There are some challenges in fintech and regtech that transcend the others -- problems that have to be solved in order to “unstick” numerous other kinds of exciting innovation. Of these core enabling solutions, none is more important than digital identity.
A few months ago I sat down with one of the people leading the work in this field. David Shrier is founder and CEO of Distilled Identity, an AI biometric software company that helps financial institutions and governments build better identity profiles. David is also affiliated with Oxford University and the MIT Media Lab.
The challenge of identity authentication bedevils numerous aspects of both finance and regulation. It impacts the Know Your Customer mandates under anti-money laundering. It impacts fraud management, cybersecurity, privacy protection, and the move toward instant, easy payments. It has a huge impact on financial inclusion, since many of the most vulnerable consumers have trouble easily proving who they are. That’s especially true in the developing world, but it also affects countries like the US where it can be hard to prove identity if you are, say, a new immigrant or a young person not yet rooted in your job or home address or bill-paying routines. If you have a roommate who pays the rent and utility bills and you repay your share via Venmo, you may have trouble proving who you are -- or at least, proving it in a quick, efficient, trustworthy way that will make a financial provider willing to do business with you.
The financial inclusion difficulties arising from lack of ID documents have been on the radar for years for governments and NGOs. An example we explored in the past was our episode with Sanjay Jain on the India Aadhaar project that has collected biometric ID on over a billion people in India. Today, though, there is growing recognition of a second problem in identity, arising from the exact opposite problem. People who have always been able to identify themselves easily through traditional means are now suddenly vulnerable to having their ID information stolen or otherwise compromised. Document-based systems like social security cards, drivers licenses, and passports were all invented in the analog age -- i.e., on paper. Today the information they contain is widely for sale on the dark web. In fact, systems built on traditional documents may actually leave people more vulnerable than those without them, if the latter leapfrog straight to modern digital ID.
No one is more expert in all this than David Shrier. In this episode, he notes that identity systems that barely evolved for decades are suddenly generating new strategies grounded in understanding individual behavior and biometrics. (He explains, in fact, how his cofounder Alex Pentland created facial biometrics in the late 1980s and invented the technology that now powers the Aadhaar project.)
Like me, David is optimistic that digital identity is going to foster consumer financial health, much as a fitness step counter creates useful data on physical health. At the same time, he takes us through the challenges. He talks about the needed enabling technologies for digital ID, including assuring that everyone -- and especially women -- get smartphones. He talks about privacy, including Europe’s new General Data Protection Regulation, or GDPR. He predicts that we’re heading toward a system where people will own our data and be paid to let companies use it, which he thinks may create the need for a new class of data custodians or agents, to help us protect and manage our information.
We recorded this show during a terrific fintech conference in New York earlier this year sponsored by FINRA, the securities industry’s self-regulatory body, for which David and I both serve on the Fintech Advisory Committee. FINRA has been at the forefront of some kinds of regtech innovation in the US and recently announced the creation of a new innovation program under the leadership of Haimera Workie. Keep an eye on that for some really interesting developments.
Barefoot Innovation Podcast: Access for All: CIEE’s Sanjay Jain and the India Stack
David Shrier’s Book, Trust Data
More on David
David Shrier is a globally recognized authority on financial innovation who works with corporations and governments to generate economic expansion. He specializes in helping organizations build new revenue and new markets, having developed $8.5 billion of growth opportunities with C-suite executives for Dun & Bradstreet, Wolters Kluwer, Ernst & Young, The Massachusetts Institute of Technology, GE/NBC, The Walt Disney Company, AOL Verizon, and Starwood, as well as private equity and VC funds. He has led a number of private equity and venture capital-backed companies as CEO, CFO or COO.
David also leads the University of Oxford's online programmes, Oxford Fintech and Oxford Blockchain Strategy, as well as MIT’s Future Commerce (the first graduate fintech class in North America), driving entrepreneurial action in over 100 countries to build the new financial ecosystem. He has published multiple books on fintech, blockchain and cybersecurity.
David is the CEO of Distilled Identity, a VC-backed AI biometrics software company that builds better identity profiles for financial institutions to help with credit, fraud, and payments; Vice Chairman of Endor, a blockchain-enabled crowd intelligence platform; and Chairman of Riff Learning, an AI-driven collaboration technology platform provider. His current academic appointments include Associate Fellow with the Saïd Business School, University of Oxford; Lecturer at the MIT Media Lab; and Fellow with the Payne Institute at the Colorado School of Mines.
He presently counsels Millennium Advisors, a middle market $120 million revenue credit liquidity provider, on growth strategy, corporate culture, and technology trends. He previously has advised the Government of Dubai on blockchain and digital identity; the OECD, on blockchain policy and standards; Ripple on regulatory strategy; and the European Commission on commercializing innovation with a focus on digital technology.
David is presently a member of the FinTech Industry Committee for FINRA, the U.S. securities industry's self-regulatory body. He serves on the Fintech Trade & Investment Steering Board for the UK Government’s Department of International Trade. He also informally engages with the European Parliament, European Commission, OECD, Bank of England, FCA, SEC, US Treasury, and FDIC on innovation, cybersecurity, digital identity, blockchain, and AI. David is on the advisory board of WorldQuant University, a program offering a totally-free, accredited, online Master’s degree in financial engineering.
David and MIT Professor Alex “Sandy” Pentland have published books including Frontiers of Financial Technology, New Solutions for Cybersecurity, and Trust::Data. The European Parliament and European Commission have asked him to author a chapter on the distributed data economy in their book Disintermediation Economics (2019, Palgrave Macmillan). David is a Forbes contributor, has been published in Newsweek and CNBC.com, and also co-edits, with Professor Pentland, the Connection Science imprint of MIT Press. He was named 2018 Global Fintech Person of the Year by Fintech Galaxy, and listed on One World Identity’s Top 100 People for 2017. He received an Sc.B. from Brown University in Biology and Theatre, and worked professionally as a dramaturg and director after college.
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We have great episodes coming up. We’ve recorded a second show with the outgoing Chairman of the CFTC, Chris Giancarlo -- one of the most thought-provoking we’ve ever done on the future of financial regulation. We also have a second show with Karen Mills of Harvard Business School, who has a new book out on fintech and small business. We have episodes coming up the Gary Schifman of Giant Oak; Dale Nirvani Pfeifer of Goodworld; Vinny Lingham of Civic; and Ida Rademacher of the Aspen Institute alongside Jamie Kalamarides of Prudential. And in London last month, I recorded a wonderful conversation with thought-leader and uber-blogger, the great Chris Skinner.
We also have a fascinating conversation that we recorded in April from the expo hall at LendIt, which erected a special stage for podcasters, and where I sat down to talk with the cofounders of Kabbage, Rob Frohwein and Kathryn Petralia. And there’s much more in the queue.
I’m excited to say we are also coming up to our 100th episode. We’re planning something extra special for that milestone!
I’ll be speaking at quite a few private events this spring. If you’re interested in booking me, contact firstname.lastname@example.org. Some of the public places I’m going to be are:
IIF Digital Finance Symposium, May 29, Washington, DC
American Banker Association’s Regulatory Compliance Conference, June 9-12, New Orleans, LA
Bank Director's Bank Audit & Risk Committees Conference, June 12, Chicago, IL
Money 2020, October 27-30, Las Vegas, NV -- I’ll be keynoting the regulatory day and also chairing it again this year -- and I’m happy to say that this year it will be on Tuesday, not Sunday!
I’ll hope to see you there!
The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.