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Digital Transformation

Digital identities: On the internet, can anybody tell if you’re a dog?

Digital signatures and identities can speed up property transactions and reduce the risk of identity fraud. But how can digital signatures and identities themselves be verified?

Andrew Knight, RICS Global Data and Tech Lead
17 March 2022

In 1993, The New Yorker magazine published a cartoon captioned “On the internet, nobody knows you're a dog”. It neatly summarised the benefits of anonymity for participants in the digital world. At the same time, it highlighted challenges for consumers and organisations across the private and public sector. How do we establish the identity of parties that we deal with in a digital world? How do we verify data that we receive over digital channels?

With technology now beginning to support transactions conducted in a partial or completely digital environment, the need for all participants to have 100% confidence in the identities of the various counterparties is critical. Various forms of property due diligence have come to rely in whole or in part on data that is presented, and in many cases, acquired digitally. We need mechanisms to validate the source of the data and depending on the level of assurance and reliance required, we also need certification of the identity of the data provider. We may also need information on the lineage and provenance of the data. This could include details of the methodologies used to capture and analyse the data, its licencing, ownership, any limitations on its use, and any restrictions on data sharing. 

Validating identity

Let’s consider the potential for property conveyancing to use technology to validate the identity of participants. These could be buyers, sellers, agents, brokers, legal advisors, land registries, lenders, tax authorities, and surveyors providing technical due diligence, condition reports, and valuations.  Even if the conveyancing process itself is conducted in a traditional, broadly non-digital manner, there is still a need to verify the parties involved in the transaction. Current manual verification methods can be slow and are still susceptible to the risk of identity fraud.

In the UK, the pilot scheme MyIdentity.org.uk [1] is trailing the use of approved digital solution providers to validate the identity of buyers and sellers. This project is intended to put the consumer at the heart of the process by providing a single comprehensive identity check, which can then be relied upon by other parties in the transaction. The scheme has the support of various government departments. These include the Department for Digital, Culture, Media & Sport (DCMS); The Department for Levelling Up, Housing and Communities; HM Land Registry; HM Revenues and Customs; and various industry bodies. The pilot began in October 2021 and runs until July 2022 across Battersea, Chiswick, Clapham, Kew, Putney, Richmond, Wimbledon, Cheltenham, Gloucester, York, and Harrogate. The scheme is aligned to the proposed UK Digital Identity and Attributes Trust Framework that is being development by DCMS.

This approach of using approved digital ID providers under a governance framework scheme is also being implemented for the financial services sector by The Investing and Saving Alliance’s (TISA) [2]. The TISA scheme and governance body will meet all Financial Conduct Authority, Know Your Customer, and Anti-Money Laundering standards, together with the requirements of UK government to access the data.

We must appreciate that current manual approaches - where copies of key documents are taken - are themselves inherently open to human error and deliberate fraud.

Replacing wet signatures with digital signatures

The direction of travel is clear. There may be an instinctive reaction that a digital approach to identity verification is inherently unsafe, and open to being compromised. However, we must appreciate that current manual approaches - where copies of key documents are taken - are themselves inherently open to human error and deliberate fraud. There are already indications that, from an underwriting perspective, providers of public indemnity insurance are viewing digital identity more favourably than current manual methods.

The pandemic has also accelerated the use of digital signatures to replace wet signatures (where a person uses a pen or seal to sign their name on a physical paper document). There are various levels of electronic signatures that can carry the same weight and legal effect as traditional handwritten signatures:

  • A Simple Electronic Signature doesn’t require strong signer authentication or identity verification, but would still be considered suitable for low value sales and procurement documents with email addresses and unique access codes used.
  • At the next level, an Advanced Electronic Signature establishes a unique link between the signature and the signer, verifies the identity of the signer, and produces a digital certificate that is attached to the transaction.
  • For highly regulated transactions, the next level is provided by a Qualified Electronic Signature (QES). A face-to-face identity verification process, provided by a Qualified Trust Service Provider, produces a digital certificate created with an electronic signature device. By establishing the validity of the signature process in this way, a QES is considered the legal equivalent of a wet signature under UK law. In the UK, GOV.UK Verify is a QES-enabled service [3], and HM Land Registry is currently exploring the use of QESs and other forms of electronic signatures [4].

The pandemic has accelerated the pace of digitisation across all sectors. The use of data and technology in the built environment sector is increasing, albeit from a low base when compared to other sectors. The direction of travel is for more digital transactions and the data supporting due diligence to be validated and assured using digital identities and certificates.

Moving forward with digital identities

So, what does this all mean for consumers, property professionals, and for professional bodies? 

Consumers will have an easier and safer way to prove their identity for a variety of transactions and day-to-day activities. Digital identities will move beyond these early use cases of conveyancing and financial services. There will be potential for more mundane uses such as proof of age without having to divulge actual details of date of birth. 

For the property professionals, work outputs such as valuations, condition reports, technical due diligence, and cost advice will be requested by clients in a digital form. Electronic signatures will certify the source of the information, identify the professional and their firm, and provide confirmation of current professional standing in terms of membership and CPD.

Professional bodes like RICS will need to provide forms of digital identity and certificates for members and regulated firms alike that third parties can trust to validate RICS credentials.

 

[1] https://myidentity.org.uk/

[2] https://www.tisa.uk.com/tisa-groups-projects/digital-id/

[3] https://www.gov.uk/government/publications/introducing-govuk-verify/introducing-govuk-verify

[4] https://www.gov.uk/government/publications/signatures-accepted-by-hm-land-registry