Digital divide holding electronic security back

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Firms need electronic identification authentication for security reasons, but the digital divide means paper proof is here to say, analysts have said.

A report released last week by online information firm Experian showed that 70 per cent of financial services companies still use utility bills, bank statements or passports for identification.

While most companies are focused on IT security, they're not worried about identity, said Anne Green, a security analyst at Experian. "I think a lot of companies are spending huge sums of money on IT security but when it comes to identity authentication, it's quite basic," she said. "For all the security around IT data, they have you send documents through the post."

Many hold back on investing in e-authentication because of the cost, she added. "A number are moving towards it, but some are slow because they haven't got the budget... though the cost of staff handling paper would balance that out," Green noted.

But there's another big reason companies haven't moved to completely electronic identity systems: not everyone is web-savvy or has internet access, noted Bob Tarzey, service director at analyst firm Quocirca. "There's an obvious reason a lot of people can't electronically identify themselves," said Tarzey. "It's easy for people with IT skills to do that, but there's plenty of people who their only way is paper."

"It's all well and good to say they [companies] should be doing one thing, but they still have to deal with paper," he said. "But companies accepting authentications can take steps to double check that ID, like a utility bill, backed up with other evidence from online services... it can be improved, but you can't eliminate paper."

Pairing electronic authentication with other methods gives companies more information to work with, as it tracks people's credit, banking and housing history through their lives, Green said. "For someone to mimic that, it would take many, many years for a fraudster," she said.

But shifting to electronic documents helps keep private papers safe from a major source of data leakage and fraud - a company's own staff. "Copies of an original document sent through the post, you have to store securely," Green said. "It means people in the office have access, and staff fraud is on the increase."

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