The Consumer Conundrum

Convenience vs security – can digital identity provide both?

Australia Post’s recent research into digital identity has revealed that Australia’s identity market has not kept pace with the digitisation of our economy.

When Australia Post, in conjunction with the Boston Consulting Group (BCG), spoke to 120 consumers for this research, they said that proving their identity is both time-consuming and frustrating.

This article looks more deeply into how consumers perceive that friction – and why they want a better solution.

A daily hassle, a significant cost

Identity moments occur daily, weekly, monthly or yearly. Whether we’re navigating the health system, applying for a job or credit card, buying tickets online or picking up a parcel or prescription, we constantly need to prove we are who we say we are.

However, our physical, paper-based system of identity verification can’t keep up with our changing expectations of a seamless online experience. As the World Economic Forum found in its 2016 research paper, relying on legacy identity systems is ineffective and creates challenges for people, business and society as a whole.

For people, these challenges include service exclusion (if we can't prove our identity, we cannot access key services), poor user experience, information over-exposure (putting users at risk of identity theft and privacy breach), and process inefficiency.

The result? A poor customer experience – and higher costs for providers. In fact, Australia Post and BCG’s research identified potential annual economic value of $11billion waiting to be unlocked by solving digital identity friction.

“It’s still too hard to do what we need to do online,” explains Andrew Walduck, Australia Post’s Executive General Manager – Trusted eCommerce Solutions.

“We have a great opportunity to unlock the digital potential of so many organisations, but first we need to overcome the barrier of being able to prove an individual is who they say they are when they transact online.”

What does identity mean to consumers?

For any new solution to succeed, it needs users to embrace it – and that means putting the consumer at the centre and ensuring participation from both the public and private sectors.

“We found through the research that identity is an incredibly personal thing, the most precious thing you have,” says Cameron Gough, General Manager, Digital ID and DDC – Australia Post.

“But if you think about the difficulty of verifying identity online today, it takes a number of steps – consumers typically give away a lot of information for what they perceive as a very small benefit. That’s why they’ve told us identity isn’t working for them in the online space.”

We also asked consumers how they store their phsyical identity. The answers ranged from wallet and folders to sock drawers, the glove box and even the fruit bowl. For something so precious and important, it’s certainly worth considering a better and more secure solution.

Identity evolves through the life-cycle

While we didn’t find any major generational differences in consumers’ attitude to proving their identity, the way we use our identity tends to shift over time.

Youth / students aged 14-21

2.2million Australians

146,640,000 identity moments every year, including buying concession tickets, online gaming, buying alcohol, proof of University ID, backpacking trips, online shopping, rental share agreements and joining a gym or sports club.

Young professionals aged 21-30

2.7million Australians

23,922,000 identity moments every year, including booking travel, work discounts, online shopping, car rentals, scam protection and tenancy agreements.

Working families aged 30-55

7.5million Australians

277,200,000 identity moments every year, including collecting parcels, registering with a GP, checking in at a hotel, sorting out childcare, making a will, buying a car, applying for a mortgage and moving house.

Mature / retirees aged 55+

4.5million Australians

135,000,000 identity moments every year, including buying prescription medicine, joining a club, applying for a pension, showing proof of concession, making travel arrangements and updating a will.

The rising risk of fraud

As online and other card-not-present transactions grow, so does the risk of identity fraud. “You can control who sees your physical identity documents, and you can keep them safe in your wallet,” explains Gough.

“But we've found the convenience consumers want also makes it much easier for fraudsters – and you can't see the people behind that fraud, they could be half a world away and outside Australia’s jurisdiction laws.”

According to Telstra’s recent research into mobile identity technology, 29 per cent of Australians have experienced identity theft personally or indirectly – and 40 per cent believe it was the institution’s fault.

Yet almost half (44 per cent) of consumers have a small number of passwords that they use multiple times across their digital identities, and one in five (18 per cent) use just one common password across all digital accounts.

Our research also found some consumers depend on a written cheat sheet to remind them of all their passwords. For example, research participant Shane keeps his documents wherever it’s convenient.

“I normally don’t leave anything of any good value in my car. But it’s been easier to just leave it in there for a moment because there’s a good chance I’m probably going to need it over the next week or two while I’m going to job interviews.”

A single digital identity solution

Telstra’s research also found that 42 per cent of Australians said the idea of a single set of personal credentials is appealing. Registered with, for example, a bank, mobile operator or independent identity provider, it could be used across multiple websites in a one-click process, rather than having to register and remember credentials for each.

Australia Post’s 2016 research into eGov services also found that 83 per cent of Australians wouldn’t mind sharing personal data if it made their lives easier – and almost half chose Australia Post as their preferred provider of eGov services.

Our research with BCG also found the idea of a single digital identity resonated with all types of consumers, regardless of age or location. Four factors were deemed critical to user adoption, as these research responses reveal.

1. Ubiquity to reduce identity fatigue

Elizabeth, a mum in regional NSW, wanted to update an account holder name

“I’m really not just a serial number. You have to have the right name, I couldn’t just say, I was this person and this is my new name. I asked to consolidate my super funds. They say, ‘No, the computer will never let us do that.’

2. Trust in security

John likes the safety buffer of a middle man.

“Some local retailer’s websites don’t take PayPal. They ask for credit card details. I just thought, I’ll wait till I can drop into the shop and pay directly. Minor inconvenience, but I’d rather not give them my credit card details if I don’t have to.”

3. Convenience is the hook

Victoria, an online clothing retailer, believes people are open to biometric ID verification

“You could have all that data in a wristband. All the stuff you have to give them: name, address, phone numbers, credit card details... my ABN number, how long I’ve been in business...”

4. Control over who can access our data, and how it’s shared

Claire, in her 60s, believes operating online requires compromise.

"Transparency of how the data is used and control over who gets access to it are two fundamentals… but one has to give those to operate in society today,
everything online requires compromise."

However Ben, in his 20s, feels protected by safety alerts.

“I always get rung up if I’m spending money in a different state. They’re like oh, what are you doing? One minute I’m having lunch next minute I’ll be in Adelaide buying cocktails and clothes and wine tasting ... I think that’s good.”

Delegating authority

Helping others, such as an aging parent, manage their affairs was also a source of deep frustration. The processes are inconsistent, and there’s a lot of red tape to wade through.

While there needs to be a level of security to protect vulnerable individuals, it was clear this could be made much more convenient. A Power of Attorney is seen as too controlling – this is more about ad hoc support and access as needed.

Bart, in his 60s, just wants to tell you once:

“He is my son, I am recorded as his father. It is just the doubling up of the info between the government departments. You would think they would have access to all that. It’s just a bit odd why you need to keep proving who you are.”

Wade simply wants to help his grandfather out:

“It was difficult to get added to his account because he had to do it and he didn't know what to do and I wasn't with him at the time.”

Colleen, in her 50s, believes security and convenience is a trade-off when it comes to supporting her intellectually disabled son Peter.

“When utility companies have asked to verify Peter, I’ve actually handed the phone over to (my husband) Jeff and said ‘Here, pretend you’re Peter’.”

Fast forward to a seamless experience

At Australia Post, our vision is to simplify identity – making it easier for consumers, business and government to interact – while also making those transactions safer and less susceptible to fraud.

“The challenge for us is to make this a seamless experience, so it enhances the way consumers use their identity. Imagine a world where identifying yourself is a seamless thing that happens without you noticing,” says Gough.

BCG Digital Ventures’ Managing Director Mike Schwartz is excited about the potential for transforming this experience. “As we digitise identity, people won’t need to carry physical artefacts."

"They’ll carry their biometric facts on their body and they’ll have their mobile phone with certain credentials. It will make for a much better customer experience, and it will be a lot more cost effective and easier for all involved parties.”

Many important moments require proof of identity and a quarter of all Australians already turn to Australia Post for an identity check each year. We’re ready to take on this challenge, and power a better solution.

To find out more about our research into Australia’s digital identity, read our white paperA frictionless future for identity management.

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