Nowadays, the smartphone replaces numerous physical proofs of identity. Users can deposit their flight ticket digitally just as they can their train card or credit card information. The trend is not surprising, since almost everyone has a mobile device these days. This is why the self-sovereign identity also relies on smartphones to initiate identification processes. With the wallet and the blockchain at its core, SSI will help make telecommunications more secure in the future and create added value for communications companies.
Fraud schemes burden telecommunications companies
According to studies, the annual damage caused by telecommunications fraud worldwide amounts to a mid-double-digit billion sum. This is primarily identity and payment fraud. The Payment Services Directive of the European Parliament has therefore prescribed two-factor authentication (2FA) for many payment processes in the digital as well as the analogue world for several years. However, the procedure has numerous shortcomings and meets with little acceptance among users. The sophisticated fraud schemes are a serious problem for online trade, banks, but also for telecommunications companies. In order to contain the damage caused by identity fraud, it is necessary to create clear ways of identifying the counterpart. Current methods are both inadequate and time-consuming.
The benefits of SSI for the telecommunications industry
Mobile phone customers are not allowed to use even prepaid tariffs anonymously due to the applicable legal regulations in most European countries. Communications companies must therefore be able to reliably verify the identity of their new customers. To prevent payment defaults, contracts also require a credit check. Credit agencies provide technical interfaces for this purpose, but these, as well as remote authentication by video or post, are associated with costs.
Providers are not allowed to transfer customer data without further ado. For example, the transfer of a telephone number requires a declaration of consent by the new customer and the initiation of a technical process. But the care of existing customers is also fraught with problems. The amendment of an existing contract requires the identification of the customer. In distance selling, this is usually done by customer password, but this is an insecure method.
Self-sovereign identity simplifies all these processes, as (new) customers can be identified beyond doubt by the customer advisor or automatic booking systems. Identification via SSI is basically possible via all distribution channels and requires only minor technical adjustments even in physical customer contact. This facilitates the onboarding of new customers as well as the customer porting between two companies. For example, the blockchain identity makes it possible to store a user’s phone number directly in his or her wallet, which significantly simplifies the transfer of phone numbers.
Make communication channels more reliable
Self-sovereign identity prevents identity fraud by helping companies to securely identify their users with the simplest of means. This results in a benefit for society as a whole from SSI, from which not only telecommunications companies profit. In particular, payments and the conclusion of contracts can be made more secure and easier with the decentralised identity. However, network operators will also play an important role in the establishment of decentralised identities. Similar to banks, providers already possess a large amount of verified customer data. Pre-verified personal data such as name, address or date of birth are a mandatory part of the decentralised blockchain identity, because they have to be encrypted and fed into the open ecosystem. The creation of decentralised identity solutions will therefore put network operators in a key position in the medium term, through which new business areas can be developed.