It may surprise you that only half of the world’s population currently have access to the internet. That’s 3.5 billion people who are completely disconnected from the web and all of the opportunities it affords.
But even more worrisome: there are one billion people who are completely undocumented — one billion people who effectively don’t exist according to public records. For these people, there’s no credit score, no tax records, no education, income, or employment history. Nothing.
One billion people in today’s world are, by all measures, unseen, unrecognized and virtually non-existent for any government or large institution, even as basic as a bank. There are one billion ghosts in 2019.
Underlying this is a fundamental problem: governments, banks and other large institutions have not treated the concept of identity with requisite gravity as an essential part of citizenship. The establishment’s current understanding of identity is no longer compatible with the reality of living in the 21st century.
If you ask most people what they understand by “identifying yourself,” they would likely pull out a driver’s license or possibly a credit card. This simple activity means little to us living in the developed parts of the world, where identity infrastructure, invisible as it may be, makes our lives livable. It’s difficult to convey to those who take identity infrastructure for granted how difficult it is to go through day to day life without this system— how difficult it is to make money, find work, pay bills, send money to family who need it even more, or support children on your own. Identity, like gas, requires infrastructure provided by trusted 3rd parties — mostly Federal Government institutions, whose physical tokens (IDs) function as proxies that bestow their trust upon the individual. Without this infrastructure, you are locked out of many of the basic functional features of living in a civilized society.
Trust is central to the concept of identity. We all need to trust that the institution that issues documents is the right entity to do so (Costco cards are not used at airports for this reason). We also have to trust that the document itself is not easily tampered with or falsified.
Once trust regarding the identity of a person is established, a number of goods and services unavailable to an unidentified person open up. For instance, goods such as alcohol are available only to consumers who can prove their age. The same goes for buying a car and driving it. Access to goods is great, but to turn the 1 billion ghosts into bona fide citizens — citizens of not just their respective countries, but of the globalized world in which we live — the access to services is of the highest importance.
The concept of “Banking the Unbanked” has become a popular moniker for the process of reaching the people off the banking grid; however, this movement mostly focuses on — as the name suggests — turning ghosts into financial services customers. While access to cheap and fair financing is most definitely a way to improve the living conditions of millions, it cannot happen until the creditor has identified the credited party. Ghosts are currently not offered credit cards — or any other type of credit for that matter — so flaunting financing as the solution to the development of the poorest areas is like trying to sell cars in a place with no roads or gas. Of course, there are companies that do in fact try very hard to distribute financing on the little data they can scrape, but those channels are small and largely unreliable, which is why the world’s largest credit companies and banks are not racing to service those demographics. This phrase, Banking the Unbanked, also implies that banking access is the main problem to solve. However, lack of formal identity information implies something far more uncomfortable. What goes along with a formal identity is a citizenship, and without it, ghosts are anything but.
Limits to the Current Infrastructure
So, before we devise a way to create cheap and fair financing in underdeveloped countries, it is imperative that we first create and implement a way to locate and identify every single living ghost. Only then will we understand their needs, and more importantly, be able to provide them with a cost-effective solutions to gradually improve their quality of life.
As with all things, proper incentives need to be in place in order to maximize the chance of success. The sad truth of this particular issue is that primarily our governments have been charged with the burden of identifying their citizens. This produces costs for those public institutions, and few politicians wish to run on platforms of mass identification programs over other issues like health care or taxes. Although great benefits in data collection come with these types of projects, the benefits rarely outweigh the costs. The fact of the matter is the government can’t do it alone. Identity data and its accompanying infrastructure, like any other infrastructure or utility, requires partnerships with a host of industrial companies, from constructing it, distributing it, to management.
For instance, building a 100km road to reach a secluded town and its population is expensive, prone to corruption in many regions, and fraught with complex bureaucratic processes. Once the project is concluded and the road reaches the town, other major services need to be established. In the case of financial services, a bank would need to consider the possibility of opening a branch in this newly connected town and start offering services. This process involves several “interest groups”, from government to private enterprises. In many cases, having multiple interests with different incentive structures can compromise the ultimate success of a project since interests are harder to align and proper oversight is harder to execute. However, this does not mean that public-private enterprises are doomed to fail. On the contrary, the use of existing government infrastructure added with the speed, agility and ingenuity of the private sector is exactly the formula necessary to identify ghosts at scale.
Private companies have great incentives to undergo these types of projects, however this does not come without a greater risk for mismanagement of the information or prioritization of one demographic group over another. Also, like with most things, a fair compromise is needed from all parties.
The Indian government recently attempted to solve this issue with the “Aadhaar Project”, by which they opened a voluntary program for citizens to create a unique digital ID number and also the citizen’s biometric signatures. Through Aadhar, Indian citizens could link a bank account to their unique ID in order to access government subsidies, which had historically been subject to corruption and mismanagement.Nandan Nilekani, the founder of one of India’s largest tech company, Infosys, makes the precision in an interview to Knowledge @ Wharton: “Their Aadhaar numbers will free them