Businesses need digital identities too

The ambition is to provide something like a digital “business driver’s license” that is interoperable with other financial systems for data cross-referencing, enhanced authenticity checks and additional fraud detection tools. This could thwart many common scams, making it harder for a fraudster to spoof a legitimate sender or impersonate a real vendor. Fraud could be stopped before it happens: If a business claiming to be a major supplier is requesting a payment, mismatched credentials mean the transaction can be halted automatically in real time.

Crucially, to protect privacy, the person or organization asking for the credentials only gets to view the ones that they are authorized to access. So, for example, a telecommunication company might be able to view the trading name of a business that wants to send a text message to its customers. A lawyer might be able to ask for the identities of beneficial owners, and a business partner might be able to ask for payment details.

This kind of idea will become increasingly important to combat new forms of fraud, such as deepfakes. Imagine you’re on a video call with the CEO of one of your suppliers, and they’re asking you to make a payment. In the age of generative AI, how do you know they are who they say they are? We can imagine a world where identity validation takes place automatically in the background by the ID system, providing reassurance that you are indeed talking to the CEO and not a hacker.

We have a long way to go to get there. Seventy-five percent of financial institutions still rely on internet searches to identify beneficial owners, annual filings and financial accounts in the process of verifying business identities.³ This is not just an efficiency problem; nine in 10 corporate treasurers have abandoned lengthy onboarding processes for business banking applications, leading to lost revenue and unhappy customers.

What businesses need is a digital identity not only to fight fraud, but also to make business more efficient and productive—something that a company can present to the bank to get an account, or to a payments company when it wants to send money to someone, and also to accountants, lawyers, leasing companies, procurement officers and everybody else.

When the next message purporting to come from the utility company shows up on your phone, it should either be in green (because the corporate digital identity has been checked and validated) or red (because it hasn’t).

If we really want to reduce friction and fraud, then it must be that simple.

By WIRED

SOURCES: WWW.JPMORGAN.COM/PAYMENTS-UNBOUND/SOURCES

ILLUSTRATION: KEITH LEE