City launches new Digital ID framework against AI fraud
Canada Corporation has unveiled plans for a new digital identity framework it claims could unlock more than £5bn for the UK economy, as policymakers and the financial sector race to tackle increasingly sophisticated AI-enabled fraud.
A blueprint published on Tuesday proposes a “Digital Verification Orchestrator”, or DVO – a system set to allow consumers to verify their identity once and securely reuse that information across banks and financial services, rather than repeatedly uploading passports or utility bills.
Developed with EY, Hogan Lovells and input from regulators including the Financial Conduct Authority (FCA), the blueprint estimates the model could generate £1.8bn through a secure digital verification service while reducing fraud losses by at least £3bn over five years.
Policy chairman Chris Hayward has branded trusted digital verification as having become “critical infrastructure” for the UK economy.
“At a time of rising fraud, rapid technological change and increasing geopolitical uncertainty, the need for secure, reliable identity verification has never been greater”, he is set to announce later on Tuesday. “The opportunity is significant, but delivering it will require coordinated action from government, regulators and industry.”
UK Finance reported earlier this month that authorised push payment fraud losses climbed 19 per cent to £576m last year, warning AI is making scams increasingly convincing by enabling criminals to impersonate trusted individuals and organisations at scale.
The launch also follows last week’s announcement that Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander are developing a bank-led digital verification service that would allow customers to verify details such as their name, age and address directly through their banking apps.
Sir Ron Kalifa, author of the government’s landmark Kalifa Review of UK fintech, said secure digital identity would become increasingly important as fraud evolves: “Trust is becoming the UK’s next critical infrastructure. As AI accelerates and fraud becomes more sophisticated, secure digital verification will be as important to the digital economy as transport networks and energy systems are to the physical economy.”
Pilot phase
Digital ID has been discussed by successive governments for more than a decade, but repeated attempts to create a widely adopted system have struggled to gain traction amid concerns over privacy, governance and commercial incentives.
The City argues its latest model builds on existing banking infrastructure rather than creating a government-run identity scheme, allowing consumers to remain in control of what data is shared while making customer checks quicker and reducing duplication for businesses.
Industry figures welcomed the blueprint but said several key questions still need to be resolved before the system could be rolled out nationally.
Chris Jones, managing director at PSE Consulting, said the bank-led approach had already proved successful in countries including Sweden and Norway, where similar schemes are now used by almost the entire adult population.
However, he warned that questions over liability, commercial incentives and governance would determine whether the UK model succeeds.
“The achievement is genuine,” Jones said. “The questions of liability, cost relative to a free alternative, and route to market are the agenda for the pilot.”
John Salmon, partner at Hogan Lovells, also said that digital verification would “only succeed at scale if it is underpinned by clear governance, robust legal frameworks and confidence in how liability is managed.”
The next phase of the project will see live industry pilots over the coming year, as firms, regulators and government test how the framework would work in practice before any wider rollout.