Strong authentication as business development

In my recent post on versatile authentication I touched the topic of national eID cards. Some two weeks ago, I did a presentation on eID interoperability from a private perspective. I started with the question about why strong authentication technologies are still not widely used. The vendors might claim that they are, but in fact we still mainly rely on weak approaches like username/password, PINs, PIN/TAN, and so on.

One reason for that is that approaches which are reusable need a sponsor. Many companies in eBanking, eCommerce, and other areas understand the need for strong authentication. But they don't want to rely on proprietary mechanisms. They don't want to deploy and provide the logistics for advanced mechanisms due to the costs associated with. And they don't want to invest in a technology for their customers which then might be used by their competitors as well. One example for the latter situation are readers for cash cards, amongst others.

For sure you could argue that the example of the UPU (Universal Postal Union) has demonstrated some 145 years ago, that this isn't a valid argument. Before UPU, there had been a complex system of billing between postal agencies in different countries. They counted the letters and the fees and billed each other. The basic idea behind UPU was, that there is usually one letter back per letter sent, thus the fees which have to be payed are more or less equal. Thus it is much cheaper to just not do that billing anymore and to have the senders pay only a fee in the originating country of the letter. This system works for a pretty long time right now. And I don't have that many doubts that a standardized system which requires some hardware to be deployed would work as well when everyone supports his customers - the ones with fewer customers will pay less on average because they have to deploy less, the ones with more customers will pay more.

Unfortunately I neither see a standard solution which is accepted by everyone nor the willigness to do that. Thus we need alternatives. And that is where eID cards come into play. There is a potential for mass adoption at least in countries where it is mandatory to have such a card. However, that requires that these cards can really be used for strong authentication in eCommerce and other areas. And that, again, requires the deployment of readers for these cards.

Thus, we need someone to sponsor at least the initial deployment to build the critical mass. The only ones to do that are the governments, like in Germany, where 1.3 million readers will be sponsored. That in fact is business development, because it enables the use of Internet-based services with strong authentication. It enables new business models, efficiency in organizations, it will reduce fraud and the associated costs. However, the eID projects usually aren't seen from that perspective of business development - private use cases are more sort of an add-on. Decisions like in the Netherlands to shift such projects to a later point of time show a lack of understanding of the potential economic impact.

We need mass adoption of reusable strong authentication for the "Internet business". The only way to achieve this is by sponsors who invest in the mass adoption of technologies. And the most likely sponsors are governments, as part of what they do for their economies and their competitive advantage. Once we have a mass adoption of strong authentication, we might see additional technologies being used for graded and step-up authentication. Vendors of versatile authentication and context-based authentication/authorization will benefit from this as well because eID cards will always be only one of many accepted means of authentication. But the ones who benefit most are the businesses themselves which can reduce fraud and implement new business models.

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