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The Centre for Finance, Innovation and Technology (CFIT) has announced new research showing that the secure use of digital identities could contribute an estimated £600m annually to the UK economy.
The CFIT has marked progress in its work on how digital company IDs could boost efficiency, prevent fraud and support the growth of a secure smart-data economy, stating that the next steps, including outputs and recommendations, are due in March 2025.
The CFIT's coalition, which comprises more than 70 financial institutions, tech companies and UK regulators, is working to create a prototype "virtual passport" for UK businesses.
The goal is to enhance economic resilience by developing a digital company ID that could streamline securing finance, reduce fraud risks and cut compliance costs across the financial services industry.
“Economic crime remains a major threat to the UK’s economic security, and has a profoundly distressing impact on consumers and businesses. At CFIT, we are committed to addressing this and making the financial services industry more robust against fraud,” said Charlotte Crosswell, the CFIT's chair.
Phalé McMillan, financial crime risk management head at NatWest, which is a member of the CFIT coalition, said: “Financial crime continues to be one of the most prevalent crimes in the UK, which is why cross industry collaboration is vital to protect consumers, businesses and the overall economy.
“The proposed digital verification framework demonstrates the power of technology in protecting the financial system and customers, whilst supporting UK economic growth.”
Government endorsement
The UK’s National Payments Vision (NPV), published in November 2024, emphasised the role of digital verification solutions in tackling economic crime and pledged a review of the findings of the CFIT's efforts.
“Introducing digital identifiers can help ensure that person-to-person payments remain a competitive and reliable option for consumers,” the NPV said, identifying India and the Netherlands as success stories.
According to the NPV, financial services is “a priority sector” for the adoption of digital identities and the “government continues to engage closely with stakeholders on opportunities in this space”.
“The government welcomes the work of the Centre for Finance Innovation and Technology (CFIT) and its coalition partners to explore the potential of digital verification solutions to combat economic crime, and will consider any findings that emerge from CFIT’s work in due course.”
Key stakeholders comment
Participants in the coalition include card networks Mastercard and Visa, traditional banks such as Lloyds Bank, challenger banks such as Monzo, and regulatory bodies such as the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR).
Other financial services organisations such as Experian and Yoti are also contributing to the project.
Welcoming the latest progress, Lloyds Bank commercial banking lead Elyn Corfield said: “Digitising how banks undertake know your customer obligations will help make compliance checks more user friendly for Britain’s small businesses and support the UK’s fight against financial crime”.
“Providing easier and quicker access to bank accounts and finance will enable businesses to secure greater investment for growth and deliver more jobs for people across the UK,” she added.
Jordan Shwide, general manager, business banking at Monzo, agreed, adding that digital IDs “should make it harder for scammers to set up fake companies and ultimately help prevent people falling victim to fraud”.
