Canadian banks and the country's Interac debit network are heavily involved in the nation's digital ID initiatives, working with telcos and tech companies to promote interoperability and thus reduce fraud.
Being able to verify customer identity digitally will be critical when Canadian financial institutions launch the
Digital ID refers to a federated form of identification that draws on multiple sources and is flexible and reusable. It’s better suited for digital payments than static forms of authentication such as usernames and passwords. This makes digital ID of value in combating fraud, which has been rising in Canada due to the growth in online transactions during the pandemic.
In 2021, there were 30,849 cases of identity fraud and 9,666 scams involving personal information, according to the Canadian Anti-fraud Centre. The government-backed fraud reporting service received 104,295 total fraud reports involving CA$379 million in reported losses in 2021, up from 46,465 fraud reports and CA$96.16 million in reported losses in 2019.
Prior to the pandemic, Canada’s largest financial institutions were already involved in developing digital ID services in partnership with Toronto-based SecureKey Technologies. In 2016, the country’s top five banks — Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Bank of Nova Scotia (Scotiabank), and Toronto-Dominion Bank — and credit union group Desjardins were among investors in SecureKey, which develops blockchain-based federated digital ID verification platforms.
In May 2019,
Verified.Me users must provide consent for their personal and credit information to be shared with third-parties, and no personal information is stored by Verified.Me.
Canada’s top five banks and Desjardins use Verified.Me to vet the identities of customers applying for bank accounts and loans from them. They also enable customers to use their banking login credentials to access services from organizations participating in Verified.Me such as investing, health care, notarizing legal documents, and real estate.
In addition to banks, Verified.Me’s partners include Equifax, which checks for fraud on applicants’ financial accounts; Onfido, which checks the legitimacy of photo ID documents uploaded to Verified.Me; and EnStream, a telco industry joint venture which ensures consumers’ cell phone accounts haven’t been hacked.
In October 2021, Interac, which operates Canada’s debit and ATM networks as well as the Interac e-Transfer payments service, bought the Canadian rights to Verified.Me.
Interac aims to sign up the 300 financial institutions participating in its payments networks to act as credential providers for Verified.Me so it can act as a nationwide digital ID scheme, said Neil Butters, Interac’s vice president of digital ID product.
“We’re building an ID network that is intended to become a utility for Canadians, giving them confidence to transact in the digital economy,” said Butters. “Interac’s goal for Verified.Me is to be as ubiquitous as possible. We’re looking at the applicability of Verified.Me for open banking and the Real-Time Rail.”
The Large Credit Union Coalition, which represents Canada’s largest credit unions, is creating a credit union system node on Verified.Me, said Atul Varde, chief information and payments officer at Edmonton, Alberta-based Servus Credit Union.
“Servus is actively involved in this process and is one of the first implementers,” he said. “Once this node is functional, Servus members could use their digital banking credentials to access services from Verified.Me's relying parties. For example, Servus members could apply for Internet connections more easily and securely from telcos if they use digital ID data from Servus to process their application.”
According to Joni Brennan, president of the Digital ID & Authentication Council of Canada (DIACC), a coalition of 120 public- and private-sector organizations, Canadian financial institutions are motivated to participate in digital ID networks due to their need to comply with know-your-customer and anti-money-laundering rules.
“It’s a real strength that Canadian banks are so involved in digital ID,” she said. “Another strength is Canada’s collaborative approach which involves the federal government working with provincial governments and the private sector to develop digital ID systems.”
Around 3 million transactions have occurred on Verified.Me since its launch, and the platform has 1.4 million users, Butters said.
“The Verified.Me use cases which we’re seeing are mainly in KYC and AML compliance areas such as applying for bank accounts and loans, insurance, health care and real estate,” he said. “With Interac now being involved in Verified.Me, we’ve seen a larger adoption rate for Verified.Me than before because of our brand recognition.”
In October 2021, Interac also acquired the rights to Government Sign-In by Verified.Me from SecureKey.
A separate service from Verified.Me, Government Sign-in by Verified.Me allows customers of 18 Canadian financial institutions to access 270 federal government services and benefits using their banking log-in credentials. In 2021, Government Sign-in by Verified.Me, which doesn’t perform the database checks carried out by Verified.Me, was used for over 200 million transactions, said Butters.
The government is involved in a separate initiative to develop a trusted digital identity platform for access to government services. It is piloting a digital ID management platform developed by ATB Ventures, a subsidiary of ATB Financial, a financial institution owned by the provincial government of Alberta.
Vancouver-based Trulioo also provides digital ID verification services in Canada. Trulioo doesn’t use banks as credential providers for its service. Instead, it aggregates personal information from multiple data sources including telcos, credit bureaus and utility companies to verify customer identities in real time.
Canadian banks are using Trulioo’s service to check new customer identities, said Garient Evans, Trulioo’s senior vice president of identity solutions. Prepaid card providers Koho and Stack also use Trulioo's services, Evans said.
