Building Trust in the Digital Age
Innovation and Tech

Building Trust in the Digital Age

By Multiple authors • Apr 2024

Exploring the Promise of Australia’s Digital ID System

Over the last few years, an increasing number of Australians have found themselves impacted in some way by major cyber security breaches which saw millions of sensitive customer details publicly disclosed, resulting in driver licences being reissued and consumers having to monitor their credit status for financial fraud and identity theft. 

In March of this year, the Senate passed the Digital ID Bill. The Digital ID Bill outlines plans to provide a national economy-wide identity validation system reducing the risks associated with continuously providing documents like passports and driver’s licences for various consumer services.  

This development has exciting potential to remove consumer friction points and streamline the identification process whilst reducing the risks associated with collecting and storing sensitive identity documents – improving the digital ID process across multiple industries – including property. 

The concept isn’t new. Digital identity verification was implemented in the European country of Estonia as far back as 2002. While there is ongoing debate on the risks and benefits of a Digital ID in Australia among our industry, further education is needed to help all Australians feel more informed on what these changes mean and why they are necessary. 

The Australian Bureau of Statistics (ABS) reported that in the financial year 2022-23, over 199,000 Australians experienced identity theft. One of the leading causes of these crimes is illegally obtained identity documents stolen from banks, utility providers (i.e. gas, water, electricity, Internet and phone) and other customer services that need to confirm who you are. This typically includes passports, driver’s licenses, Medicare cards, credit cards and various utility bills. Companies who collect this information must store it for up to seven years or longer for regulatory purposes.  

If you are renting a house, you would typically be sharing these types of identity documents with the realtor and possibly the owner of the property. This creates a world where large volumes or caches of sensitive data exist. Cyber criminals look for these caches of data and use weaknesses in an organisations’ IT systems to steal the documents, and resell them online to the highest bidder, often on the “dark web”. Once these critical documents are available on the Internet, it becomes straightforward for your digital identity to be stolen.  

The Minister for Finance, Senator Katy Gallagher – who would also oversee the proposed digital ID scheme – said in a recent statement on the Bill, that recent high-profile cyber-attacks “have shown how important it is to keep Australians safe online.” Therefore, the introduction of the Bill aims to expand an existing digital ID system, used by the Government’s MyGov system. Over 10 million Aussies have registered digital identities through this system. In a recent article in the Australian Financial Review, the Senator was quoted saying that the Bill aims to expand the service to private businesses such as banks, removing the need for those businesses to collect and store sensitive identity documents.  

The property industry, and home buyers, are among those that stand to gain from this scheme in the long term. As the nation’s largest digital property exchange platform, PEXA has digitised most of the sensitive documentation required to settle a property – making the process more secure since the early days of manual paper-based settlements. However, some parts of the process still require participants to physically handle and store sensitive identity information – therefore adding to the risk. Imagine a world where a customer’s identity can be verified securely with just a few clicks and, more importantly, where you do not risk handling their identifying documents or need to worry about how to securely store them. This would allow digital platforms like PEXA to instead focus on providing first-class service to its clients.  

If the right balance is found, a digital ID system could revolutionise how we handle sensitive documents in Australia. You would no longer need to hand over your passport or driver’s license to get a loan or a mobile phone. You verify once and then refer to the digital service each time you need to verify. This could significantly reduce the risk of identity theft for everyday Australians. Moreover, businesses would have a secure method to identify customers without storing passports and other sensitive copies of identification. This would create a safer environment and help rebuild trust between public and private businesses, a trust that cyber criminals often look to exploit.  

It Is worth noting that the program is currently voluntary. Meaning you can opt-out of having a digital ID if you wish. There is also ongoing debate about ensuring safe management of any centralised repositories of identity records. Including the need for a robust certification process for private entities to participate in the system.  

The current scheme has been expanded to include digital identification through Australia Post. Major banks and credit providers also express serious interest in participating over the next two years. There are still ongoing discussions about the most practical and secure methods of implementation. However, it’s worth keeping an eye on developments in this space, especially as other business and services embrace the service to de-risk their business with regards to verification of identity and the associated complex challenges of securely storing copies of sensitive identity documents.  

A secure system where you prove your identity once, in a convenient and easy mechanism can benefit us all in the long run.  

Co-authored by David Willett

Co-authored by David Willett

Chief Information Technology Security Officer, PEXA

As PEXA’s Chief Information Technology Security Officer, David leads PEXA’s security strategy and operational capabilities that ensure the availability, confidentiality and integrity of PEXA and customer data. David is a regular speaker at various cyber security industry events, most recently the 2023 NAB Small Business Australia conference and the 2023 AISA Australian Cyber conference.

Co-authored by Damien Manuel

Co-authored by Damien Manuel

General Manager, Regulatory, PEXA

Damien is seasoned ICT business professional with over 28 years of expertise in pivotal domains such as ICT and business security, compliance, risk management, and strategic business growth. Damien has been with PEXA for two years, and serves on multiple boards including Crime Stoppers Victoria, RSA Security Australia, Cooperative Research Centres Advisory Committee (Department of Industry Innovation and Science Australia), Australian Conservation Foundation, and Victorian Ombudsman.

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