The need for universal corporate digital identity standards

The European Union (EU) is making significant strides in securing online identities through initiatives like the eIDAS regulation and the proposed EU Digital Identity Wallet. While these efforts primarily focus on individual digital identities, it is equally crucial to expand the focus to include Corporate Digital Identity (CDI) standards. These standards are vital for banks where secure, verified identities are essential.

The case for corporate digital identity

CDI differs significantly from individual digital identity. Unlike individuals, whose identities are tied to personal documents like passports or driver’s licenses, corporate identities link to complex structures. These can be incorporation documents, tax identification numbers, and ownership details. Managing these intricate and dynamic identities is critical to operating securely and efficiently in a digital environment.

Moreover, legal entities often have dynamic structures, with changing directors and shareholders. The implications of data privacy are also different for legal entities compared to individuals. Despite these differences, a robust foundation for individual digital identities is essential for CDI, as businesses operate through representatives who must be authenticated.

Furthermore, as banks, and their clients, increasingly adopt advanced technologies like blockchain and Artificial Intelligence (AI), a strong CDI data foundation will be necessary to support these innovations.

The role of standards in CDI

To fully realize the benefits of CDI, standardized approaches to managing referential data are essential. Referential data includes basic corporate details like company name, address, and ownership information, while transactional data pertains to specific business interactions. Without common standards, cross-border transactions within the EU — and globally — become more complex and less secure.

Standardization also lays the groundwork for progressive advancements such as perpetual Know Your Customer (pKYC) processes. As CDI standards evolve, they will support the continuous and automated verification of corporate identities. Subsequently reducing the need for repeated checks and enhancing operational efficiency.

Benefits of CDI for banks

Robust digital identities for both corporates and individuals allow banks to exchange sensitive financial information securely. This reduces fraud in account opening and transactions while ensuring compliance with regulatory requirements related to identity proofing and authentication.

Looking forward, as CDI becomes more standardized and integrated into global systems, banks will be better positioned to innovate and offer new services. The control over digital identity—how corporate information is collected, stored, accessed, and used—will become even more critical as new technologies like blockchain mature and become mainstream. CDI will provide the data foundations that will be the backbone that will enable these innovations.

Addressing gaps and challenges in CDI

The development of CDI standards faces several challenges, including building trust among stakeholders, aligning incentives, and adopting universal standards to ensure interoperability. Additionally, legal and regulatory frameworks must be clear, consistent, and adaptable to technological advancements. These frameworks are vital for protecting user privacy and ensuring that digital identities are resistant to fraud and misuse.

Universal standards and interoperability

The adoption and implementation of international standards are crucial for establishing universally understood protocols. However, a gap exists in the adoption of these standards across different jurisdictions and industries, leading to interoperability issues.

Creating standards for CDI

The creation of CDI standards involves collaboration among various stakeholders, including industry participants, regulatory bodies, and standards organizations. The process begins with identifying needs, such as the necessity for standards that enable the use of corporate digital identities in financial activities. Consultation with industry participants and regulators, followed by public consultation, will be required to develop comprehensive standards.

As these standards are developed within the EU, consideration should also be given to international standards to ensure interoperability. A globally standardized approach to generating unique identifiers, managing attributes, and ensuring the trustworthiness of CDI-related data is essential.

CDI as a catalyst for innovation in standards

Establishing CDI standards within the EU Digital Identity Wallet framework is both a technical necessity and an economic imperative. It promises to enhance security, streamline business processes, and foster trust in digital ecosystems. Achieving this requires collaboration across regulatory bodies, financial institutions, and industry participants. By adopting international standards and ensuring interoperability, the EU can lead the way in creating a secure, efficient, and trustworthy digital future for both corporate and individual identities.