The Centre for Finance, Innovation and technology (CFIT) has launched an initiative to give more businesses digital IDs, which could add £600m to the UK economy each year through the reduction of economic crime.
Digital IDs for businesses, which the CFIT likens to a digital passport, will consolidate information about companies in one trusted place, easing the process of accessing finance for them and streamlining compliance costs.
Working with a coalition of about 70 organisations, including the major banks, the CFIT has published a white paper on digital business IDs, claiming they could add £600m annually to the UK economy.
Digital IDs for business will “make securing finance and conducting day-to-day business quicker and less vulnerable to fraud”, according to the CFIT.
In February 2023, the UK government launched CFIT, with £5.5m funding, in response to a report into UK fintech carried out by WorldPay chairman Ron Kalifa in 2021.
The CFIT and its coalition partners will announce its blueprint for digital business IDs in the spring. Chancellor Rachel Reeves said she would “consider any findings that emerge from CFIT’s work”.
The coalition includes Lloyds Bank, NatWest Group, Barclays, Santander and HSBC, as well as fintechs, accountancy firms and finance regulators.
Cross-industry collaboration
The CFIT said economic crime will be tackled through a “cross-industry collaboration leveraging cutting-edge digital verification”.
NatWest Group’s head of financial crime risk management, Phalé McMillan, said: “Financial crime continues to be one of the most prevalent crimes in the UK, which is why cross-industry collaboration is vital to protect consumers, businesses and the overall economy. The proposed digital verification framework demonstrates the power of technology in protecting the financial system and customers, whilst supporting UK economic growth.”
Meanwhile, business banking will be streamlined for banks and their business customers by replacing largely manual identification processes with digital IDs.
Elyn Corfield, CEO of business and commercial banking at Lloyds Bank, said: “Digitising how banks undertake know your customer obligations will help make compliance checks more user friendly for Britain’s small businesses and support the UK’s fight against financial crime. Providing easier and quicker access to bank accounts and finance will enable businesses to secure greater investment for growth and deliver more jobs for people across the UK.”
CFIT chair Charlotte Crosswell said: “Economic crime remains a major threat to the UK’s economic security, and has a profoundly distressing impact on consumers and businesses. At CFIT, we are committed to addressing this and making the financial services industry more robust against fraud. The dynamic elements of smart data and digital ID, along with cross-sector interoperability, have been key to the success of the coalition to date, and demonstrate a further milestone in CFIT’s mission to boost economic growth through financial innovation.”
Jordan Shwide, general manager of business banking at challenger bank Monzo, said: “[Digital business IDs] not only enable quicker access to financial services for legitimate businesses, but it also means lots of business information lives in one place. This should make it harder for scammers to set up fake companies and ultimately help prevent people falling victim to fraud.”
