Technology is transforming the banking and financial industries, but it is also raising new issues of identity and security. The dawning of the internet age has given birth to exciting trends like online banking, digital currencies and now even trading has gained mass appeal online through social investment sites. But when serious financial practices are opened up to the masses, it becomes more important than ever to be able to prove the identity of those accessing the services.

Social investment sites connect investors and traders across the globe to share insight and expertise while trading online. Radical networks such as eToro let users trade based on other users’ activities. Sites like this democratise trading – taking it from something that was restricted to experts on trading floors, to being possible for anyone, anywhere at any time. This is a very exciting trend for the banking and financial industries. It helps them remain relevant and accessible in a digital age, and also provide the opportunity to bring in people into the stock market who have often thought of investing but have been reluctant to do so for lack of knowledge and experience. But social trading is also a potentially dangerous trend if it is not managed correctly. Companies that offer these services must be able to verify that the people dealing with large sums of money are who they say they are. This is fairly straightforward in a controlled environment such as the trading floor, but when it comes to the World Wide Web, which sometimes can feel more like the Wild West Web; this is an entirely new prospect.

Similarly exciting yet equally potentially dangerous is the growing trend of Bitcoin and digital currencies. Recent estimates place the amount of Bitcoins in circulation at around 11 million, with a collective market value approaching $1.4 billion at current rates. This global digital currency has great potential, yet verification is once again an issue. When Bitcoin users engage with one another online there is currently no way for them to verify the identity of the individual they are doing business with. While this is the core attraction for many users, it fundamentally undermines the reliability of whole platform and needs to change if the currency is to achieve widespread acceptance. As a result, we see stories in the press about drug trading sites which use Bitcoins as payments in illegal transactions.

The internet is dramatically impacting and shaping the future of the banking and financial sectors, but for trends like digital currencies and social trading to achieve widespread adoption, they will need to prove they are both reliable and trustworthy. To do this they will need to be able to verify with confidence who it is they are doing business with.

Reliable identity (ID) information is a fundamental requirement of infrastructures used to manage the exchange of currency, goods and services, and financial platforms must adopt online ID verification. This enables companies to authenticate their potential customers in real-time, while also offering the scalability and efficiency needed for a global company.

Installing such verification measures offer great benefits for these organisations as well as their users. Compliant companies are able to operate and market themselves as following the industry best practice standards. This should include following anti-laundering regulation as well as the implementation of identity verification for users. This would generate greater trust and expand the global appeal in these disruptive companies.

The internet is transforming the banking and financial industries; new trends such as digital currencies and social trading are leading the way, and established financial institutions are having to adapt quickly to the changing landscape to deliver services such as online banking. But without measures to guarantee the safety of customers and users when using online services, disruptive companies will never achieve widespread adoption and existing financial giants will become extinct.

Glenn Porter, General Manager International Identity Verification, GBGroup