Matt Homer on the Importance of Getting Digital Identity Right

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In episode seven of Financial Inclusion & Beyond, we spoke with Matt Homer, Deputy Commissioner of the Research and Innovation division of the New York State Department of Financial Services. Matt is an expert on the use of data and technology for social good. He has previously held positions in the U.S. government and financial technology sectors where he has focused on issues like the role of digital identity in promoting financial inclusion and wellbeing.

We get into the benefits of inclusive technology, but also the potential for digitization to exclude some vulnerable populations, and the unexpected challenges policymakers and firms face in delivering new financial services to people that previously lacked access We also discuss the broader trade-offs between inclusion, privacy, and other emerging data rights.

Key takeaways from the discussion include:

• People that aren’t a part of the formal financial system don’t dream of things like getting access to a bank account—a traditional indicator of financial inclusion in the past. They want tools to access the digital economy, whether to operate a business or save for the future.
• Universal digital identities that enable people to verify themselves with financial service providers are critical infrastructure for any efforts to include more people in the financial system and broaden their ability to transact in the digital economy.
• Policymakers and private companies designing digital identity and other enabling infrastructure must be careful to provide multiple pathways for people to gain access. Matt provides the cautionary example of a brick maker in India whose fingerprints were so worn down that he needed his son to help him provide biometric verification for financial transactions.
• Protections for customer data rights, from privacy to ownership, are also crucial in promoting inclusive digital financial systems. Matt argues that in countries like the United States, we need a new trust framework to govern data use in the emerging digital economy, helping people better understand and control the use of their data.

Please note that the initial interview was recorded prior to the onset of the COVID-19 crisis.

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The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or of the Federal Reserve System.