Electronic ID in the Nordics – a model for other countries?

A recent report by Arkwright Consulting looked into the take-up of electronic identity schemes on a national basis, comparing Nordic countries with each other and also with Germany and the UK. It makes for interesting reading, for several reasons.

First, it demonstrates the chasm between the Nordics and some other EU states. The report shows just how far ahead the four Nordic countries are, with the vast majority of citizens registered for, and using, electronic identities on a regular basis.

The market penetration of these schemes is even more impressive given that most of the uptake has occurred in the last decade. Sweden, for example, began laying plans for an e-ID scheme in 2001, when the EU ruled that electronic signatures were as valid as paper-based ones. But it wasn’t until 2005 that the country’s BankID was available in card form. Take-up was gradual and steady until Nordea, Sweden’s largest bank, joined the scheme in 2011, after which it became the de-facto standard for electronic proof of identity.

Norway’s BankID scheme (same name but different system) was initially proposed in 1999 but did not become widely available until 2004. It was a banking-only system until 2013, after which major telecoms providers also jumped on board. The government in this case was more of a hindrance than a help, hell-bent on setting up its own proprietary scheme. Norway’s BankID scheme grew more slowly than Sweden’s, partly because of this obstruction, but has still reached a high level of penetration.

Finland had two e-ID systems running in parallel in the early 2000s, but eventually the Tupas system became the basis for MobileID. Unlike Norway, the Finnish government accepted the market’s chosen system in 2009 and it has been used for accessing government services since then.

Denmark’s NemID system was launched in 2010 and has grown at a similar rate to Sweden’s BankID, with banks and government working together, even to the extent of inviting tenders for technology upgrades together.

Another interesting point is what all four Nordic countries have in common. Key to all these schemes is the involvement of banks. Few other national organisations routinely verify new and existing users’ identities, which makes banking the obvious place to start when building a national ID system.

Potentially, such a system simplifies banking for everyone – including the banks themselves – and can be used for other transactions that would normally require paper-based proof of ID, such as car loans and mortgage applications, as well as interactions with government.

But progress in all four countries has not been without hiccups. A manager at Nordea explained that part of the bank’s reticence about joining up was that it already had its own (non-mobile) ID scheme, and it lost customers as a result of joining the BankID scheme in 2015, although it has gained customers in the long run. Even so, by the standards of ID schemes in general, the Nordic schemes can be regarded as successes.

Can such successes be repeated in other countries? That’s not an easy question to answer. Taking the report’s examples of the UK and Germany, they are markedly different from the Nordic states.

Finland, Sweden, Denmark and Norway are widely considered to have some of the most balanced and socially conscious systems of government in the world. Taxation is relatively high, but welfare and benefits are generous, and there is a strong sense of national unity. These countries consistently rank highly in quality-of-life surveys.

But nowhere is perfect – Sweden, in particular, has had some issues in recent years that may have dented its citizens’ belief in its government – but still, trust in authority is generally high. And without such trust, e-ID faces an uphill battle.

Contrast that description with the UK, which, even before Brexit, tended to rank quite poorly in satisfaction surveys and measures of quality of life, in part due to the poor work-life balance of many of its citizens. Now, perhaps more than ever, the UK feels let down by its politicians – most, if not all of them – and arguably justifiably so.

It is also a country that is recovering from 10 years of bank-induced economic stagnation, still struggling along on “emergency” Bank of England measures introduced more than a decade ago.

Banks are not, to put it mildly, widely held in high regard or fully trusted in the UK. Any proposed national e-ID system that required collaboration between banks and government is likely to be viewed with deep suspicion by the population. Even a government-only ID card system was rejected earlier this century. Adding banks into the mix would make the prospect less appealing, not more so.

In Germany, there are different issues. Only 30 years have passed since the fall of the wall separating East and West Germany, and people on both sides recall the Stasi and its manic collection of data on citizens.

Germans – as a general stereotype – do not trust large organisations that collect personal data. They aren’t even overly fond of credit or debit cards, preferring to pay and be paid in cash whenever possible. Germany is also a federation, with many Germans feeling affiliation to their own region first, the EU second and Germany third. Put a Bavarian and a Berliner in a room together and they will find little to agree on.

An e-ID scheme tied between banks and governments would be a hard sell in Germany, particularly if it were made compulsory or mandatory for interactions with government. In a country that still uses fax machines to communicate between public sector departments, the technical implementation would also be a hard slog.

Similar arguments may apply in other countries where national e-ID schemes have not taken off as much as observers might have hoped or expected. Electronic ID is a mechanism that works well in smaller countries without too much internal political strife. You could see it working well in Estonia, for example, which led the drive towards e-citizenship, but probably not so effectively in Spain or Italy, at least not yet.

Even so, the Nordic schemes are worth watching. As models of technical implementation, they provide useful pointers. If and when other countries are ready to follow suit, they won’t need to reinvent the wheel because all the hard IT work has already been done. There’s just the small matter of trust in banks and politicians to sort out first.