Often, all you need to do to access services like loans and credit on digital platforms in Indonesia is upload a photo of your national ID card, along with a photo of yourself holding the card close to your face. The platform then checks whether the ID card number exists in the government database, and takes a call on whether the face in the selfie matches the one on the ID card.
The process is easy, quick, and therefore common on platforms that want to onboard new customers in a hurry. It is also easy to game.
Reports of entire villages being duped duped The Ken Default, fraud turn Indonesia’s digital lenders into unlikely collaborators Read more by identity thieves are common, with scammers using these datasets to open accounts online and take out loans in the victims’ names. The lack of a proper mechanism to verify if the person using the data to open an account digitally really is that person or someone impersonating them with stolen identity credentials plays right into these cons.
Indonesian authorities are currently a house divided when it comes to solving this identity authentication problem.
India’s Aadhaar Aadhaar Aadhaar Aadhaar is a unique identification number assigned to each individual in India, after collecting their biometric and demdata and other demographic information. The card only contains the number. All data related to the person is stored in a central database. is a tantalising proposition. Potentially, something Indonesia could emulate.
The sophisticated digital identification system claims to solve—or at least minimise—the potential for identity fraud by adding additional layers of security. Such as requiring a fingerprint scan or sending a one-time password (OTP) to a linked mobile number.
Apart from fraud reduction, Aadhaar promises to solve multiple emerging market problems at once. When it launched in India in 2009, it claimed it would further the country’s sustainable development agenda by simplifying access to government services and promoting financial inclusion. These are problems Indonesia also grapples with.
Over the years, Aadhaar also triggered major shifts in India’s entire digital economy.
With one trusted, state-sanctioned mechanism to onboard users, new services grew at an unprecedented pace. That newcomer telco Jio was able to become India’s largest mobile network in under five years is largely credited largely credited The Ken Know Your Creator: The evolution of KYC from checkbox to disruptor Read more to its ability to rely on Aadhaar to onboard customers. An Aadhaar-like system could bring about a similar digital economy acceleration in Indonesia.