Matt Homer on the Importance of Getting Digital Identity Right

By Sean Creehan and Kaitlin Asrow

In episode seven of Financial Inclusion & Beyond, we spoke with Matt Homer, Deputy Commissioner of the Research and Innovation division of the New York State Department of Financial Services. Matt is an expert on the use of data and technology for social good. He has previously held positions in the U.S. government and financial technology sectors where he has focused on issues like the role of digital identity in promoting financial inclusion and wellbeing.

We get into the benefits of inclusive technology, but also the potential for digitization to exclude some vulnerable populations, and the unexpected challenges policymakers and firms face in delivering new financial services to people that previously lacked access. We also discuss the broader trade-offs between inclusion, privacy, and other emerging data rights.

Key takeaways from the discussion include:

  • People that aren’t a part of the formal financial system don’t dream of things like getting access to a bank account—a traditional indicator of financial inclusion in the past. They want tools to access the digital economy, whether to operate a business or save for the future.
  • Universal digital identities that enable people to verify themselves with financial service providers are critical infrastructure for any efforts to include more people in the financial system and broaden their ability to transact in the digital economy.
  • Policymakers and private companies designing digital identity and other enabling infrastructure must be careful to provide multiple pathways for people to gain access. Matt provides the cautionary example of a brick maker in India whose fingerprints were so worn down that he needed his son to help him provide biometric verification for financial transactions.
  • Protections for customer data rights, from privacy to ownership, are also crucial in promoting inclusive digital financial systems. Matt argues that in countries like the United States, we need a new trust framework to govern data use in the emerging digital economy, helping people better understand and control the use of their data.

Please note that the initial interview was recorded prior to the onset of the COVID-19 crisis.

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Transcript

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Kaitlin Asrow:

This is Pacific Exchanges, a podcast from the Federal Reserve bank of San Francisco. I’m Kaitlin Asrow.

Sean Creehan:

And I’m Sean Creehan. Welcome back to Financial inclusion and Beyond, an ongoing exploration of what we can learn from efforts around the world to improve financial inclusion and wellbeing. In today’s episode, we sat down with Matt Homer Executive Deputy Commissioner of the Research and Innovation Division of the New York State Department of Financial Services.

Matt Homer:

I don’t think anyone goes out and says, “I really want a bank account.” I think they go out and say, “I want to have access to this new digital economy. I want to become a seller on this e-commerce platform so I can grow my storefront business into an online business as well.” Well, in order to do that, I need a bank account or in order to do that, I need a digital identity.

Kaitlin Asrow:

Matt is an expert on the use of data and technology for social good. He has previously held positions in the U.S. government and financial technology sectors where he has focused on issues like the role of digital identity in promoting financial inclusion and wellbeing. We talk a lot in this episode about the benefits of technology and driving inclusion, but also the potential for digitization to exclude some vulnerable populations.

Sean Creehan:

Matt has some great examples of unexpected challenges, policymakers and firms face in delivering new financial services to people that previously lacked access – from the bricklayer who has no fingerprints to use for authentication to citizens, wary of state surveillance, should they share their mobile phone data to gain access? We also get into the broader trade-offs between things like inclusion, privacy, and other emerging data rights.

Kaitlin Asrow:

As with some of our earlier episodes, we’d note that we recorded this before the outbreak of the COVID-19 crisis, which has emphasized a lot of these tensions between inclusion and data rights. We’ll share some more thoughts there at the end of the episode. Okay. Let’s jump into the conversation with Matt.

Sean Creehan:

Matt thanks for joining us today.

Matt Homer:

Thanks Sean. It’s good to be here.

Sean Creehan:

So many of the world’s gains in financial inclusion have come from technology and digitization of economic life. As we begin, can you describe some ways that you’ve seen technology change financial inclusion in your work?

Matt Homer:

Yeah, absolutely. I start by saying there’s a lot of understandable attention on the end user and the technology the end user uses to experience or to become financial included, but the infrastructure itself and everything else that sits around that end user experience is also very important. And in a way it gets actually more challenging than the technology itself. You wouldn’t have mobile money platforms unless you also had cell phone networks, or if you didn’t have access to power. So it’s important to kind of orient the conversation with that in mind that you have this technology for the experience that people get very excited about and really sort of in some ways started in Kenya with M-Pesa, but it’s also important to recognize that the sitting around that experience a consumer has as a whole host of other things that have to happen to make it possible.

I started working in this space domestically in the U.S. when I was at the FDIC and we were really excited about this thing called remote deposit capture. So you could take a photo of your check and deposit your check into your bank account without having to actually walk into a bank. And that wasn’t that long ago. If you think about that as a reference point and where we are today, it just shows how far technology has come. And I think initially the focus was on how do you digitize the banking experience and just make banking digital? And I think now where we’ve come as a community is recognizing that there’s an opportunity to actually reimagine or re-engineer what banking is, and kind of start with a fresh perspective rather than just sort of digitizing existing processes.

So it’s a little funny and silly to think about kind of being able to deposit a check electronically would be such an exciting thing when, why don’t we just get rid of checks all together? So technology has had a pretty tremendous impact in helping drive financial inclusion. And even for people who already are financially included, providing them more options, more services, I think has led to a really robust competitive marketplace. That story is even more pronounced in emerging markets in places like India, where the mobile phone is just completely transformational. And as I was mentioning previously with sort of the advent of increasing ubiquity of mobile phone networks and access to low cost power, that’s really facilitated the ability for people to use mobile phone-based financial services.

Sean Creehan:

Say you’re living in an Indian countryside, and maybe you haven’t had a formal bank account before, walk someone through how that looks, who doesn’t necessarily understand how this basic technology is enabling financial inclusion.

Matt Homer:

Sure. One thing that’s different in some of those markets is that here like in the U.S. and perhaps other countries within the developed world, the focus has been on digitizing the existing banking experience. In India and other emerging markets you’ve seen other actors enter the space outside of traditional banks to offer financial services. So the idea is if you already have a mobile phone, you should be able to use that mobile phone to digitize your money. Practically speaking, the way you see it work in many of these markets is through cash-in, cash-out networks, plus mobile phone operators who provide some type of wallet service as a feature to the consumer. So there are many different pieces of the ecosystem. In many of these markets, salaries are not digitized and so then the question becomes, if you’re a person in India you’re paid in cash, how do you actually convert that cash into digital value that you can hold electronically in a wallet and practically speaking?

The way it works is that you would go to an agent which could be sort of a local mom and pop type store. You’d give them your cash. And then they would load that cash into your mobile wallet. The mobile wallet is basically a balance you’re keeping oftentimes with your telco provider and they would be holding your money oftentimes on their balance sheet although the rules vary on country with what they can do with that cash that they hold. Now, once you have the money in your wallet, you can do all sorts of things with it. You can cash out, which is kind of the most common feature, but then you can also send it to a relative. So this is kind of the killer use case in Kenya, where people were sending money from back home.

Imagine as though, someone moves to a city and they’re trying to send money home to their family in a rural area, and before this type of features existed, you had to give your money to a courier or bus driver. And they would transport your money and you were just sort of hoping that everything would be fine. And what this has done is in many markets is enabled people to sort of transfer money to relatives and others much more seamlessly. And then the next phase and the phase we’re kind of entering now is now that you have money in these accounts, you can also spend that money directly, through e-commerce or even through point of sell.

Kaitlin Asrow:

So, Matt, do you think this digitization that you’re describing ever resulted in actually a barrier to financial inclusion for some populations? So let’s say people who are not literate on the mobile phone or didn’t have the same access to the telco infrastructure.

Matt Homer:

That’s a good question. I don’t know if it’s led to more financial exclusion. I think it doesn’t solve the whole thing. If you think of the many people in the world who are financially excluded, we have to assume that not all of them can be included through this channel. There’s a lot of focus on this channel because it’s an adjustable channel, but yeah, your point is right. Other approaches will be needed for other people that won’t reach everyone. And that’s particularly for people, like you said, in rural or remote areas or people that don’t, as you said, don’t have mobile phones. I’d say even for people that do have mobile phones, oftentimes the mobile phone coverage quality or service quality is not always that great in rural areas.

Kaitlin Asrow:

And the telcos, it sounds like have so much involvement and potential influence in actually this digitization of cash. Are there any concerns with them being not regulated or in a different kind of sphere in terms of consumer protection around finances?

Matt Homer:

Yeah. There can be for sure. And countries have taken various approaches to how they regulate this space. But yeah, there are for sure, I would say in a few different areas, one is sort of agent qualities. That’s really kind of that cash-in cash-out point is a really critical piece of the ecosystem where you can imagine there can be fraud, you’re giving someone your money and you’re sort of trusting them that they’re putting into your account. There are oftentimes issues where an agent will ask you for your password in order to deposit your money, maybe because the network isn’t working. And so they’ll say, leave your phone here with your password and all deposit it when the network is working.

So agent quality and that’s really, I think become the most difficult piece for regulators to figure out how to properly supervise that space, but then even for the money that’s being held, there’s a question about when a telco is holding the money, what types of things can they do with that money while they’re holding it? Does it have to be held literally just sort of in kind of a protected account or can they lend against that? Can they invest that money and securities or government bonds? So there’s some really interesting questions there as well.

Sean Creehan:

You’ve done a lot of thinking, both in India, specifically related to some programs there around universal biometric IDs, but more broadly about the importance of digital identities and all of this in terms of promoting inclusion, bringing in as many people as possible into the financial system. And then for those that are already there, making sure that their activity digitally, they’re not there to show an ID in person that it’s safe and secure. Could you talk about the role of digital identities in the broader global push for financial inclusion?

Matt Homer:

Digital identity, and I’d just say identity generally, has become I think a big emphasis for people who care about financial inclusion. And the reason is because there are many people in the world who simply can’t prove their identity. And you think about financial services because financial services can be used also to engage in illicit activities, such as money laundering and those sorts of things, all regulators in the world require consumers to identify themselves in order to properly protect against money laundering, especially for the financing of terrorism. So digital identity is critical to open an account. I’d say though, before talking about digital identities specifically, I think there are a number of approaches regulators look at to mitigate that identity issue. So another approach is something called tiered KYC, which has become, I think, sort of a standard that even the FATF has endorsed in many countries follow-

Sean Creehan:

And can you just spell that out for our listeners KYC?

Matt Homer:

So KYC is know your customer. So these are the requirements regulators imposed for customers to identify themselves. And the idea that with tiered KYC is that the larger, the risk you pose to the system, the more strenuous, the identity verification procedures you need to go through. So if you’re opening an account, a very low value account and low value can have different meanings in different contexts. But if you’re opening a small account with only a limited amount of money in it, you may not be required to provide that much by way of identity verification. But if you’re going to have a very large value account and the money in that account could be leveraged for lots of different purposes, then you’d probably have to go through a full identity verification. That’s really become recognized as a best practice that the international standard setting bodies and many countries have adopted.

And then when it comes to digital identity, and again, identity more broadly, it’s a useful and really important tool for financial inclusion, but also for a lot of other things too. I mean, to get access to government benefits, to be able to enroll a child at school, to get on an airplane. I mean, there are all sorts of reasons for which I think identity is becoming recognized as a fundamental right, that people should be able to identify themselves. Getting Sean to your question about digital identity, just using India as a specific example, we were talking obviously about a huge country over 1.3 billion people. Many of whom previously were not able to identify themselves. Digital identity is really an important way for them to be able to onboard and enter the financial system as well as engage in other activities.

So Aadhaar their biometric identity system started over a decade ago at this point. And has very quickly become ubiquitous, so that almost every single Indian or person residing in India has an Aadhaar biometric identity. It’s been really important for a couple of reasons. I think there are several motivations associated with it. I think one motivation was to make the government’s welfare system more efficient and more effective. There was a sense that there was a lot of fraud previously, a lot of what the government there sometimes refers to as leakage where consumers were not getting the full value of the government and benefits they were due. Middlemen and others would cut out a piece of it for themselves. And that was one big motivation perhaps the driving motivation for establishing Aadhaar was to provide people the ability to get exactly what they were sort of entitled to. They have several forms of biometrics they use in the program, including fingerprints, iris scans, and now increasingly facial recognition.

Kaitlin Asrow:

So Matt, going back to your tiered KYC approach in the international community, it sounds like there’s some customization that’s needed per country and maybe per region in a country. Is there any concern that could lead to discrimination or different groups being treated in different ways through that tiering process and do digital identities help address any of that?

Matt Homer:

That’s a great question. I think with a tiered KYC approach, I guess one risk there would potentially be associated with the level of discretion associated with how you establish those tiers and how you draw the line. I don’t know that I’ve come across many instances or stories associated with sort of discrimination emerging from a tiered KYC model. I mean, I’m not sure that has happened, but I think it’s more commonly understood and seen as being a tool for, including people in particularly those who, for whatever reason, may not have kind of all the documents they needed to fully identify themselves, but have enough to be able to deposit a small amount in an account.

Kaitlin Asrow:

Related to digital identities in KYC. Can you touch on how they may create consistent or inconsistent experiences for different populations? For example, I understand in India, there were groups of people who did not receive their digital ID right away for various reasons, but it was still required to collect government benefits.

Matt Homer:

Yeah, I think that’s a great question. Digital identity is still a relatively new thing and there’s still a lot we need to figure out in terms of how you actually implement these in the way that’s most inclusive and equitable for a society. I think when it comes to biometrics, you’re right. I was in India for several months last year and visited a village where there were a number of people there who are brick makers. And one of the people I met showed me his hands and his fingerprints were worn. I mean, that form of identity really didn’t work for him because his hands were so worn from the type of work that he performed.

And actually in that instance, when he went to sort of get his monthly ration from the government, he had to take his son with him instead. And he had to actually take his son out of school in order to go during hours when it was open. And then they were able to use his son’s biometric to claim their ration for the month. So digital identity can be a really powerful tool for inclusion, but at the same time, if we’re really focused on inclusion, we need to provide multiple pathways for people to identify themselves. And if we rely exclusively on one or just a very small number, some people inevitably will fall through the cracks.

Sean Creehan:

So picking up on that and as we think more broadly beyond just inclusion, but also about an individual’s financial health, as well as just broader rights that they might have in this sort of digital economy, digital financial system of the future. And we’ve been talking a lot about issues of security, for example, when you propose certain approaches to KYC, but maybe we can get into the broader set of challenges and tensions between other rights to things like privacy. What is a user’s right to privacy in a context where yes, the institution needs to verify their identity and provide some level of security, both for the consumer, but also for the broader financial system to prevent fraud or crime, as you mentioned? But also what is that user’s underlying right to own the data that’s being generated by their activity to take that data elsewhere? All sorts of other potential rights that come up when we think about this sort of digital activity, how do you think about that collection of rights and how do we safeguard them in a fairly complex financial system?

Matt Homer:

That’s a good question. And I did want to note too on the identity piece that it’s not really just an issue for emerging markets that even here in the United States, it’s something we need to continue to think about how we provide people access to financial services and the ability to identify themselves through a variety of methods. I mean, here, for example, in New York, we’ve been able to at a state level on a city level. We’ve done a lot of work in thinking about how do we enable all people in the state sort of regardless of their status the ability to identify themselves in order to access financial services. I think it’s really truly a challenge that exists wherever you have sort of marginalized populations.

Sean Creehan:

In the India context it’s interesting because it seems to some extent, a lot of the gains of Aadhaar and a lot of the hope around it from a public policy perspective, and also from a perspective of the private sector innovating on top of this infrastructure that was created by this digital identity and other kind of modern payment rails, et cetera, but that there was a concern, for example, at the Supreme court level in India, that, okay, this is all well and good, but getting to Kaitlin’s earlier point could create some exclusionary impacts, but also it could infringe on people’s right to privacy. But so just clearly it is a big can of worms that you open up, but how do you balance that? Is it a well-constructed digital identity, for example, can it respond to some of these challenges, both guaranteed security and privacy, or is that idealistic?

Kaitlin Asrow:

I think about it as getting into this digital world that might improve financial inclusion or access to services for different populations or accessibility inherently means collecting more information and potentially more and more sensitive information that can be combined in new ways. And so what do we need to think about when we are moving towards this digital space relative to risks that we haven’t had to deal with as much yet?

Matt Homer:

Yeah, those are great questions. So let me start first with the privacy and digital identity, and then I’ll go to the risk area. I think with regard to privacy and digital identity, there is a concern there, and really as a society, we have to figure out how do we balance the rights of the individual with the rights of society more broadly. I was at an event in Germany a couple of years ago, focused on privacy. And I don’t think I had fully appreciated beforehand kind of the extent to which the history of what happened in Europe, not that long ago, where identity information was used to target and systematically, the attempt to engage in genocide against an entire group of people.

So I absolutely think privacy and identity is a super important thing to figure out and to balance the kind of the technology solutions emerging around self-sovereign identity. And some of those things are pretty interesting to consider. Some of them have a lot of merit. To me, regardless of whether it’s a government program or a self-sovereign program. It really comes down to the governance of the program that matters so much. And frankly, it comes down to kind of the people that control it, whether you trust them and whether they are subject to democratic norms and a responsive to citizens. And that’s such an important thing. And when we’re talking about digital identity, it may be great in certain contexts, but in some countries it may actually be a horrible idea, right? If it’s a country where certain groups are targeted because digital identity, while, it can be used to include people. It can also be used to much more effectively exclude people that you don’t want.

In India, I think they’ve been trying to do it the right way overall. I mean, I don’t think it’s perfect. The Supreme Court has stepped in around some of these issues. When I look at India, I think they moved very quickly. And one lesson that perhaps has emerged for other countries or other geographies looking at digital ID. It said this governance piece really matters. And by governance, I mean, things like what consumer redressal rights exist. So if you’ve been excluded from the system as an individual, how do dispute that? How do you rectify that? How do you correct information, right? If the information that’s contained about you is incorrect, is there an independent process to adjudicate those sorts of things?

So I think getting that governance right, to ensure that it’s not the same entity, that’s both implementing program and regulating the program and responding to consumer redressal or grievances it’s really important to kind of think through that for any digital identity system that exists. And I’d say too, to make sure that there are pathways for people to engage with real people. I sometimes worry as the system becomes totally digitized. And as a consumer, you’re locked out, where do you even go? It’s important that we create pathways or a bridge to be able to continue to have human to human interaction.

Sean Creehan:

That’s a really great point. I’m also thinking about discussions around central bank issued digital currency, and you think about cash and the convenience of cash. And you got to the question and the concern that people might have in certain countries about government intrusion into their daily lives and control and surveillance. And I think maybe even in this country, when you look at the persistent demand for cash, as opposed to digital payments, and one explanation there is that people just want to have that anonymity in their economic and social life. And so I think it’ll be interesting to see when we’re talking about digital identity or digital currency and obviously those two things are related how various governments and private sector players can resolve that tension and balance those competing demands.

Kaitlin Asrow:

Yeah. And that makes me think of just another question for you, Matt. You mentioned that these digital systems and infrastructure wants to be responsive to citizens, but from my understanding, the Aadhaar and what’s going on in India, or even other efforts around the globe are driven not necessarily by kind of grassroots consumer demand for digital identity, as Sean said, cash is still widely used. And so, some of these policies might be more competition driven or have other incentives. So how do governments really know what consumers want? Was there a demand for a digital identity in India and how are consumers involved in that development?

Matt Homer:

Yeah, probably there are very few people that say, “I want a digital identity.” I mean, it’s probably just people like us that are nerds on these topics. I think in India is that people wanted to have access to the things they were entitled to have.

Sean Creehan:

It’s funny you say that though, but if you polled an average American who has a social security number and has thought about all the potential, identity theft that they’ve may have undergone over the past few years, I wonder if people would start to kind of coalesce around well, we need something better than what we have for verifying who I am online.

Matt Homer:

Yeah. I think it all depends on how you ask the question. I think many people want access to the type of outcomes or things that can emerge when you have a digital identity, but they’re not necessarily associating it as digital identity as the solution. In an emerging market, one thing that I think is an important part of the financial inclusion story that doesn’t get told as much as it should is that I don’t think anyone’s goes out and says, “I really want a bank account.” I think they go out and say, “I want to have access to this new digital economy. I want to become a seller on this e-commerce platform. So I can grow my storefront business into an online business as well.” Well, in order to do that, I need a bank account or in order to do that, I need a digital identity.

So for a consumer, the key driver is economic opportunity often. Another area is if you look at ride hailing in India, where if you want to be a driver on these ride hailing apps, you often need to have a bank account. And those types of opportunities are real compelling reasons that help motivate people or provide value to people for why they need a bank account or why they can benefit from digital identity.

Kaitlin I realized, I didn’t get to your question on the risk. I’m a technology optimist. I think technology can have a huge amount of impact, a positive impact, but I also think that won’t necessarily be the case. And I think it really is incumbent upon all of us, whichever part of the ecosystem we work in to make sure that technology actually does have a positive impact as opposed to a negative impact.

We talked a little bit about digital identity and how it can be used for inclusion or exclusion. I think two other areas and I know Kaitlin you’re very familiar with alternative data is another area where I think on one hand it can help bring new people into the system, but it can also be used to discriminate. I think you could think about that in the context of lending. In other contexts where you kind of see the double-edged nature of it is in the insurance space where data can be used to price risk much more effectively. So effectively that it’s almost like pricing the risk against you as an individual based on countless data points a company may have on you, which then begins to reduce kind of the inclusion benefits that are often associated with risk pooling, if risk is sort of assessed so precisely on you as an individual, as opposed to kind of a larger pool of people.

And then I think in the machine learning and artificial intelligence space, as well as regulators, we need to really make sure we can understand not just regulators, people that are kind of using these tools, understand how algorithms are arriving at a specific decision. And I think the trust framework comment I mentioned earlier, I think is also really applicable here. What does a trust framework look like for artificial intelligence and machine learning? So that as consumers, we can have confidence kind of in the decisions that are being made and an ability to kind of audit these systems to ensure that they’re not intentionally or unintentionally discriminating against people in a way that as a society, we wouldn’t be happy with.

Sean Creehan:

Matt, as we wrap up, this may be an unfair question or way too broad, but as you look at different approaches to this broader set of issues around the world, so trying to include more people in the financial system, hopefully in healthy ways, but also safeguard individual and kind of broader financial institutions, security and fight crime, minimize fraud, and then also respect privacy and other emerging data rights. Is there one framework or a few different frameworks that you’re seeing emerge that you think are instructive for us here in the United States or just as models for the future? Where do you see this going? Any insights as we think about this here in the US?

Matt Homer:

I am 100% convinced that we need to find a new trust framework for data. And I shouldn’t use the word new because there actually isn’t sort of any existing trust framework. And I think if you look historically at the past major instances in which the public trust has been violated, new types of trust architectures have emerged in response. So you had the great depression, which wiped out the wealth of many different people, and then a number of interventions emerged to guard against that in the future, and to build a trust around it. So deposit insurance being, I think, one great example of how you build trust around people’s monetary assets. And I think for data, we need to figure out something similar, what is the right trust framework for data? And I’m not entirely sure what it is. I think I have a sense for what some of the components might be, but I think with data it’s sort of novel in the sense that your data can exist at the same time in many different places.

So if your data has been hacked, someone else has your data, but you still have your data and you can protect people obviously against sort of the financial harm that could result from their data being stolen. But can you ever really bring that data back to the consumer that’s been replicated somewhere else? I think it’s a really interesting area to figure out going forward. I do think, and Kaitlin has heard me kind of use this framework several times, but I do think that there are kind of two dimensions that I’m really focused on. And I think that any impactful solutions would need to cover. I think one is sort of solving the informational asymmetry that exists between people and their data. And then the second is solving the power symmetry that exists between the people and their data. So I’ll just break that down.

I think that the informational asymmetry is understanding how people are using your data. So if a company is collecting my data, I should be able to know why they’re collecting it, how they’re collecting it, what they’re collecting, all the practices associated with it, but ultimately that’s not enough. I mean, you can put that into a hundred page disclosure or terms of service and users are going to click ‘yes,’ I don’t think that’s meaningful and you can probably get to a place where you have better disclosures and things like that. And that would probably be useful on the margins, but I don’t think that’s going to sort of have a dramatic impact. I think that the second piece I think is really important is solving this power asymmetry which is: how do you actually give people more agency over their data and more ability to exercise that agency?

So there, I think that comes down to tools and frameworks and technology architectures that enable consumers to download their data, to move their data from one provider to another to ask for their data to be corrected. If you look at kind of at the global landscape, that’s one thing I think is quite interesting about India. If you look at Europe, the GDPR (General Data Protection Regulation) is a very rights-based approach. And I think that that type of approach can work well in a country or an environment where you have state capacity to actually enforce those rights. In a context where you have less state capacity to actually regulate and take action then you need tools and ways for consumers on their own, and seamlessly integrated into their existing experiences, exercise those rights themselves.

In India, they also have a set of rights, so say with their data, but then they go a step further. It’s still very nascent, but some of what’s being contemplated and developed there is a technology architecture to actually enable consumers exercises. So I’ll just mention two components to that, that I think are interesting. One is something called a DigiLocker which is sort of a centralized place where a consumer can go to access their data across a variety of different sectors, including government data now, but in the future data from regulated and other sectors as well.

And then secondly, I think they’ve also contemplated a new electronic consent framework whereby intermediaries would sit between a consumer and institutions that use their data. So if you’re a bank and I’m opening an account with you, a consent intermediary would sit between the two of us to collect my consent. And then it’d be a place where I can go in the future to revoke that consent, to see what consent I provided to modify, my consent, maybe to see how my consent has been used. So I think that thinking about the architecture will be very important to solving that power asymmetry.

Sean Creehan:

Okay. Well, thanks for joining us today Matt.

Matt Homer:

Yeah. Thanks, Sean. Appreciate it.

Sean Creehan:

We hope you enjoyed today’s conversation with Matt. Kaitlin, I don’t know about you, but we had that interview before this whole crisis unfolded and I think we come into this conversation knowing how important the topic is around the world and here in the United States, but certainly everything that we’ve seen in terms of the impact of our kind of twin health and economic crisis on the un- and under included here in the U.S. has really driven home, how important this topic is. So you followed all these topics for a long time and have thought a lot about it, but how do you feel about this conversation and what do you think we’ve learned since the last few months in the outbreak of the pandemic?

Kaitlin Asrow:

It’s been obviously crazy for everyone to watch all of this unfold and to live through it, but something that has really stuck out to me as someone who’s been thinking about inclusion for a long time is just really the foundational level of access to the internet and devices that can connect to the internet that we still don’t necessarily have in the United States and around the world. So if we’re talking about access to digital services, some of that needs to come through basic infrastructure and maybe that’s back to the telecommunications and internet cabling concepts, but that’s something that the pandemic has really highlighted for me.

Sean Creehan:

Yeah. And even just basic bank accounts. I mean, we’ve talked about this a number of times so far, but I think the FDIC estimates that at least 14 million Americans don’t have a bank account and it made it hard for them to get a stimulus payment. I mean, this crisis just issues of verifying someone’s basic identity. So the government can say, “You’re a small business.” Or you’re just an individual taxpayer that by the letter of the CARES Act, the stimulus that was passed after the pandemic started by this law, you’re owed this payment, but maybe we don’t know where you are. We don’t have a digital access point for you. We can’t verify who you are.

Those things are very simple in some ways, but we haven’t necessarily figured it out at a national level and a universal level for everyone in the country. And we see how that impacts receiving a stimulus check and paying rent and buying food and all of these really basic things. So I think just going back to that conversation with Matt and thinking about what they’re doing at New York State level, or just the U.S. level, it’s not just a matter of delivering hundreds of millions of accounts to people in emerging countries. It’s a live issue here.

Kaitlin Asrow:

Absolutely. And the lack of speed at which people were able to receive the checks was partially because all of our information is kind of scattered across social security databases and tax roll databases. I think your point about digital identity is really true. And maybe this pandemic will show us the value as we have increasingly digital services for having kind of one identity that can move across all of these systems so that when we really need speed and we really need to be able to understand who needs to receive assistance immediately, we can do that. So hopefully this will make, like you said, not just in developing contexts, but here in the United States to think about what are some of the basic conclusion infrastructure we need to have moving forward?

Sean Creehan:

The one other piece that kind of occurred to me, and I know you followed this, we talked a little bit about the idea of data privacy and how that has tension with policies to include more people. But I’m just curious your thoughts on this. I mean, with the pandemic, there’ve been the development of mobile phone apps that help people do contact tracing if they were infected and also just looking at economic activity, there’s been a lot of interesting data coming out on mobility and payments that has informed policy makers around the world, as you know, well, this is a geography or a sector where there’s been a big downturn in activity. We need to make sure that there’s some sort of relief measure there, but of course it doesn’t involve tracking movement and other data that may be considered private. What do you make of all that?

Kaitlin Asrow:

Yeah, the pandemic has really highlighted what I think is fascinating about data, which is that it’s multiple things at once really. It’s something that’s really inherent about me and myself and could be very sensitive, like health status or where I currently live. But at the same time, it’s a collective resource that we might need as a country or as a society to understand our economic position and heal the country in that way, but also track the disease, track the virus and try to combat it and do contact tracing and all of those things. So I think it’s really important.

And the pandemic has shown a spotlight on this to be able to respect people’s privacy and make sure that their information is protected, but at the same time, make them comfortable that it can also be used for societal benefit and for societal purpose. And that doesn’t detract from their own kind of agency and security. So it’s hard to live in both worlds, but I think we need to think more deeply about our strategy as a country so that we can leverage this resource in times of need. Also make sure that people are comfortable, that they’re protected in their individual private spaces.

Sean Creehan:

Yeah, that makes a lot of sense. Glad people like you and Matt are thinking a lot about it and doing good work there. So we hope you enjoyed it. For more episodes like this, you can find us on iTunes, Google Play, Stitcher and Spotify. And if you like what you hear, please leave a review. Feedback from listeners like you will help more people find us. And for even more content, look up our Pacific Exchange blog available at frbsf.org. Thanks for joining us.

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