Business Identity in the Digital Economy: A Global Problem Needs a Global Solution
GLEIF’s commitment to transforming entity identity management globally is reflected in its new branding and its mission to establish one global identity behind every business.
Author: Stephan Wolf
Businesses today face significant pressure to go digital. Government and private sector organizations around the world are racing to digitize processes, products, and services—even national currencies—to remove friction, save money, streamline operations, and improve user experiences.
Despite the tremendous benefits it delivers, digital transformation is not a panacea for all that ails the business world. If, for example, a service operates within the boundaries of a fragmented ecosystem, the digitization process alone won’t make it transversal. And as the digital divide widens, barriers to accessing products and services are becoming more pronounced. And then, there is the issue of authenticity. As more partnerships are established across legal jurisdictions, and more transactions between these partners move online, the crucial job of counterparty identity verification is getting more complex, time-consuming, and operationally onerous. Put simply, in today’s global digital marketplace, it is harder than ever for businesses to establish and maintain trust.
Successful digital transformation will only follow thoughtful, strategic real-world changes to policies, procedures, and infrastructure. Most leaders know that organizational change is hard, though, and research suggests that digital transformation may be even harder: McKinsey & Company found that fewer than 30% of digital initiatives succeed and that transformation success is still very much the exception, not the rule. A recent blog by the International Monetary Fund (IMF) illustrates this reality well. According to the IMF, the success of African countries implementing central bank digital currency pilot programs will be determined by the extent to which the countries are willing to invest in developing “the expertise and technical capacity to manage the risks to data privacy, including from potential cyber-attacks, and to financial integrity, which will require countries to strengthen their national identification systems, so know-your-customer requirements are more easily enforced.” These countries must make foundational changes before they can undergo digitization.
Global problems need global solutions. And it is in this tension between accelerating digital transformation and improving fundamental business processes that GLEIF is bringing unique value.
Born out of the financial crisis of 2008 and officially established by the Financial Stability Board (FSB) in June 2014, GLEIF is a supra-national, not-for-profit organization that regulates and supports the implementation and use of the Legal Entity Identifier (LEI). Its mission is to increase transparency by regulating a genuinely universal identification standard—a unique 20-character code created for a legal entity. This single code represents a single organization so that anyone, anywhere in the world, can trust that an organization is who it claims to be. Today, over two million legal entities around the world identify themselves internationally using an LEI.
From the beginning, the LEI initiative has served as a ‘broad public good,’ evident mostly in global financial markets where its use has been widely mandated, creating much-needed transparency and promoting financial inclusion. In the fight against money laundering, terrorism financing, and other forms of financial crime, more than 200 financial regulators worldwide mandate the LEI for use by entities engaging in capital markets. It is fair to say that the LEI has transformed due diligence, KYC, and anti-money laundering processes for financial institutions, regulators, and entities around the world. And it will continue to do so by simultaneously making it easier and more valuable for organizations to obtain an LEI, while creating business justification for organizations with the need for validated and verified identity practices to build the LEI into their own onboarding processes. It is doing this, in collaboration with identity industry stakeholders and its network of LEI issuing organizations, by evolving and expanding its existing ecosystem to remove economic and operational barriers to LEI use.
At the same time, the organization is undergoing a transformation of its own—a transformation that will enable GLEIF to expand its horizons beyond regulated LEI use and help organizations see how the LEI can bring greater trust, efficiencies, and transparency to any identity management system in any sector. This new strategic direction rests on the understanding that the benefits to the wider business communities grow in line with increasing LEI adoption, so GLEIF will seek to drive LEI adoption by legal entities everywhere, and to encourage broader, voluntary utilization of LEIs beyond use-cases mandated by regulation.
In parallel, GLEIF recognizes that enabling digital identity is critical. GLEIF will continue to build on and amplify the value offered by the LEI as an organizational identity management tool by expanding its unique applicability in the digital world. As the world’s organizations rush to digitize their processes and transactions, confidence in digital authenticity remains in short supply. To equip and enable the global economy in this respect, GLEIF is leveraging existing technologies such as digital certificates and a new model of decentralized business identity to enable businesses everywhere to use the Global LEI System to identify themselves and verify the authenticity of counterparty organizations without the need for human intervention. In both instances, ISO standards have been established to enable uniform implementation globally, industry-specific proofs-of-concept are rapidly maturing, and GLEIF’s network of partners, known as LEI issuing organizations, is expanding, and diversifying in anticipation of future demand.
While GLEIF’s vision remains constant, GLEIF has modernized the way it presents itself to the world in acknowledgment of its transformation. A fresh, clean brand identity has been created, including a new logo, strapline, and trust marks. The intention of this outward transformation is to reflect the ongoing evolution of the LEI’s universal applicability and broadening relevance in both the offline and digital worlds and to help the GLEIF ecosystem better convey the LEI’s central purpose: to create lasting and verifiable trust between legal entities everywhere- whether offline or online.
If you would like to comment on a blog post, please identify yourself with your first and last name. Your name will appear next to your comment. Email addresses will not be published. Please note that by accessing or contributing to the discussion board you agree to abide by the terms of the GLEIF Blogging Policy, so please read them carefully.
Stephan Wolf is the CEO of the Global Legal Entity Identifier Foundation (GLEIF). In 2021, he was appointed to an all-new Industry Advisory Board (IAB) as part of the International Chamber of Commerce’s (ICC) Digital Standards Initiative (DSI). In that capacity, he serves as co-chair of the workstream on ‚Trusted Technology Environment‘. Between January 2017 and June 2020, Mr. Wolf was Co-convener of the International Organization for Standardization Technical Committee 68 FinTech Technical Advisory Group (ISO TC 68 FinTech TAG). In January 2017, Mr. Wolf was named one of the Top 100 Leaders in Identity by One World Identity. He has extensive experience in establishing data operations and global implementation strategy. He has led the advancement of key business and product development strategies throughout his career. Mr. Wolf co-founded IS Innovative Software GmbH in 1989 and served first as its managing director. He was later named spokesman of the executive board of its successor IS.Teledata AG. This company ultimately became part of Interactive Data Corporation where Mr. Wolf held the role of CTO. Mr. Wolf holds a university degree in business administration from J. W. Goethe University, Frankfurt am Main.