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A Step Back in Time: The History and Evolution of Digital Identity

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In the late 1990s, there was a clear market opportunity to solve the issue of poor online registration experiences with a streamlined login process and a simple way to authenticate users on websites. Microsoft introduced the first concept of unified online identity — Identity 1.0 — with its Passport product. Passport took the first step in virtualizing user identity by enabling consumers to log into various sites using a single username and password.

Passport’s goal was to provide consumers with a trusted online identity from a well-known company (Microsoft) and provide businesses with more registered users by simplifying the login user experience. But Passport missed the mark. Neither consumers nor businesses were receptive to Microsoft Passport, and the product ultimately dissipated. Passport failed to remember user preferences, and even Microsoft employees griped about the inconsistencies and lackluster user experience.

The second generation of online identity — Identity 2.0 — was born in 2010 as social networks began allowing users to log in to websites using their existing social identities. Facebook Login, in particular, saw widespread adoption as online users accessed websites and mobile applications using their Facebook credentials more than 10 billion times in 2013 alone. To date, more than 35 global social networks allow the use of social authentication, giving consumers the option to log into websites and mobile apps through the identity of their choice.

In addition, businesses began to reap the benefits of having access to their customers’ profile data via social authentication. Upon registering on a website or application using an existing digital identity, consumers give brands permission-based access to rich, first-party identity data, including unique information such as likes, relationship statuses, and work history. For businesses, this means they now have access to accurate customer data that can be leveraged to deliver hyper-relevant marketing communications, in turn creating memorable, personalized customer journeys and significantly boosting conversion rates.

Fast-forward to 2014, and we saw the origin of the next iteration of identity. With Identity 3.0, consumers’ real identities become increasingly intertwined with their virtual lives. Beyond social identities, Identity 3.0 includes next-generation authentication methods, increased security, new protocols, and innovative applications of identity.

Consumers now actively leverage authentication systems beyond social login. Payment providers such as PayPal and Amazon allow identity verification on websites and streamline the online retail checkout process. Venmo is another interesting use of identity that allows users to transfer money to friends and family using only their mobile phone numbers, eliminating the need to share sensitive financial information.

Another significant influencer contributing to the evolution of identity is Apple Pay’s Touch ID, which leverages biometrics and NFC technology to identify shoppers at the point of sale. With the introduction of Apple Pay in 2014, the company is positioned against Facebook and Google as a leading identity provider of the future. The combination of Apple Pay and Apple’s native Passbook app digitizes a user’s entire wallet and identity as a consumer.

Other tech giants are following suit to tie identity with payments. Last year, Facebook appealed to the European Union for a license for money-transferring capabilities. With Facebook already having an extremely high number of active, registered users on its main network, as well as on its separate Messenger, WhatsApp and Instagram applications, the world’s largest social network is positioned to succeed with any payment technology it might introduce.

As Identity 3.0 continues to evolve, fascinating implementations and use cases are on the rise with the most talked-about frontier of the technological landscape: the Internet of Things (IoT). From smart cars to connected refrigerators, the IoT has led to a new infusion of gadgets that must be able to communicate with each other in order to effectively create personalized user experiences. To date, many devices are not designed to work in collaboration because there is not a unified and consistent language for sharing data. User identity could provide the common thread for empowering these smart devices to absorb, learn and evolve together based on user preferences. Until customer identity is centralized, the IoT will remain an idealistic concept that never reaches its true potential.

Now, let’s look further into the future. Companies like Google and Apple have spearheaded the shift toward biometrics as a form of identity authentication. Google developers recently purchased a patent for iris-scanning contact lenses, hinting at a new trend in identity verification. As noted, Apple has utilized fingerprint authentication since the introduction of Touch ID in 2013. Even MasterCard recently decided to step into the world of biometrics, as evidenced in the company’s announcement that it will be using fingerprints and facial scans to approve purchases. Between connected devices and fingerprints scanners, contact lenses and facial recognition, the concept of identity has made significant strides since the early days of Microsoft Passport.

Digital identity will only continue to evolve, making the management of customer identity data and identity verification technologies even more critical for businesses. In order to provide consumers with innovative and new authentication mechanisms for the purposes of creating truly relevant 1:1 experiences, businesses must have a flexible, scalable, and customer-centric identity management strategy in place. With identity at the core of consumer-facing business initiatives, brands can build lasting customer relationships that will result in levels of engagement and loyalty that were not previously possible.

Patrick Salyer is CEO of Gigya. Gigya is a customer identity management platform with more than 700 customers including Fox, Forbes, and Verizon. When he is not helping brands create identity-driven relationships with their customers, Patrick enjoys captaining the Gigya basketball team against formidable rec-league opponents, playing Settlers of Catan, and spending time with his wife and two daughters.




Edited by Ken Briodagh
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