Background
- Recently, as technological innovation develops, digitalization of financial services has rapidly increase and various financial services are provided via wide range of devices and digital platforms. To keep up with these trends, Japanese Financial Service Agency (“JFSA”) stipulated “Finance Digitalization Strategy” and actively engaging in data utilization and protection of consumer privacy, etc. in the financial sector.
- Digital Identity is one of indispensable elements for financial digitalization. Regardless of modes of service, financial service providers are required to properly handle identity information for consumer protection, anti-money laundering / combating the financing of terrorism (AML/CFT). Financial service providers are expected to build and operate digital identity systems compliant with appropriate frameworks so that they can provide individualized services according to each customers’ needs and circumstances based on understanding them appropriately and efficiently.
- It is important for JFSA to understand recent activities in technological developments and standardization. In addition, SelfSovereign Identity / Decentralized Identity (SSI/DID) attracts a lot of attentions because of recent concerns for privacy protection on centrally controlled digital identity, developments of regulations on data protection, avoidance of rock-in, and financial inclusion.
- For development of SSI/DID, as some experts insist that decentralize architectures such as blockchain technologies would be suitable, such new trend have to be taken in account in advance.
- As such, JFSA needs to have a deep understanding on wide range of issues, such as technological elements of digital identity including authentication, access control, cryptography, and blockchain as well as operational and governance frameworks. JFSA also needs to set up dialogues with various stakeholders around digital identity.
Purpose
- Based on above background NRI will conduct this multilateral joint research focus on possible utilization of digital identity in the financial sector. This research will be an important input for JFSA, the financial regulator, to analyze digitalization of finance in the future and have a deep understanding on current digital identity systems, desirable digital identity systems and its operations.
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