When a smooth ride is critical

Originally posted at InnovationAus.com

Changes of Prime Minister, just like changes of government, can be a fraught time for business. The uncertainty created can be a confidence killer. It is noteworthy that the elevation of Scott Morrison as Prime Minister represents a smooth transition for the digital transformation agenda.

As Treasurer, Mr Morrison was a friend to the FinTech sector as a means of driving new innovation and better consumer outcomes in the financial services sector. And, importantly, he has been a driving force behind Australia’s planned open banking regime.

He has taken a pragmatic approach to open banking, avoiding the bleeding-edge of policy implementation and following the lead of jurisdictions like the United Kingdom – taking the regulatory frameworks that have proven successful, and tweaking the areas where issues had been found.

The retail banking sector is the first to roll-out the open data principles of open banking. But open data and the introduction of a Consumer Data Right will be introduced systematically in the coming years across a broad set of industries.

The open banking regime will ultimately deliver better outcomes for consumers. It will become easier to move from one bank to another – taking your existing customer data with you – and also make it easier to compare the prices and offerings between financial institutions.

Applying open data philosophies to the financial services sector will also encourage the creation of entirely new customer services, some from within the banks and others from the burgeoning Australian FinTech sector.

Less remarked upon in discussions about FinTech and open banking is the fact that it will make our critical financial system more secure, and more resilient as a result.

This is fundamentally important – as highlighted by Scott Farrell in the federal government’s Open Banking Review. The adoption of open source protocols like OpenID Connect and OAuth2 should spell an end to the FinTech work-arounds like screen-scraping that are based on poor security practices.

Elsewhere in government, Prime Minister Morrison retained the steady-as-she-goes commission of Michael Keenan as both the Minister for Human Services and Minister for Digital Transformation. Mr Keenan retains both portfolios, critical to ensuring continuity in the government’s digital transformation agenda.

This should be welcomed by the industry. Mr Keenan has committed to updating the Commonwealth’s Digital Transformation Strategy.

But the Digital Transformation Agency is only now coming to grips with the project to scale the Commonwealth’s digital identity capability. It was important that the DTA be given a steady hand, and Mr Keenan’s re-appointment to the effort is welcome.

Of all the digital initiatives currently in-flight within government, the digital identity piece is arguably most critical – not just to the better and more efficient delivery of government services but as an underpinning layer to aid the transition to a broader digital economy as well.

The work done now for a smooth ride into digital ID will pay enormous dividends.

The DTA received significant funding in the May budget to roll-out digital ID infrastructure across government. It is a large and important project, but no-one should underestimate its complexity.

The federal efforts toward a digital ID has been something of a stop-start affair. The DTA has published a lot of guidance in the past couple of years, and must now be nearing a clear direction.

One thing worth contemplating is the complexity of ID as a fundamental issue that goes well beyond just its technology component. There is much to understand about identity as a broad concept that must be understood before it can be applied into a digital environment.

Overseas, several countries have built federal citizen identity systems, using a number of different models for identity registration and verification.

Some mandate a single identity verification service; others, multiple certified identity verification services, including some that use commercial third parties. The outcomes of these different models, in various stages of maturity and rollout, all have pros and cons that can instruct those working on our government’s plans.

Some of Australia’s state governments are well advanced with their rollouts of citizen identity project. It may make sense to federate these into the federal system to lessen the friction of enrolling citizens.

One of the major issues holding back the uptake of government identity, both here and overseas, has been a lack of focus on highlighting the value for citizens to register for yet another digital identity. Often, it’s been the registration and authentication processes that have deterred citizens from using government services. Making use of an existing, fully verified, credential from a trusted third party may help solve this problem.

Certainly the open banking experience in the United Kingdom has exposed some of the complexity. It has been the case where some large financial institutions have had to back-track on digital ID projects, not because they did not understand the technology or the finance sector, but because of mis-steps taken on the nature of identity and the complexity of applying it in a digital environment.

The great hope is that Australia can engage with proven industry standards, and apply some of the thinking already applied in other jurisdictions.

There is a final element to digital identity in the context of the Australian circumstance. The federal government has been developing a Digital Economy strategy, expected to be unveiled in the coming months by out new Minister for Industry, Science and Technology Karen Andrews.

The digital economy is of course our future, representing the total flows of good and services and currency and commerce online – and the rules that are applied to it. Digital identity is a foundational component.

We look forward to engaging with the Morrison government as it develops policy in this exciting sphere.