Digital ID's and the Peer-to-Peer Alternative
I came across this discussion on the MicroSave website:
Why Financial Inclusion May Well Depend on Cyber ID Data: Digital IDs are quick and cost-effective – but more data on unbanked customers is needed
Among the obstacles to digital financial inclusion is the challenge of serving people who lack traditional identity data. But as Trulioo founder Stephen Ufford explains, our online activity creates a digital footprint that can be used to identify us quickly and cost-effectively. He describes how Trulioo is cultivating partnerships to advance its goal of establishing a digital ID for the entire global population.
This post makes some interesting assumptions: first, that “more data on unbanked customers is needed”, which raises the question, “needed by whom, to do what?” But it goes to answer that question, by assuming that “the entire global population” needs to have “a digital ID”! Really? That sounds like it might be a better deal for “Trulioo” than for the global population. Here is the response I wrote:
The vast majority of financial transactions are based on “Personal Knowledge IDs”. These include ROSCAS, ASCAS, savings groups, Self Help Groups, solidarity guarantees and all the transactions between friends and families and traders and shopkeepers. Except for solidarity group guarantees none of these involve financial institutions. Over the last months I have come to appreciate the ingenuity of immigrant ROSCAS in the USA where those at the absolute bottom of the economic pyramid are saving in their groups and taking care of their financial needs outside the formal financial structure. Along the way they are building solidarity based on trust and compassion utilizing the most complex algorithm ever known - how we size each other up.
There is a vast informal peer to peer banking system in place that finances virtually every kiosk, food cart, magazine stand, ethnic restaurant, taxi medallion in NYC and across the nation. As Portfolios of the Poor so brilliantly illustrates, we are bit players in the financial lives of the poor. How can we expand the peer to peer financial system? Savings groups are one of the best examples, but this is only a start. Why only start with financial institutions when we could learn so much from those we supposedly want to help and then build on what they are already doing? See www.intheirhands.com. “In Their Own Hands: How Savings Groups are Revolutionizing Development.