the customer wants to open his account pulls the information about him from a credit bureau's database. If the data matches, an account is opened. Delia König, who oversees the product, says: "Since we don't need people to authenticate, there's virtually no capacity limit." The product, like similar ones from competitors, is also allowed for opening bank accounts and is already in use.

Since September, for example, smartphone maker Samsung has been using Solarisbank's new product to authenticate customers for its in-house payment solution Samsung Pay, and other partners are waiting in the wings, König says. Which ones they are, she doesn't want to say for now. Only so much: "There are also the really significant banks, which confirms us in the assumption that our product also has good chances on the market."

The market is tending to become larger and broader

Top dog IDnow is not afraid of new competition. CEO Andreas Bodczek sees the possibility to offer new procedures rather as a growing market, especially because different procedures are approved for different security levels. For example, the conventional video identification is already established, in addition to the identification via the electronic ID and new procedures such as Bankident, in which the identification runs via an existing bank account.

Then there are the preferences of users. "We want to offer customers the full range of procedures. They should have the choice of which procedure they like best or is most convenient to carry out. One wants to use the new electronic ID card another prefers video chat and yet another values the speed of the process and prefers to use Auto Ident," says Bodczek.

He believes that the share of automated procedures will continue to increase, and the mix of different procedures will change accordingly. Videoident will not disappear in the foreseeable future, in his view. There are enough users who don't want to use Bankident or prefer to speak to a human agent, he said.

IDnow has already seen a sharp increase in demand for video identification over the past year, with more and more customers using its platform to identify themselves for bank accounts, for example, especially during the lockdown. "The market is growing strongly, which means the pie for everyone is getting bigger for now, not smaller," says Andreas Bodczek.