Jul 8, 2022

By  Robin Arnfield July 08, 2022, 11:19 a.m. EDT 5 Min Read REGISTER NOW Canadian banks and the country's Interac debit network are heavily involved in the nation's digital ID initiatives, working with telcos and tech companies to promote interoperability and thus reduce fraud. Being able to verify customer identity digitally will be critical when Canadian financial institutions launch the Real-Time Rail instant payments service in 2023, followed within the next few years by open banking . Digital ID refers to a federated form of identification that draws on multiple sources and is flexible and reusable. It’s better suited for digital payments than static forms of authentication such as usernames and passwords. This makes digital ID of value in combating fraud, which has been rising in Canada due to the growth in online transactions during the pandemic. In 2021, there were 30,849 cases of identity fraud and 9,666 scams involving personal information, according to the Canadian Anti-fraud Centre. The government-backed fraud reporting service received 104,295 total fraud reports involving CA$379 million in reported losses in 2021, up from 46,465 fraud reports and CA$96.16 million in reported losses in 2019. Prior to the pandemic, Canada’s largest financial institutions were already involved in developing digital ID services in partnership with Toronto-based SecureKey Technologies. In 2016, the country’s top five banks — Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Bank of Nova Scotia (Scotiabank), and Toronto-Dominion Bank — and credit union group Desjardins were among investors in SecureKey, which develops blockchain-based federated digital ID verification platforms. In May 2019, SecureKey launched Verified.Me , a Canadian digital ID network that uses customers’ encrypted personal information drawn from multiple databases along with their banking login credentials to verify their identity. Verified.Me users must provide consent for their personal and credit information to be shared with third-parties, and no personal information is stored by Verified.Me. Canada’s top five banks and Desjardins use Verified.Me to vet the identities of customers applying for bank accounts and loans from them. They also enable customers to use their banking login credentials to access services from organizations participating in Verified.Me such as investing, health care, notarizing legal documents, and real estate. In addition to banks, Verified.Me’s partners include Equifax, which checks for fraud on applicants’ financial accounts; Onfido, which checks the legitimacy of photo ID documents uploaded to Verified.Me; and EnStream, a telco industry joint venture which ensures consumers’ cell phone accounts haven’t been hacked. In October 2021, Interac, which operates Canada’s debit and ATM networks as well as the Interac e-Transfer payments service, bought the Canadian rights to Verified.Me. Interac aims to sign up the 300 financial institutions participating in its payments networks to act as credential providers for Verified.Me so it can act as a nationwide digital ID scheme, said Neil Butters, Interac’s vice president of digital ID product. “We’re building an ID network that is intended to become a utility for Canadians, giving them confidence to transact in the digital economy,” said Butters. “Interac’s goal for Verified.Me is to be as ubiquitous as possible. We’re looking at the applicability of Verified.Me for open banking and the Real-Time Rail.” The Large Credit Union Coalition, which represents Canada’s largest credit unions, is creating a credit union system node on Verified.Me, said Atul Varde, chief information and payments officer at Edmonton, Alberta-based Servus Credit Union. “Servus is actively involved in this process and is one of the first implementers,” he said. “Once this node is functional, Servus members could use their digital banking credentials to access services from Verified.Me's relying parties. For example, Servus members could apply for Internet connections more easily and securely from telcos if they use digital ID data from Servus to process their application.”